efu cmplt

EFU LIFE ASSURANCEEFU LIFE ASSURANCE LIMITEDLIMITED

FINANCIAL PROJECTFINANCIAL PROJECT

DEPARTMENT OF MANAGEMNT SCIENCES

UNIVERSITY OFUNIVERSITY OF EDUCATIONEDUCATION

OKARA CAMPUS June, 2010

EFU LIFE ASSURANCE LTD

“EFU LIFE ASSURANCE LTD”“EFU LIFE ASSURANCE LTD” [MUHAMMAD MAJEED] 2 | P a g e


PAKISTANPAKISTAN

BYBYMUHAMMAD MAJEED BASHIRMUHAMMAD MAJEED BASHIR

B.B.A Hons VIII SEMESTERROLL NO 143

SUPERVISORSUPERVISORMR. RAI IMTIAZ HUSSAINMR. RAI IMTIAZ HUSSAIN

UNIVERSITY OF EDUCATION UNIVERSITY OF EDUCATION OKARAOKARA

PUNJAB – PAKISTANPUNJAB – PAKISTAN June, 2010

[MUHAMMAD MAJEED] 3 | P a g e


DedicationDedication“All praises for Almighty Allah, the creator of the world

And

Hazrat Muhammad (PBUH), the last Prophet.

We dedicate this feeble work "To our beloved parents".

Living legend of excellence for our lives without their knowledge, wisdom &

guidance.

We would not have the goal we have to strive and be the best to reach our

dreams.

"To the person whom we love & for

All those who pray for us".



AcknowledgementAcknowledgementFirst of all thanks to Almighty Allah, who have given me the strength and

knowledge to complete this project.

I would like to specially thank for the help of my finance teacher Sir IMTIAZ

who helped me a lot regarding this project.

I have learned a lot with the kind guidance of Sir IMTIAZ and I think I have

achieved my goal of learning practical things.

MUHAMMAD MAJEED B.B.A (Hons) Finance



EFU LIFE ASSURANCEEFU LIFE ASSURANCE [MUHAMMAD MAJEED] 6 | P a g e


In 1992, the Government of Pakistan reopened the life insurance business to the private sector organizations and EFU Life Assurance Ltd was incorporated in November 1992 as the first private sector life insurance company. In early 1993, EFU Life commenced writing group life insurance business and by March 1994, the company began writing its individual life business.

EFU Life is managed by a team of professionals with extensive life insurance experience in the United Kingdom. This has helped the Company establish a professional culture unique amongst life insurance business in Pakistan.

The Company has a growing branch network of over 100 branches through out the country with employee strength of 150 personnel at its main offices in Karachi and Lahore. The company employs 4 full time actuaries and also has an active involvement of one of the leading actuarial firms in the country.

EFU Life is the first life insurance company in Pakistan to be awarded the ISO 9001:2000 certification, and also the only life insurance company to have an "Insurer Financial Strength" rating which is currently AA-, Outlook: Stable, by JCR-VIS, an affiliate of Japan Credit Rating agency.

Today, EFU Life continues to be the largest private sector life insurance company in Pakistan. In 2007, EFU Life’s premium income was Rs. 4.8 billion. The Company enjoys a market share of over 64% of the private sector life premium income (excluding single premium).

EFU Life has a comprehensive range of products which has been developed after extensive research of financial services in western countries such as the United Kingdom. These products are designed to meet the varying needs of EFU Life’s clients and offer the best in financial services.

EFU Life is the pioneer in introducing the following products and features in Pakistan

Unit-linked products Critical illness products Education planning product Inflation protection benefit Pension Plans



Islamic Fund Products

EFU Life’s product range is the most competitive in the market in terms of value for money. The Company continuously reviews its product range to ensure that it remains at the leading edge.

EFU- THE BEGNING EFU- THE BEGNING [MUHAMMAD MAJEED] 8 | P a g e


In the early 30s , under the inspiration of the Quaid-e-Azam Mohammad Ali Jinnah, there began to appear signs of economic renaissance of the Muslims of India. Shipping, Airline, Banking and Insurance companies made their debut.

In 1932 in Calcutta, Mr. Ghulam Mohammed, a far sighted man, who later became Governor General of Pakistan, established an insurance company with financial assistance from the H.H. Aga Khan and H.H. Nawab of Bhopal. The company was named Eastern Federal Union Insurance Company Ltd. It was registered in Calcutta and operated in undivided India and Burma. Its business was both General and Life Insurance.

In 1947, on the birth of Pakistan, EFU (as the company was called), found a new country and rapidly established itself as a progressive and innovative insurance company. It provided the emerging insurance industry the leadership, the manpower and the drive needed to grow in a situation where at that time three-fourths of insurance business was held by foreign companies.

By 1961, EFU had become the flag bearer of Pakistan's insurance industry on the world stage, and the largest life company in Afro-Asian countries (excluding Japan) under the leadership of our late chairman Mr. Roshen Ali Bhimjee. It remained so until 1972 when Life Insurance industry in Pakistan was nationalized. From that time onwards, EFU operated solely as a general insurance company and was subsequently renamed EFU General Insurance Company Limited.



COMPANY INFROMATIONCOMPANY INFROMATION [MUHAMMAD MAJEED] 10 | P a g e


Chairman Saifuddin N. Zoomkawala

Managing Director & Chief Executive Taher G. Sachak

Directors Sultan AhmadJahangir Siddiqui Rafique R. BhimjeeMuneer R. BhimjeeHasanali Abdullah

Corporate Secretary Syed Mehdi Imam

Appointed Actuary Omer Morshed, F.C.A., F.P.S.A., F.I.A.

Consulting Actuary & Advisor Michael J de H. Bell, F.I.A.

Medical Director Dr. Tajuddin A. Manji

Legal Advisor Mohammad Ali Sayeed, M.A.B.L

Auditors KPMG – Taseer Hadi & CoChartered Accountants, KarachiHyder Bhimji & Co.Chartered Accountants, KarachiWebsitehttp://www.efulife.com/EFU GROUPEFU GROUPBy 1961, the EFU was the largest insurance company not only in

Pakistan but also in all of Afro-Asia excluding Japan. It remained so until 1972



when life insurance in Pakistan was nationalized. From this time onwards EFU operated solely as a general insurance company. EFU General is the second largest general insurer in Pakistan.

EFU General is managed by a team of experienced insurance professionals with strong support from service departments such as Finance and Human Resource Development. The Managing Director of the Company has international experience of running the general insurance operations of an insurance company based in the United Arab Emirates (UAE). EFU General has over 64 branches situated throughout the country and employs over 1,000 individuals at its Head Office and in the branch network. In 2004 EFU General's total premium income was Rs. 4.8 billion.

In 1992, the Government of Pakistan opened up life insurance to the private sector and EFU Life Assurance Ltd was incorporated in 1992 as the first private sector life insurance company.

The third company in the EFU Group is Allianz EFU Health Insurance Ltd which is dedicated to providing health insurance to individuals and corporations. It is a joint venture with Allianz of Germany, one of the largest insurance companies of the world. Allianz EFU Health is Pakistan's first specialized health insurance provider.

EFU is the only insurance group in Pakistan to provide a full range of insurance services. This includes life, health and general insurance. A pillar of EFU's strength lies in its close and long-term (over 50 years) relationship with its main reinsurer, Munich Re of Germany, one of the largest reinsurance companies in the world.

Another unique feature of EFU is a voluntary review mechanism by the companies to keep under review their operations, by professionals of international repute.

EFU General has taken Mr. Wolfram Karnowski, who retired at a very senior level from Munich Reinsurance Company of Germany, on its Board of



Directors. EFU Life has appointed Mr. Michael Bell, a very eminent UK based actuary (retired from Watson Wyatt and currently Chairman of a large UK based life company), to carry out an annual review of the company's policies and operations.

This independent review enables the company to keep abreast of international changes in the industry and ensures that the managements adopt the best international practices.

PURPOSE OF LIFE ASSURANCEPURPOSE OF LIFE ASSURANCEThe fundamental purpose of Life Assurance is to provide money to

meet financial losses caused by death, disability and illnesses. However, Life Assurance policies may also provide investment benefits that is, money


http://www.efuinsurance.com/

http://www.allianz-efu.com/


payable on survival of the life assured rather than only on death.

In some circumstances you can also have policies that pay out benefits if the Policyholder suffers a critical illness.

There are two main elements of Life Assurance.

These are:-

Protection - income and security for dependents after the death of the life assured

Investment - the creation of capital from regular savings

A life assurance product can be made up of either or both of these two elements.

Life Assurance policies are paid for by premiums. A premium is made up of three elements.

P = PROTECTION The cost of the life cover or ‘risk’

I = INVESTMENT The amount, if any, of the investment content

E = EXPENSES The expenses of the life company

The Proportion of each element of the ‘PIE’ varies according to the type of policy of which there are many different forms.

Current Strategies

Strategies In Our Communities

Where there is opportunity, there is hope for a better tomorrow.We are committed to nurturing and fulfilling hopes of our policyholders through innovative quality products. We conduct our business on a sound financial basis and adhere to the highest ethical and professional standards.



Our clients come from all backgrounds and all walks of life.They depend upon us for their financial security and to fulfill their dreams, because they know we deliver.Our partnerships are rooted in knowledgeable counsel, careful money management, wise investment strategies and providing opportunities to achieve long term goals.

Strategies Starts With Our People

People come first at EFU Life.Our investment in the nurturing of talent and acknowledgment of skills makes us the employer of choice in the industry.By developing strong relationships internally we are well-equipped to develop equally strong relationships with clients across our markets.

At EFU Life there is a strong commitment from each member

Strategies To Make A Difference

EFU Life launched an extensive Media Campaign in 2008 to create awareness about financial planning using the concept of Child Marriage and Education, and Retirement.To reach a wide target audience, EFU Life utilized the medium of Television, Print and Radio for its advertisements. This was the first of its kind integrated media campaign by any life insurance company in the country.The theme of the campaign is “Zaroori Hai” which signifies that like many “zaroori” things and events in life, planning for future financial security of ones family is also “zaroori”.

QUALITY POLICYQUALITY POLICY



PRODUCTSPRODUCTSEFU life assurance providing its customers the following products



1.1. FOR INDIVIDUALSFOR INDIVIDUALSEFU life assurance providing the following products for individuals

1. PROSPERITY FOR LIFEYour life is a journey with many different stages and each stage brings

with it new challenges. As you take each step in life your role and


http://www.efulife.com/products/individuallife.asp

http://www.efulife.com/products/groupbenefits.asp

http://www.efulife.com/products/islamic.asp

http://www.efulife.com/products/prosperityforlife.asp

http://www.efulife.com/products/educationplan.asp

http://www.efulife.com/products/capitalgrowthbond.asp

http://www.efulife.com/products/savingplan.asp

http://www.efulife.com/products/executivepensionplan.asp

http://www.efulife.com/products/securityplan.asp

http://www.efulife.com/products/loanprotectionplan.asp

http://www.efulife.com/products/ahplan.asp


responsibilities change. Whether you are at the beginning of your career, have just started a family, require funds for your children’s education and marriage or would like to plan for your retirement, you need to have a financial planning tool which can respond to your changing circumstances and at the same timeProvide you sufficient funds to fulfill your and your family’s needs.

EFU Life brings you “Prosperity for Life” – a flexible and high value savings and protection plan that ensures that your dreams become a reality at all stages of life… throughout your life

2. EDUCATION PLANOne of the best investments any parent can make in their lifetime is an



Investment in their children’s education.

Of course, parents do strive to give their children a good start in life by accumulating assets for them such as business, property and cash, but these can be "temporary" in nature. One asset, that is permanent, however, is a good college / university education - that is something no one can take away From them.

A good solid education is now a prerequisite to financial stability and advancement in the very competitive and technologically advanced world that your children are growing up in. But unfortunately too often one hears The following words:

“I wish I had started saving early enough to be able to send my children to university”.

With EFU’s Education Plan, you can make sure that unlike other parents your dreams for your children will become a reality.

Inflation Protection

Under the Inflation Protection, the contribution will increase every year by 7% of the original premium with an appropriate increase in benefits, without any medical evidence.

Guarantee their education even if you should die

In the unfortunate event of your death prior to the maturity of the Plan, you would want to make sure that your education plans for your children will still be fulfilled.

3. CAPITAL GROWTH BONDAn increasing number of investors have discovered that to achieve real

capital growth over and above inflation, it is necessary to have a substantial portion of their investments in asset-backed investments such as shares.


http://www.efulife.com/products/protection.asp#epip


But successful investment in equities is not easy. Knowing what to buy and sell, and when, demands experience and expertise and can be extremely Time consuming.

The EFU Capital Growth Bond provides the ideal solution. The Bond provides both the investment expertise and the spread of risk through investments across a wide range including equities, government securities and cash deposits.

Security through Spread

The money you invest with us will be invested in the EFU Capital Growth Fund. The objective of the Fund is to maximize capital growth whilst reducing the potential risk normally associated with pure equity funds.

Emergency Access

There may be instances when you require access to part of your investment to meet a particular need. The Plan gives you the flexibility to make partial withdrawals and leave the balance of the investment (minimum of Rs. 20,000) to continue to participate in the performance of the Capital Growth Fund.

Retirement Income

You may need a regular retirement income as opposed to a lump sum under the Bond. The Capital Growth Bond gives you the facility of applying the Cash Value to provide a pension to help you maintain your standard of living in retirement. The income payable (subject to the Company’s minimum) will be dependent on the guaranteed payment period, the value of your investment and your age at the time.

Built-in Protection Benefits

The Bond also provides valuable protection benefits which are automatically

SAVING PLANThe EFU Savings Plan is a high value savings and investment vehicle, which offers higher unit allocation in the early policy years and provides valuable life insurance coverage. The large funds accumulated during the savings term can be utilized for higher education or marriage of children, buying a house, providing for regular income after retirement and any other purpose. The plan is highly flexible and responds to the needs of the


http://www.efulife.com/products/growthfund.asp#cgbpfg

http://www.efulife.com/products/growthfund.asp#cgbpfg

http://www.efulife.com/products/growthfund.asp#cgbbuy


individual. The plan aims to accumulate contributions and provide a large sum at the end of the savings term. In addition it provides valuable life insurance coverage during the entire savings period.

The opportunity for Growth

Your contributions to the Plan will buy units in the EFU Managed Growth Fund. The Investment Plan is designed to provide a large cash sum at the end of your selected period.



Access to your Savings

Nobody can predict the future. If your circumstances change and you have a need for cash before the end of the savings period you can en case the policy for the full bid value of units without any early surrender penalties after the second annual premium has been paid.

Retirement Income

At the maturity of the Plan your need may be for a regular retirement income as opposed to a lump sum.

Investment with a “Safety Net”

The moment you start saving with the Investment Plan you will enjoy a guaranteed level of life assurance protection.

EXECTUIVE PENSION PLANEnsuring that retirement is planned for is vital, especially for those who

are self-employed or are working in a company that does not provide a pension. Otherwise, they will end up becoming one of the vast numbers of people who can not maintain a decent standard of living in retirement, thus negating a lifetime’s work.

EFU offers the Executive Pension Plan to suit your circumstances to help you achieve financial independence in retirement.


http://www.efulife.com/products/protection.asp




http://www.efulife.com/products/growthfund.asp




Expert Investment Management

Your contributions will buy units in the EFU Managed Growth Fund. The Fund is managed by experts who will adjust the mix of the underlying investments in the light of economic conditions and investment opportunities.

A Range of Benefit Options

You will be able to choose how to take your benefits from a whole range of options. During the plan term, you may select to withdraw your full or partial fund value. At maturity you have the option to withdraw the fund value as a lump sum amount, or you may select an income to be paid for your lifetime with payments guaranteed for 10 years as shown in the illustration above.

Alternatively you can select an income which will continue to be paid to your spouse for the rest of his/ her life in you dies first.

Access to savings

Nobody can predict the future. If your circumstances change and you have a need for cash before the end of the savings period you can encase the policy for the full bid value of units without any early surrender penalties after the second annual premium has been paid.

Early/Late Retirement

The Executive Pension Plan is designed to mature between your ages of 60 to 70 years.

Portability

We live in times where change is the norm and it is likely that you will want to change your job in the future. It is therefore important that your retirement planning is flexible and can accommodate your changed circumstances. EFU Executive Pension Plan is fully portable and stays with



you wherever you go. Thus you can continue paying contributions under one Plan up to your retirement.

Additional Benefits

The basic purpose of the Plan is to build up substantial capital to provide a pension. However, the Executive Pension Plan offers a range of additional benefits to help you tailor the plan to suit your particular needs.

SECURITY PLANThe need to provide high life cover at a minimum cost may arise for a number of reasons. For example you may need:

To provide a replacement income for your family on your death To ensure that your early death does not jeopardize your future plans

for your children in terms of their education, wedding etc. To protect the continuity of your business by ensuring that funds are

available for your beneficiaries.



EFU Security Plan is a term assurance contract which allows you to provide protection against the financial consequences of death at a very low cost.

High Cover for a Nominal Cost

Example : Male aged 35 next birthdayTo provide a lump sum payment of Rs. 500,000 on death during a 20 year term the annual premium would be Rs. 3,960 i.e. just over Rs. 10 per day.



Additional Benefits

The basic objective of the Security Plan is to pay a lump sum if you die within the term of the Plan. The Plan can also be arranged on a joint-life basis so that both husband and wife are covered. The benefit (Sum Assured) would then be payable on the first ‘claim’ of either partner.

You also have the flexibility to tailor the Plan to suit your circumstances by being able to choose from a range of additional benefits.

Family Income Benefit Accidental Death and Disability Accidental Death and Disability Plus Waiver of PremiumLOAN PROTECTION PLAN

The EFU Loan Protection Plan, by providing a capital sum on death and critical illness, can ensure that your loan will be repaid leaving your assets unencumbered.

The Benefits

Taking into account the term of your loan and the interest rate payable, we will tailor the plan to suit your needs. The Plan will provide a level of cover


http://www.efulife.com/products/riders.asp





http://www.efulife.com/products/protection.asp#spip


which will reduce approximately in line with the reduction of loan capital outstanding through the term of the loan.

The reduction of the loan capital is dependent on the interest rate payable. The graph below illustrates the effect of various interest rates - a higher interest rate implies a higher principal amount of loan outstanding at any point in time.

The EFU Loan Protection Plan gives you the facility to choose the level of cover at four different interest rates. This means that you can ensure that on death the cover available will be more or less sufficient to repay the outstanding loan, leaving your home or business unencumbered.

High Cover for a Nominal Cost

Example: Male aged 40 next birthdayTo cover a principal amount of loan of Rs. 500,000 for a 20 year term and at 10% interest rate, the annual premium would be Rs. 3,915 i.e. just over Rs. 10 per day.

Additional Benefits

The following riders can be added to the main plan:

Life care Benefit Life care Benefit Plus Waiver of PremiumACCIDENT & HOSPITALIZATION PLAN

There is absolutely nothing better then being blessed with good health. However, No one can predict the future.

What would happen to you if you suffered an accident or had to be hospitalized?

The likelihood is that you and your dependants would be adversely affected.

EFU’s Accident & Hospitalization Plan will help guarantee your financial







well being. The Plan will pay out cash on death, disablement or prolonged absence from work as a result of an accident or hospitalization due to an accident.

The Plan provides a comprehensive range of benefits from which you can choose. You can also tailor the level of payments to your needs by being able to choose up to 10 Units of Benefits.

Death

With this plan, you can guarantee that your family receives a substantial lump sum on your accidental death to help them maintain their standard of living.

Double Indemnity

If death occurs as a result of an accident whilst you are traveling as a fare-paying passenger on a licensed public conveyance or on a commercial airline, that standard lump sum payment is doubled.

Permanent Partial Disability

If you become disabled as a result of an accident, cash will be paid to you expressed as a percentage of the Basic Sum Assured Per Unit of Benefit. Please contact the Head Office for details.

Permanent Total Disability

Under this benefit, the cash payment (sum assured) will be made after 6 consecutive months of total disability, which means inability to engage in any occupation for which you are reasonably qualified for by education, training or experience.

ADDITIONAL BENEFITS

In addition to the basic benefits included in each unit you can add the following two benefits to enhance your cover.



Accidental Disability Income

This benefit will help you replace part of your lost income by providing a monthly income so that you can continue to meet your basic commitments.

Accident & Sickness In-Hospital Income

This benefit provides a fixed daily cash amount which will be paid directly to you even if the medical expenses are paid for by your employer.

2. FOR GROUPSAlthough everyone has a need for life insurance, people in different life stages may have different needs. Employees want to ensure whether their families will be able to meet any financial obligations and carry out basic living expenses should a death occur.

In today's environment, employers seeking to attract and retain high-quality employees must appeal to a more diverse workforce, consisting of people in various stages of life. They are challenged to create an employee compensation package that is attractive to a broad range of people, but which also conserves money and administrative time.



Group cover from EFU Life offers a variety of coverage options. Employers may select basic and supplemental coverage amount to fit the requirements of the group.

Coverage

Death Group Accidental Death Benefit Group Accidental Disability Benefit Fortnightly Income Benefit Group Natural Disability Benefit Group Terminal Illness Benefit Group Critical Illness Cover Group Loan Insurance Group Provident Fund Insurance

The group cover from EFU Life offers comprehensive protection and a whole range of options. It is a cost-effective and easy-to-administer means for employers to provide protection to their employees without requiring evidence of insurability.

3. ISLAMIC FUND PRODUCTS1. ASASA PLAN

Life is the greatest divine gift and gives you the opportunity to live it by fulfilling your dreams. These dreams are your assets and drive you to plan accordingly. Whether it is your career, marriage, children's education or your retirement, planning for the future is the key to success. At each step in life you require a financial planning tool that can fulfill your and your family's needs with certainty.

EFU Life brings you "Asasa" - a high value savings and protection product that ensures you achieve your dreams for your loved ones.

The two distinguishing features of the plan are:


http://www.efulife.com/products/gbdetails.asp#gpfi

http://www.efulife.com/products/gbdetails.asp#gli

http://www.efulife.com/products/gbdetails.asp#gcic

http://www.efulife.com/products/gbdetails.asp#gtib

http://www.efulife.com/products/gbdetails.asp#gndb

http://www.efulife.com/products/gbdetails.asp#fib

http://www.efulife.com/products/gbdetails.asp#gadb2

http://www.efulife.com/products/gbdetails.asp#gadb1

http://www.efulife.com/products/gbdetails.asp#death


i. New unit linked fund with "interst free investments". The investments include Islamic mutual funds, approved equities, term deposits in Islamic Banks and Sukuk Bonds. This new fund has been named "EFU Aitemad Growth Fund" (AGF). As the name suggests, Aitemad (meaning Trust) outlines the basic philosophy of EFU Life's business and all its financial planning solutions.

ii. Allocation of Bonus Units based on experience of the product: At the end of each year, EFU Life will review the mortality experience of the product, and in case of a surplus the amount will be distributed back to the clients in the form of "Bonus Units". These Bonus Units will be credited to the EFU Aitemad Growth Fund to enhance the cash value of the plan. As a service to society, you may also instruct EFU Life to utilize your share of the surplus for a social cause and donate it to a charitable institution.

2. NOOR PLANChildren are a blessing from the Almighty and mean a world to you. Every parent wants to give their loved ones a secure future and a life that is least disturbed by financial constraints. You, as a caring parent need to choose an investment and protection package that can cater to all your requirements and can act as a smart financial tool no matter what uncertainties life unfolds for you.

EFU Life brings you "Noor" - a complete financial planning solution for you to plan for your children's future education and marriage. The plan helps you accumulate a fund over a savings period which can be used to finance your children's college or university education, or marriage expenses.

The two distinguishing features of the plan are:



i. New unit linked fund with "interst free investments". The investments include Islamic mutual funds, approved equities, term deposits in Islamic Banks and Sukuk Bonds. This new fund has been named "EFU Aitemad Growth Fund" (AGF). As the name suggests, Aitemad (meaning Trust) outlines the basic philosophy of EFU Life's business and all its financial planning solutions.

ii. Allocation of Bonus Units based on experience of the product: At the end of each year, EFU Life will review the mortality experience of the product, and in case of a surplus the amount will be distributed back to the clients in the form of "Bonus Units". These Bonus Units will be credited to the EFU Aitemad Growth Fund to enhance the cash value of the plan. As a service to society, you may also instruct EFU Life to utilize your share of the surplus for a social cause and donate it to a charitable institution



ORGANIZATIONAL CULTUREThe culture of the organization is very hard working where teamwork is appreciated and there is no communication gap between the various levels of the hierarchy. As far as the rules and regulations are concerned, employees are expected to stick closely with them. No negligence on the part of the workers or the managers is tolerated. The organization values a safe, stable, and predictable and rule oriented environment. All the higher authority has a very strong control on the behavior of the personnel. No one is seen sitting idle and having a chat with someone, rather every one is seen working hard and committed to the Quality. The organization encourages the workers and the managers towards



commitment to quality. Every department carries boards and charts with beautiful messages like;

HARD WORK IS A KEY TO SUCCESS. QUALITY IS THE ONLY WEAPON TO WIN CUSTOMERS. LOYALTY. COMMITMENT TO QUALITY IS OUR MOST DOMINANT TRAIT. CUSTOMER IS THE ULTIMATE JUDGE.

Hence whenever some one goes to the Head Office, he finds every one working in a much disciplined environment, the environment that is very important for any good and successful organization.



SWOT ANALYSISSWOT analysis is the analysis of the internal and external factors,

which have impact on the survival of any organization. Now let’s make SWOT analysis for EFU Life Assurance Company Limited

STRENGTHS:

EFU Life Assurance Company Limited is the part of the EFU Capital. The brand name is enough to sell the products easily. Private placement of Rs. 10,000 crs. worth of securities by the

government. Led to an improvement in market securities. Strong liquidity was the major reason for the up move. Range of products



Reliance Life Insurance Company Limited has a long and strong history of solvency, financial stability.

WEAKNESSES:

Due to lack of awareness, people seem it risky. Lack of staff. Lack of advertisement, so most of the customers are not aware of the

EFU Life Assurance Company Limited.

OPPORTUNITY: There is a vast untapped market in Pakistan. The life insurance

penetration in Pakistan is approximately 2.5%. So it has large potential. Intention of traditional products is to encourage long term, regular and

disciplined savings to systematically build up a target fund. The average insurance premium being collected by the company has

been growing exponentially year on year.

THREATS:

The main threat is from the other players who have grabbed approximately 15% of the market share.



As the government has scrapped the rebate on the life insurance premium, the people who used to invest in life insurance for the sole motive of tax benefit may turn to other instruments.



PEST ANALYSIS1. POLITICAL FACTORS

Within Pakistan political ambitions and rise of communalism, fissiparous tendencies are on the rise and may well continue for quite some time to time. Therefore, it expected that the assurance companies might consider offering political risk coverage also.

The only area where Pakistan insurers consider giving cover is with regard to customs duty change under certain conditions.

Certain type of political risk at the international level has serious implications for exporters. The term ‘political risk’ has a wider connotation



than commonly understood or assumed. It covers events arising not just from politics, but risks in the course of international transactions. In this connection, it may be noted that export credit assurance has evolved out of uncertainties relating to international trade, particularly due to problems arising out of foreign legal jurisdiction, political changes and currency exchange difficulties faced by many developing countries.

The political situation of Pakistan is not stable and after the war on terror it has gone worse especially for the business sector, and due to inconsistent policies of government every new government set different policies which make difficult for the businesses to grow and be consistent in their performance.

2. ECONOMICAL FACTORS Interest rate at bank and interest rate of P.F variation very much affect

to life assurance industry, because people always attract by higher return. Therefore, they do not prefer lower return policy.

Unemployment also affects assurance industry, because the unemployment people will not have earning, so saving also affect to life assurance sector Life assurance industry will directly affected by Earthquake, Monsoon, and Natural calamity. Because of these events turns into lots of death, so the life assurance companies have to pay claim against policy.



Infant mortality rate and maternity mortality rate are also affecting to life assurance. Typical Pakistan want luxurious product against low income, so that they prefer installment or annuity (EMI), so that they may not have extra saving to invest in life assurance.

3. SOCIAL FACTORS The basic social factors that affect the life assurance sector are as under:

Population Life style Educational level Level of earning Societal benefits

These are the major social factors, which affect the life assurance sector. We will discuss all of them in brief

Population:

Growth in the population is a major factor pushing up the demand. It is also going to exert a special influence on the life assurance market in other



ways. Apart from exerting pressure on demand for goods and services, and through that, ill effects of uncontrolled growth of population also could spur the growth of demand. For example, overcrowding in public places of entertainment, public support, or too many vehicles on the road can result in hazards like stampedes and pollution, which require covers and still are not sold on a large scale today.

Life style:

The peculiar lifestyle of a country or an age also influences the assurance business. Change therein produces different demands for life assurance. For e.g. All over the world, family size is shrinking and the fact that in decades to come, both presents are more frequently likely to work outside the home will mean that there could be a greater possibility of property loss. Similarly, a larger number of vehicles

Level of education:

Pakistan is one of the developing countries: the level of education is very low here. The literacy rate is very poor. More than 50% of the population is still uneducated or more or less not educated. Thus the people are not able to understand the concept of the life assurance. Among the educated people the quality of the education is still a big question mark. Thus the awareness is not created and it has become a big challenge for the industry. Thus one of the factors, which affect the life assurance sector, is low level of education.

Level of earning:

Another factor, which affects the life assurance sector, is the level of earning. In Pakistan the rule of 80-20 is working. The 80% of the total



population is having the 20% of the wealth and the 20% of the total population is having 80% of total wealth. Thus the richer are richer and poorer are poorer. Due to this the life assurance sector is affected very much.

Societal benefits:

In view of the fact that large sections of Pakistan have inadequate life assurance cover, an important social responsibility of the government relates to spreading it far and wide. In addition, the government attempts to extent life assurance with certain social obligations in view in both urban and the rural areas through such means special schemes for the weaker sections, and by tilting of the life assurance companies’ investments in favor of social developments.

4. TECHNOLOGICAL FACTORS Internet as an intermediary in the current Pakistan market customer is

not aware about the intrinsic value of assurance. He thinks of assurance only in the mount of March as a tax saving measure.

The security provide by an assurance cover is rarely thought about. In such a scenario Internet can be an effective medium for educating the consumers about assurance. It serves as a single window for disseminating product, process and procedural information to the consumers.

Product development and target marketing through the Internet: with increase in the number of assurance companies there will be a need for market segmentation and subsequently product designed for each of them.



In such a scenario Internet can be a effective channel for pushing product specific information to a particular market segment.

Consumer feedback about a particular product as well as suggestions for different types or covers can also be generated through the Internet.

Retail marketing is a commonly expected concept and the providers of the retail products and service will try out for larger market and market share. There would be cut through competition and the real benefit would be to the customers in terms of better products, distribution, pricing, post transaction service and technology.

Technology will perhaps be the single largest driver of the retail thrust. The entire strategy will evolve around the absolute ability of the organization. The customer will demand for greater convenience of excess to the Product/ service and all at low cost of delivery. There fore the use of technology and specifically the Internet with realigned strategies would be one of the key factors to success. Constraints of locations, timing and accessibility would not be a hurdle for either customers or businesses.



I.I.

II.II.

III.III.

IV.IV.

V.V.



VI.VI.

VII.VII.

VIII.VIII.

IX.IX. BCG MatrixBCG Matrix

CASH COW: -



The EFU Life Assurance LTD has strong market position in Pakistan because of their evergreen insurance policy & nature throughout the year that’s why it has large market share and its products has till very strong potential to grow and penetrate in Pakistani markets. Therefore according to BCG matrix product lines of EFU life assurance lies in Cash Cows due to large market share and high potential to grow. Around 30 to 40 advisors work under one unit manager. The cost of maintaining them is very less in comparison to the other department.

Dogs:-

No one at present; As Insurance sector is at the growing stage, so there is no dog for the company at present and in future ,which are on the three section can become dog for the company



FINANCIAL ANALYSIS

SUMMERIZED FINANCIAL STATEMENTSEFU life Assurance (Pakistan) Limited

Summarized Balance SheetAs on December' 31

2009 2008 2007 2006 2005( Rupees in ' 000' )

AssetsNon-Current AssetsFixed AsstsLeased hold land 417,319 417,319 417,319 417,319 51,553Furniture and Equipment 98,454 90,640 84,404 45,801 35,026Vehicles 150,627 118,166 116,867 95,020 69,362Equipments 72,026 68,159 62,384 47,175 43,228Computers 45,380 39,410 33,149 26,014 17,149Total Fixed assets (at cost)

783,806 733,694 714,123 631,329 216,318

- Accumulated Depreciation

(2,181,192) (1,812,178) (1,364,242)

(1,087,356)

(971,094)

Net Fixed Assets (1,397,386)

(1,078,484)

(650,119)

(456,027)

(754,776)

Drawing 192,803 61,059 60,973 33,202 15,927Software 3,027 3,577 4,930 - -



Intangible assets 195,830 64,636 65,903 33,202 15,927Civil works - - 1,335 741,890 -Advance for loans - - - 66,171 -Others 183 5,008 2,657 9,832 1,253Capital work-in-progress

183 5,008 3,992 817,893 1,253

Long term investment - - - 509,039 758,419Long term loans and advances

31,503 29,050 28,105 36,163 36,060

Long term deposits 4,042 4,091 4,091 - -Differed taxation 571,214 338,165 251,008 - 17,814Total Non-Current Assets

(594,614) (637,534) (297,020)

940,270 74,697

Current AssetsPremium due but unpaid

101,942 83,101 50,316 29,736 22,878

Work in process 248,184 188,496 173,408 76,086 68,701Finished goods -Self created 1,065,836 400,312 672,368 1,071,827 68,400 -Services including in transit

377,068 258,911 373,299 190,853 -

Stoke in trade 1,691,088 847,719 1,219,075

1,338,766

137,101

Considered plans - - - - -Considered doubtful 16,142 16,142 16,142 16,142 16,142Less: Provision for doubtful claims

(16,142) (16,142) (16,142) (16,142) (16,142)

Service debts - - - - -Short term investment - - - 634,843 -Payments and other receivables

853,218 507,852 706,092 1,075,600

1,230,469

At bank -On current account 5,319 4,844 5,483 5,725 22,798-On deposit account - - - - 5,200,00

0On saving account/deposits maturing in 12 months

13,114 225,513 213,475 354,836 650,829

Cash at hand 2,054 1,523 901 58 360Cash and bank balance

20,487 231,880 219,859 360,619 5,873,987

Total Current-Assets 2,666,735 1,670,552 2,195,342

3,439,564

7,264,435

Total Assets 2,072,121 1,033,018 1,898,32 4,379,83 7,339,13



2 4 2Liabilities and Equity

Non-current LiabilitiesThe bank of Punjab 500,000 500,000 666,667 1,000,000 -MCB Bank Limited 1,000,000 - 750,000 -ABN MRO Bank (Pakistan) Limited

- 375,000 -

Standard Chartered Bank (Pakistan) Limited

- 750,000 -

Less: Current portion shown under current liabilities

- - (583,333) (333,333) -

Deferred Taxation - - - 5,428 -Long-term finance-secured

1,500,000 500,000 1,958,334

672,095 -

Total non-current liabilities

1,500,000 500,000 1,958,334

672,095 -

Current-LiabilitiesCurrent portion of long term finance

- - 583,333 333,333 -

Short term borrowing-secured

2,151,601 - - 1,454,873 -

Make-up accrued on loans and other payables

75,048 32,029 39,627 15,719 -

Trade and other payablesCreditors 396,791 130,159 275,419 517,024 453,185Accrued liabilities 42,793 21,026 32,854 24,950 25,793Bills payable 240,406 420,350 424,794 544,068 611,981Security deposits against display cars

1,064,643 1,147,643 1,196,631 870,164 1,913

Workers' profit participation fund

- 3,417 - 729 4,142

Workers' welfare fund - 1,298 - 20,309 -Employees' retirement benefits and other obligations

18,309 15,921 14,165 16,015 -

Advances from customers

1,136,755 1,115,617 889,182 1,194,154 7,989,363

License fee, technical fee and royalties

297,082 135,270 111,296 315,119 119,857

Provision for customs duties

32,169 32,169 273,449 429,601 441,611

Unclaimed dividends 4,822 4,842 4,940 5,026 -Federal excise duty payable

130,719 - - - -

Withholding tax payable 10,372 - - - -Others 12,733 27,325 60,425 55,888 45,808



Total Trade and other payables

3,387,594 3,055,037 3,283,155

3,993,047

9,693,653

Dividends - - - - 4,716Total Current Liabilities

5,614,243 3,087,066 3,906,115

5,796,972

9,698,369

Total Liabilities 7,114,243 3,587,066 5,864,449

6,469,067

9,698,369

EquityAuthorized Capital 2,000,000 2,000,000 750,000 750,000 750,000Issued, subscribed and paid up capital

1,428,000 1,428,000 714,000 420,000 420,000

Reserves 1,801,500 1,727,000 1,991,000 1,579,500 1,579,500

Inappropriate profit/ Accumulated loss

(401,655) 74,678 (264,332) 705,708 94,914

Total Equity 2,827,845 3,229,678 2,440,668

2,705,208

2,094,414

Total Liabilities And Equity

9,942,088 6,816,744 8,305,117

9,174,275

11,792,783

Shareholder Equity 4,327,845 3,729,678 4,399,002

3,377,303

2,094,414

EFU Life Assurance (Pakistan) Ltd

Summarized Income StatementFor The Year Ended December 31,

2009 2008 2007 2006 2005Rupees In ' 000

Sales 14,149,646 14,715,495 17,055,115 25,638,698 16,587,217Policy planning 12,470,229 12,022,266 14,678,457 23,427,780 15,401,196Policy working 47,638 35,438 43,131 49,552 33,672Salaries, wages and benefits

225,195 202,079 263,375 200,930 124,376

Fuel and power 49,652 39,051 40,962 36,797 25,767Insurance 28,278 28,918 29,265 15,334 9,706Traveling and vehicle running

62,331 62,258 69,126 64,468 38,224



Policy handling 19,751 16,098 20,534 60,843 40,770Claims for reinsurance 10,781 12,306 27,643 10,502 12,391Technical assistance 31,834 26,852 44,970 17,313 6,873Depreciation on property and equipment

490,471 434,677 422,095 114,841 122,943

Amortization on intangible assets

39,100 29,524 37,365 13,004 9,239

Royalty 287,321 296,486 339,723 491,293 272,415Canteen subsidies 11,308 10,272 13,951 17,355 10,599Other expenses 1,714 2,367 1,192 1,306 1,517

13,775,603 13,218,592 16,031,789 24,521,318 16,109,688Opening stock of policy in process

188,496 173,408 76,086 68,701 68,653

Less: closing stock of policies in process

(248,184) (188,496) (173,408) (76,086) (68,701)

(59,688) (15,088) (97,322) (7,385) (48)Cost of policy plan 13,715,915 13,203,504 15,934,467 24,513,933 16,109,640Less: On work capitalized (25,648) (38,637) (11,138) (36,828) (13,009)Less: Cost of reinsured policies

(6,816) (713) (2,749) (8,011) (10,451)

13,683,451 13,164,154 15,920,580 24,469,094 16,086,180Opening stock of finished targets

400,312 672,368 1,071,827 68,400 73,056

Closing stock of Finished targets

(1,065,836) (400,312) (672,368) (1,071,827) (68,400)

(665,524) 272,056 399,459 (1,003,427) 4,65613,017,927 13,436,210 16,320,039 23,465,667 16,090,836

Cost of sales - Trading plans 955,217 651,791 635,142 1,005,517 213,346Cost of Goods Sold (13,973,14

4)(14,088,00

1)(16,955,18

1)(24,471,18

4)(16,304,182

)Gross Profit 176,502 627,494 99,934 1,167,514 283,035Less: Distribution and marketing cost

190,088 209,677 214,889 149,877 101,724

Administrative expenses 139,749 139,163 147,274 134,518 97,771Other operating expenses 311,025 4,975 64,514 80,924 16,145Total Expenses (640,862) (353,815) (426,677) (365,319) (215,640)Other operating income 64,844 23,589 150,585 377,865 197,190(Loss)/Profit from operation

(399,516) 297,268 (176,158) 1,180,060 264,585

Provision for impairment on available forsale equity investment

(222,769) (233,651) (305,491) (46,356) (5,956)

(Loss)/Profit before taxation

(622,285) 63,617 (481,649) 1,133,704 258,629

Taxation (220,452) (11,393) (217,109) (428,410) (96,450)

(Loss)/Profit after taxation

(401,833) 75,010 (264,540) 705,294 162,179

Earning per share/ (Loss) (2.81) 0.55 (2.08) 16.79 3.86



Number of Outstanding Shares

142,800 142,800 71,400 42,000 42,000

Earning per share/ (Loss) Before Tax

-4.36 0.45 -6.75 26.99 6.16



TREND ANALYSIS OF BALANCE SHEET

BALANCE SHEETTrend Analysis

EFU Life Assurance Pakistan Ltd.Balance Sheet’s Comparative Change Base Analysis

2009 2008 2007 2006 2005

Total Non-Current Assets 1,631,135 (242,689) 1,719,547 1,398,061 -Total Current-Assets 1,494,209 (1,245,684) (2,588,705) (4,016,569) -Total Assets 3,125,344 (1,488,373) (869,158) (2,618,508) -Total non-current liabilities

1,000,000 (1,458,334) 1,286,239 672,095 -

Total Current Liabilities 2,527,177 (819,049) (1,890,857) (3,901,397) -Total Liabilities And Equity

3,125,344 (1,488,373) (869,158) (2,618,508) -



2009 2008 2007 2006 2005-5,000,000

-4,000,000

-3,000,000

-2,000,000

-1,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000

Total Non-Current Assets

Total Current-Assets

Total Assets


Total Current Liabilities


Interpretation:

The Total non current assets are: High volume from 2005 to 2007 Diminishing trend in 2008 Again boosted in 2009 by 1,631,135

The Total current assets are:

Diminishing trend from 2005 to 2008 High volume in 2009 by 1,494,209

The Non-current liabilities are:



Gaining trend from 2005 to 2007 Diminishing trend in 2008 Boosted back in 2009 by 1,000,000

The Current liabilities are: Falling trend from 2005 to 2008 Higher trend in 2009 by 2,527,177

The Liabilities and Equity is:

Diminishing trend from 2005 to 2008 Higher trend in 2009 by 3,125,344

Balance Sheet’s %age Comparative Change Base Analysis



2009 2008 2007 2006 2005-100.00%

-50.00%

0.00%

50.00%

100.00%

150.00%

200.00%



Total Assets




Interpretation:

The Total non current assets are: Increasing trend from 2005 to 2007 Decreasing in 2008 Increased in 2009 by 37.23%



Honda Atlas Cars Pakistan Ltd.Balance Sheet’s %age Comparative Change Base Analysis

2009 2008 2007 2006 2005

Total Non-Current Assets 37.23% -5.25% 59.21% 92.81% -Total Current-Assets 61.35% -33.84% -41.29% -39.05% -Total Assets 45.85% -17.92% -9.47% -22.20% -Total non-current liabilities 200.00% -74.47% 191.38% - -Total Current Liabilities 81.86% -20.97% -32.62% -40.23% -Total Liabilities And Equity 45.85% -17.92% -9.47% -22.20% -


Decreasing trend from 2005 to 2008 Increased in 2009 by 61.35%


Increasing trend from 2005 to 2007 Decreasing in 2008 Increased in 2009 by 45.85%

The Current liabilities are: Decreasing trend from 2005 to 2008 Increased in 2009 by 81.86%


Decreasing trend from 2005 to 2008 Increased in 2009 by 45.85%

Balance Sheet’s 2005 Change Base Method

Honda Atlas Cars Pakistan Ltd.Balance Sheet’s 2005 Change Base Method

2009 2008 2007 2006 2005Total Non-Current Assets 399.15% 290.86% 306.97% 192.81% 100.00

%Total Current-Assets 38.20% 23.68% 35.79% 60.95% 100.00

%Total Assets 84.31% 57.80% 70.43% 77.80% 100.00



%Total Current Liabilities 57.89% 31.83% 40.28% 59.77% 100.00

%Total Liabilities And Equity

84.31% 57.80% 70.43% 77.80% 100.00%

2009 2008 2007 2006 2005-5,000,000

-4,000,000

-3,000,000

-2,000,000

-1,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000



Total Assets




Interpretation:The Total non current assets are:




The Total current assets are: Decreasing trend from 2005 to 2008 Increased in 2009 by 38.20%





Decreasing trend from 2005 to 2008. Increased in 2009 by 84.31%

Balance Sheet’s Vertical Common Size Analysis

Honda Atlas Cars Pakistan Ltd.Balance Sheet’s Vertical Common Size Analysis

2009 2008 2007 2006 2005Total Non-Current Assets 60.47% 64.27% 55.68% 31.66% 12.77%Total Current-Assets 39.53% 35.73% 44.32% 68.34% 87.23%Total Assets 100.00% 100.00% 100.00% 100.00% 100.00

%



Total non-current liabilities 15.09% 7.33% 23.58% 7.33% -Total Current Liabilities 56.47% 45.29% 47.03% 63.19% 82.24%Total Liabilities And Equity 100.00% 100.00% 100.00% 100.00% 100.00

%

2009 2008 2007 2006 20050.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%



Total Assets




Interpretation:

The Total non current assets are: Increasing trend from 2005 to 2007 Decreasing in 2008 Increased in 2009 by 39.53%


Decreasing trend from 2005 to 2008



Increased in 2009 by 100.00%





Decreasing trend from 2005 to 2008. Increased in 2009 by 100.00%

TREND ANALYSIS [MUHAMMAD MAJEED] 60 | P a g e


OF INCOME STATEMENT

INCOME STATEMENTTrend

Analysis

EFU Life Assurance Pakistan Ltd.Income Statement’s Comparative Change Base Analysis

2009 2008 2007 2006 2005

Sales (565,849) (2,339,620) (8,583,583) 9,051,481 -Cost of Goods Sold 114,857 2,867,180 7,516,003 (8,167,002) -



Gross Profit (450,992) 527,560 (1,067,580) 884,479 -Total Expenses (287,047) 72,862 (61,358) (149,679) -(Loss)/Profit after taxation

(476,843) 339,550 (969,834) 543,115 -

2009 2008 2007 2006 2005-10,000,000

-8,000,000

-6,000,000

-4,000,000

-2,000,000

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

Sales

Cost of Goods Sold

Gross Profit

Total Expenses


Interpretation:The Sales are:

Increasing trend in 2006 by 9,051,481. Diminishing trend from 2007 to 2009

The Cost of Plans sold is:

Diminishing trend in 2006 by (8,167,002) Higher trend from 2007 to 2009

The Gross Profit is:



Higher in 2006 by 884,479. Diminishing in 2007 by (1,067,580) Higher in 2008 by 527,560 Diminishing in 2009 by (450,992)

The Total Expenses are: Diminishing trend from 2005 to 2007 Higher in 2008 by 72,862 Diminishing in 2009 by (287,047)

The (Loss)/Profit after taxation are:

Higher in 2006 by 543,115. Diminishing in 2007 by (969,834) Higher in 2008 by 339,550 Diminishing in 2009 by (476,843)

Income Statement’s %age Comparative Change Base Analysis

Honda Atlas Cars Pakistan Ltd.Income Statement’s %age Comparative Change Base Analysis

2009 2008 2007 2006 2005Sales -3.85% -13.72% -33.48% 54.57% -Cost of Goods Sold 3.88% -17.14% -35.00% 52.17% -Gross Profit -71.87% 527.91% -91.44% 312.50% -Total Expenses 81.13% -17.08% 16.80% 69.41% -(Loss)/Profit after taxation -635.71% -128.35% -137.51% 334.89% -



2009 2008 2007 2006 2005-5,000,000

-4,000,000

-3,000,000

-2,000,000

-1,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000



Total Assets





Increased in 2006 by 54.57% Decreasing trend from 2007 to 2009

The Cost of Goods Sold is: Increased in 2006 by 52.17% Decreasing trend from 2007 to 2009 Increased in 2006 by 54.57%


Increased in 2006 by 312.50% Decreased in 2007 by -91.44% Increased in 2008 by 527.91%



Decreased in 2009 by -71.87%)

The Total Expenses are: Increasing trend from 2005 to 2007 Decreased in 2008 by -17.08% Increased in 2009 by 81.13%


Increased in 2006 by 334.89% Decreasing trend from 2007 to 2009

Income Statement’s 2005 Change Base Method

Honda Atlas Cars Pakistan Ltd.Income Statement’s 2005 Change Base Method

2009 2008 2007 2006 2005Sales 85.30% 88.72% 102.82% 154.57% 100.00

%Cost of Goods Sold 85.14% 81.96% 98.91% 152.17% 100.00

%Gross Profit 62.36% 221.70% 35.31% 412.50% 100.00

%Total Expenses 297.19% 164.08% 197.87% 169.41% 100.00

%(Loss)/Profit after taxation

-247.77% 46.25% -163.12% 434.89% 100.00%



2009 2008 2007 2006 2005-300.00%

-200.00%

-100.00%

0.00%

100.00%

200.00%

300.00%

400.00%

500.00%

Sales

Cost of Goods Sold

Gross Profit

Total Expenses



Decreasing trend from 2006 to 2009

The Cost of Goods Sold is: Decreasing trend from 2006 to 2008 Increased in 2009 by 85.14%


Increased in 2006 by 412.50%



Decreased in 2007 by 35.31% Increased in 2008 by 221.70% Decreased in 2009 by 62.36%

The Total Expenses are: Increasing trend from 2005 to 2007 Decreased in 2008 by 164.08% Increased in 2009 by 297.19%


Increased in 2006 by 434.89% Decreased in 2007 by -163.12% Increased in 2008 by 46.25% Decreased in 2009 by -247.77%

VERTICAL ANALYSIS OF



BALANCE SHEET

BALANCE SHEETVERTICAL ANALYSIS

EFU Life Assurance Pakistan LtdSummarized Balance Sheet

As on December' 312009 2008 2007 2006 2005

( Rupees in ' 000' )Assets

Non-Current AssetFixed AsstsLeased hold land 20.14% 40.40% 21.98% 9.53% 0.70%Furniture and Equipment 4.75% 8.77% 4.45% 1.05% 0.48%Vehicles 7.27% 11.44% 6.16% 2.17% 0.95%Equipments 3.48% 6.60% 3.29% 1.08% 0.59%Computers 2.19% 3.82% 1.75% 0.59% 0.23%Total Fixed assets (at cost) 37.83% 71.02% 37.62% 14.41% 2.95% - Accumulated Depreciation -

105.26%-175.43% -71.87% -24.83% -13.23%

Net Fixed Assets -67.44%

-104.40% -34.25% -10.41% -10.28%



Drawing 9.30% 5.91% 3.21% 0.76% 0.22%Software 0.15% 0.35% 0.26% 0.00% 0.00%Intangible assets 9.45% 6.26% 3.47% 0.76% 0.22%Civil works - - 0 0 -Advance for loans - - - 1.51% -Others 0.01% 0.48% 0.14% 0.22% 0.02%Capital work-in-progress 0.01% 0.48% 0.21% 18.67% 0.02%Long term investment - - - 11.62% 10.33%Long term loans and advances

1.52% 2.81% 1.48% 0.83% 0.49%

Long term deposits 0.20% 0.40% 0.22% 0.00% 0.00%Defferd taxation 27.57% 32.74% 13.22% 0.00% 0.24%Total Non-Current Assets -

28.70%-61.72% -15.65% 21.47% 1.02%

Current AssetsPremium due but unpaid 4.92% 8.04% 2.65% 0.68% 0.31%Work in process 11.98% 18.25% 9.13% 1.74% 0.94%Finished goods -Self created 51.44% 38.75% 35.42% 24.47% 0.93% -Services including in transit 18.20% 25.06% 19.66% 4.36% 0.00%Stoke in trade 81.61% 82.06% 64.22% 30.57% 1.87%Considered plans - - - - -Considered doubtful 0.78% 1.56% 0.85% 0.37% 0.22%Less: Provision for doubtful debts

-0.78% -1.56% -0.85% -0.37% -0.22%

Service debts - - - - -Short term investment - - - 14.49% -Payments and other receivables

41.18% 49.16% 37.20% 24.56% 16.77%

At bank -On current account 0.26% 0.47% 0.29% 0.13% 0.31% -On deposit account - - - - 1On saving account/deposits maturing in 12 months

0.63% 21.83% 11.25% 8.10% 8.87%

Cash at hand 0.10% 0.15% 0.05% 0.00% 0.00%Cash and bank balance 0.99% 22.45% 11.58% 8.23% 80.04%Total Current-Assets 128.70

%161.72% 115.65% 78.53% 98.98%

Total Assets 100.00%

100.00% 100.00% 100.00% 100.00%

Liabilities and EquityNon-current LiabilitiesThe bank of Punjab 5.03% 7.33% 8.03% 10.90% 0.00%MCB Bank Limited 10.06% 0.00% 9.03% 0.00% 0.00%ABN MRO Bank (Pakistan) Limited

- - 0 - -

Standard Chartered Bank (Pakistan) Limited

- 9.03% -

Less: Current portion shown under current liabilities

- - -7.02% -3.63% -

Deferred Taxation - - - 0.06% -



Long-term finance-secured 15.09% 7.33% 23.58% 7.33% -Total non-current liabilities

15.09% 7.33% 23.58% 7.33% -

Current-LiabilitiesCurrent portion of long term finance

- - 7.02% 3.63% -

Short term borrowing-secured

21.64% 0.00% 0.00% 15.86% 0.00%

Make-up accrued on loans and other payables

0.75% 0.47% 0.48% 0.17% 0.00%

Services and other payablesCreditors 3.99% 1.91% 3.32% 5.64% 3.84%Accrued liabilities 0.43% 0.31% 0.40% 0.27% 0.22%Inter fund payable 2.42% 6.17% 5.11% 5.93% 5.19%Amount due to reinsurers 10.71% 16.84% 14.41% 9.48% 0.02%Accrued expenses - 0 - 0 0Workers' welfare fund - 0 - 0 -Employees' retirement benefits and other obligations

0.18% 0.23% 0.17% 0.17% 0.00%

Premium received in advance 11.43% 16.37% 10.71% 13.02% 67.75%Technical fee and royalties 2.99% 1.98% 1.34% 3.43% 1.02%Outstanding claims 0.32% 0.47% 3.29% 4.68% 3.74%Unclaimed dividends 0.05% 0.07% 0.06% 0.05% 0.00%Federal excise duty payable 1.31% 0.00% 0.00% 0.00% 0.00%Taxation provisions 0.10% 0.00% 0.00% 0.00% 0.00%Others 0.13% 0.40% 0.73% 0.61% 0.39%Total Services and other payables

34.07% 44.82% 39.53% 43.52% 82.20%

Dividends - - - - 0.04%Total Current Liabilities 56.47% 45.29% 47.03% 63.19% 82.24%Total Liabilities 71.56% 52.62% 70.61% 70.51% 82.24%

EquityAuthorized Capital 20.12% 20000000

0.00%7500000

0.00%7500000

0.00%75000000.00%

Issued, subscribed and paid up capital

14.36% 20.95% 8.60% 4.58% 3.56%

Reserves 18.12% 25.33% 23.97% 17.22% 13.39%Unappropreated profit -4.04% 1.10% -3.18% 7.69% 0.80%Accumulated loss 28.44% 47.38% 29.39% 29.49% 17.76%Total EquityTotal Liabilities And Equity

100.00%

100.00% 100.00% 100.00% 100.00%

Shareholder Equity 0 1 1 0 0



Balance Sheet’s Vertical Common Size Analysis

2009 2008 2007 2006 20050.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%



Total Assets






VERTICAL ANALYSIS [MUHAMMAD MAJEED] 72 | P a g e


OF INCOME STATEMENT

EFU Life Assurance (Pakistan) LtdSummarized Income Statement

For The Year Ended December 31,2009 2008 2007 2006 2005

Rupees In ' 000Sales 100.00

%100.00

%100.00

%100.00

%100.00

%Policy planning 88.13% 81.70% 86.06% 91.38% 92.85%Policy working 0.34% 0.24% 0.25% 0.19% 0.20%Salaries, wages and benefits 1.59% 1.37% 1.54% 0.78% 0.75%Fuel and power 0.35% 0.27% 0.24% 0.14% 0.16%Insurance 0.20% 0.20% 0.17% 0.06% 0.06%Traveling and vehicle running 0.44% 0.42% 0.41% 0.25% 0.23%Policy handling 0.14% 0.11% 0.12% 0.24% 0.25%Claims for reinsurance 0.08% 0.08% 0.16% 0.04% 0.07%Technical assistance 0.22% 0.18% 0.26% 0.07% 0.04%Depreciation on property and equipment

3.47% 2.95% 2.47% 0.45% 0.74%

Amortization on intangible assets

0.28% 0.20% 0.22% 0.05% 0.06%

Royalty 2.03% 2.01% 1.99% 1.92% 1.64%Canteen subsidies 0.08% 0.07% 0.08% 0.07% 0.06%Other expenses 0.01% 0.02% 0.01% 0.01% 0.01%

97.36% 89.83% 94.00% 95.64% 97.12%Opening stock of policy in process

1.33% 1.18% 0.45% 0.27% 0.41%

Less: closing stock of policies in process

-1.75% -1.28% -1.02% -0.30% -0.41%



-0.42% -0.10% -0.57% -0.03% 0.00%Cost of policy plan 96.93% 89.73% 93.43% 95.61% 97.12%Less: On work capitalized -0.18% -0.26% -0.07% -0.14% -0.08%Less: Cost of reinsured policies (0) (0) (0) (0) (0)

96.71% 89.46% 93.35% 95.44% 96.98%Opening stock of finished targets 2.83% 4.57% 6.28% 0.27% 0.44%Closing stock of Finished targets -7.53% -2.72% -3.94% -4.18% -0.41%

-4.70% 1.85% 2.34% -3.91% 0.03%92.00% 91.31% 95.69% 91.52% 97.01%

Cost of sales - Trading plans 6.75% 4.43% 3.72% 3.92% 1.29%Cost of Plans Sold -

98.75%-

95.74%-

99.41%-

95.45%-

98.29%Gross Profit 1.25% 4.26% 0.59% 4.55% 1.71%Less: Distribution and marketing cost

1.34% 1.42% 1.26% 0.58% 0.61%

Administrative expenses 0.99% 0.95% 0.86% 0.52% 0.59%Other operating expenses 2.20% 0.03% 0.38% 0.32% 0.10%Total Expenses -4.53% -2.40% -2.50% -1.42% -1.30%Other operating income 0.46% 0.16% 0.88% 1.47% 1.19%(Loss)/Profit from operation -2.82% 2.02% -1.03% 4.60% 1.60%Provision for impairment on available forsale equity investment

-1.57% -1.59% -1.79% -0.18% -0.04%

(Loss)/Profit before taxation -4.40% 0.43% -2.82% 4.42% 1.56%Taxation -1.56% -0.08% -1.27% -1.67% -0.58%

(Loss)/Profit after taxation -2.84% 0.51% -1.55% 2.75% 0.98%

Earning per share/ (Loss) (2.81) 1 (2.08) 16.79 3.86

Income Statement’s Vertical Common Size Analysis



2009 2008 2007 2006 2005-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

Sales

Cost of Plans Sold

Gross Profit

Total Expenses




Ratio Analysis

RATIOS:

Financial ratios are useful indicators of a firm's performance and financial situation. Financial ratios can be used to analyze trends and to compare the firm's financials to those of other firms. Ratio analysis is the calculation and comparison of ratios which are derived from the information in a company's financial statements. Financial ratios are usually expressed as a percent or as times per period.

It is defined as the systematic use of ratio to interpret the financial statements so that the strength and weaknesses of a firm as well as its historical performance and current financial condition can be determined. The term ratio refers to the numerical or quantitative relationship between two variables.

OBJECTIVE OF RATIOS:

Ratio is work out to analyze the following aspects of business organization-



Solvency- Long term

Short term

Immediate

Stability

Profitability

Operational efficiency

Credit standing

Structural analysis

Effective utilization of resources

Leverage or external financing

ADVANTAGE OF RATIO ANALYSIS Helpful in analysis of Financial Statements. Helpful in comparative Study. Helpful in locating the weak spots of the

business. Helpful in Forecasting. Estimate about the trend of the business. Fixation of ideal Standards. Effective Control. Study of Financial Soundness.



LIMITATIONS OF RATIO ANALYSIS

Comparison not possible if different firms adopt different accounting policies.

Ratio analysis becomes less effective due to price level changes.

Ratio may be misleading in the absence of absolute data.

Limited use of a single data. Lack of proper standards. False accounting data gives false ratio. Ratios alone are not adequate for proper

conclusions. Effect of personal ability and bias of the analyst



Interpretation of Formulas

Short term debt paying ability

Liquidity: “A firm’s ability to satisfy its short-term obligations”.

1. Current Ratio:

“A measure of liquidity calculated by dividing the firm’s current assets by its current liabilities”.

Current Ratio = CurrentAssetsCurrentLiabilities

EFU LIFE ASSURANCE Pakistan LimitedLiquidity Ratios Analysis

2009 2008 2007 2006 2005Current Ratio 0.17:1 0.27:1 0.25:1 0.36: 0.73:1Current Assets (Rs.) 3,929,738 2,435,529 3,681,213 6,269,918 10,286,48

7


Short Term Debt Paying Ability

0.700.79

0.94

1.08 1.06

0.00

0.20

0.40

0.60

0.80

1.00

1.20

2009 2008 2007 2006 2005

Years

Val

ues

Current Ratio


Current Liabilities (Rs.) 5,614,243 3,087,066 3,906,115 5,796,972 9,698,369

Interpretation:The current shows that decreasing a trend after 2006 that means the

firm has insufficiently uses its resources. The current liabilities are increases year to year that shows poor management, as shows in above graph. The current ratios are less then their favorable values.

2. Acid-Test Ratio:Acid-Test Ratio = Current assets – Inventory Current Liabilities


2009 2008 2007 2006 2005Quick Ratio 0.17:1 0.27:1 0.25:1 0.36:1 0.73:1Current Assets (Rs.) 3,929,738 2,435,529 3,681,213 6,269,918 10,286,487Inventory 2,954,091 1,612,696 2,704,946 4,169,120 3,159,153Current Liabilities (Rs.) 5,614,243 3,087,066 3,906,115 5,796,972 9,698,369



0.17

0.27 0.25

0.36

0.73

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

2009 2008 2007 2006 2005

Years

Rat

ios

Quick / Asset test Ratio


0.61

0.000.100.200.300.400.500.600.70

2009 2008 2007 2006 2005


Interpretation:

The quick shows that the current ratio shows decreasing a trend after 2005 that means the firm has insufficiently uses its resources. The current liabilities are increases year to year that shows poor management, as shows in above graph. The quick ratios are less then their favorable values.

3. Cash Ratio:

Cash Ratio = (cash∧cashequilent+marketable sec urities)

currentliabilities

Honda Atlas Car Pakistan LimitedLiquidity Ratios Analysis

2009 2008 2007 2006 2005Cash Ratio 0.00:1 0.08:1 0.06:1 0.17:1 0.61:1Cash and Bank balance

20,487 231,880 219,859 995,462 5,873,987

Current Liabilities 5,614,243

3,087,066

3,906,115

5,796,972

9,698,369



0.61

0.000.100.200.300.400.500.600.70

2009 2008 2007 2006 2005


588,118472,946

2009 2008 2007 2006 2005


Interpretation:

In 2005 the firm has reasonable liquid cash to meet its short term needs but after 2005 firm’s liquid resources are less then their acceptable amounts, which shows firm has very risky position. Eve. In 2009 its cash resources are zero which is very risky. 4. Net Working Capital:

Net Working Capital = current assets – current liabilities


2009 2008 2007 2006 2005Net working Capital (1,684,505) (651,537) (224,902) 472,946 588,118Current Assets 3,929,738 2,435,529 3,681,213 6,269,918 10,286,487Current Liabilities 5,614,243 3,087,066 3,906,115 5,796,972 ,698,369



588,118472,946

2009 2008 2007 2006 2005


Interpretation:

The values of net working capital for 2005 and 2006 are positive and the firm is its normal condition with respect to net working capital. But after 2006 the current liabilities are increases then its current assets which show that risky position of the form.



DEBTPAYING ABILITY


Long Term Liquidity

8.62

67.08

0.0010.0020.0030.0040.0050.0060.0070.0080.00

2009 2008 2007 2006 2005

Rat

ios

1. Times InterestEarned


Long Term Debt Paying Ability:Debt position of a firm indicates the amount of other people’s money used to generate profits. The more debt a firm has, the greater its risk to meet its contractual debts payments and becoming bankrupt.1. Time Interest Earned Ratio:

TIER = Earning Before Interest and Expenses Interest Expense

EFU LIFE ASSURANCE Pakistan LimitedLong Term Debt Paying Ability

2009 2008 2007 2006 2005Time Interest Earned Ratio 1.79:1 1.71:1 1.31:1 8.62:1 67.08:1

EBIT 399,516 399,516

399,516

399,516

399,516

Interest Expense 222,769 233,651

305,491 46,356 5,956


Long Term Liquidity

8.62

67.08

0.0010.0020.0030.0040.0050.0060.0070.0080.00

2009 2008 2007 2006 2005

Rat

ios

1. Times InterestEarned

Long Term Liquidity

0.23 0.54 0.18 0.56

67.08

0.0010.0020.0030.0040.0050.0060.0070.0080.00

2009 2008 2007 2006 2005

Years

Rat

ios

2. Debt ServiceCoverage


Interpretation:

In 2005 the firm took very low amount of loan, so it ha tremendous ability of 67.08 times to meet its interest payments. In 2006 it had get a big amount of loan but still the firm had favorable ratio to meet its interest payments. But 2007 on ward its time interest earned ratio’s values are less then standard an acceptable value that means the firm is in risky position.

2. Debt Service Coverage

= Earning before interest and taxes Lease payment + Interest payment + Principal payment

EFU LIFE ASSURANCE Pakistan LimitedLong Term Debt Paying Ability2009 2008 2007 2006 2005

Debt Service Coverage Ratio

-0.23:1 0.41:1 -0.08:1 1.64:1 44.42:1

EBIT (399,516) 297,268 (176,158) 1,180,060 264,585Interest + Lease Payment + Principal Payment

1,722,769 733,651 2,263,825 718,451 5,956



Interpretation:In 2005 the firm had great ability to meet its fixed interest payments, but after 2005 the firm took big amount of loan, so its ability is to meet is decreases suddenly and now the values are unfavorable and firm is in risky position.

3.Debt Ratio:The ratio of total debt to total assets, generally called the debt ratio, measures the percentage of funds provided by the creditors. The proportion of a firm's total assets that are being financed with borrowed funds.

Debt Ratio: = Total Liabilities Total Assets

Honda Atlas Car Pakistan LimitedLong Term Debt Paying Ability

2009 2008 2007 2006 2005Debt Ratio 0.72:1 0.53:1 0.71:1 0.71:1 0.82:1Total Liabilities 7,114,243

3,587,066 5,864,449

6,469,067

9,698,369

Total Assets 9,942,088

6,816,744 8,305,117

9,174,275

11,792,783



LongTerm Liquidity

0.72

0.53

0.71 0.71

0.82

0.00

0.10

0.20

0.30

0.400.50

0.60

0.70

0.80

0.90

2009 2008 2007 2006 2005

Years

Rat

ios

Debt Ratio

Interpretation:

In 2005, the firm has higher ability to pay its long term funds and it has more financial leverage. From 2006 to onward it has been .73 which is also favorable but in 2005 it has low ability to pay its debts.

4. Debt Equity Ratio:

= Long term debts Shareholder’s Equity




Debt Equity Ratio 0.35:1 0.13:1 0.45:1 0.20:1 0.00:1Long term debts 1,500,000 500,000 1,958,334 672,095 -

Shareholder Equity 4,327,845 3,729,678 4,399,002 3,377,303 2,094,414

Long Term Liquidity

0.35

0.13

0.45

0.20

0.000.00

0.10

0.20

0.30

0.40

0.50

2009 2008 2007 2006 2005

Years

Tim

es Debt/ Equity Ratio

Interpretation:

In 2005, the firm had not taken loan so its debt to equity ratio is 0 while in 2006 it has been increased little bit coz of loan rose. In 2007 the firm’s 45% of resources has been acquired by its debts, in 2008 it has again decreased but in 2009 it is favorable.5. Debt to tangible Assets:

= Total Liabilities Total Assets – Intangible Assets



Long Term Liquidity

0.73

0.53

0.71 0.71

0.82

0.000.100.200.300.400.500.600.700.800.90

2009 2008 2007 2006 2005

Years

Tim

es

Debt To TengibleAssets


Debt Equity Ratio 0.73 0.53 0.71 0.71 0.82Long term debts 7,114,243 3,587,066 5,864,449 6,469,067 9,698,369Shareholder Equity

9,746,258 6,752,108 8,239,214 9,141,073 11,776,856

Interpretation: The liabilities of firm are more then its assets over the five years, but it has better ability to pay its debts in 2005 and then after, in other words the firm had more solvent in pas then present.6. Fixed Assets Coverage Ratio:

= Net Fixed Assets Long Term Debts

EFU LIFE ASSURANCE Pakistan LimitedLong Term Debt Paying Ability

2009 2008 2007 2006 2005Debt Equity

Ratio3.46 7.73 2.08 1.56 0.00

Long term 5,190,53 3,864,52 4,082,95 1,051,72 649,24


Long Term Liquidity

3.46

7.73

2.08 1.560.00

0.00

2.00

4.00

6.00

8.00

10.00

2009 2008 2007 2006 2005

Years

Rat

ios Fixed Asset

Coverg Ratio


debts 5 7 5 3 4Shareholder

Equity1,500,00

0500,000 1,958,33

4672,095 -

Interpretation:

In 2006 the firm had no debt so its fixed asset coverage ratio is zero. From 2006 to 2009 in all years the firm has favorable position but in 2008 its ability to satisfy debts against assets is very good rather then previous years.



ACTIVITY RATIOS

Activity Analysis

Activity ratio are sometimes are called efficiency ratios. Activity ratios are concerned with how efficiency the assets of the firm are managed. These ratios express relationship between level of sales and the investment in various assets inventories, receivables, fixed assets etc.1. Accounts Receivable Turnover

= Net SalesAvg. Trade Receivable

EFU LIFE ASSURANCE Pakistan LimitedActivity Analysis

2009 2008 2007 2006 2005A/R Turnover 16.58 28.98 24.15 23.84Net Sales 14,149,6 14,715,4 17,055,1 25,638,6 16,587,2


Activity Analysis

16.58

28.98

24.15 23.84

13.48

2009 2008 2007 2006 2005

Years

Tim

es Account ReceivableTurnover


46 95 15 98 17Avg. Trade Recievables

853,218 507,852 706,092 1,075,600

1,230,469

Interpretation:

Account receivable turnover is very good in 2005. A/R turnover of 2009 is also acceptable, but of 2006, 2007 and 2008 is poor that shows inefficiencies of management, but it also shows positive signs in 2009, as shown in above graph.

2. Accounts Receivable Turnover in Days

= 360 A/R Turnover


2009 2008 2007 2006 2005A/R Turnover in days

21.71 12.42 14.90 15.10 26.71


Activity Analysis

21.71

12.4214.90 15.10

26.71

0.00

5.00

10.00

15.00

20.00

25.00

30.00

2009 2008 2007 2006 2005

Years

Day

s Account ReceivableTurnover in Days


Days in a year 360 360 360 360 360A/R Turnover 16.583857

828.975951

724.154239

123.836647

513.480402

2

Interpretation:

Account receivable turnover in days is very good in 2005. A/R turnover in days of 2009 is also acceptable, but of 2006, 2007 and 2008 is poor that shows inefficiencies of management, but it also shows positive signs in 2009, as shown in above graph.

3. Working Capital Turnover = Net Sales

Working Capital


2009 2008 2007 2006 2005Working Capital

1.48 2.66 2.25 2.12 0.83


Activity Analysis

1.48

2.66

2.25 2.12

0.83

-

0.50

1.00

1.50

2.00

2.50

3.00

2009 2008 2007 2006 2005

Years

Tim

es Working CapitalTurnover


TurnoverNet Sales 14,149,6

4614,715,4

9517,055,1

1525,638,6

9816,587,2

17Working Capital

9543981 5522595 7587328 12066890

19984856

Interpretation:

In 2005 working capital turnover shows favorable position rather then in coming years. The financial year 2008 shows a very risky and unfavorable position, but in 2009 calculation shows that company again track.

4. Fixed Assets Turnover

= Net Sales Net fixed Assets


2009 2008 2007 2006 2005Fixed Assets

Turnover2.73 3.81 4.18 24.38 25.55

Net Sales 14,149,646

14,715,495

17,055,115

25,638,698

16,587,217


Activity Analysis

2.73 3.81 4.18

24.38 25.55

0.00

5.00

10.00

15.00

20.00

25.00

30.00

2009 2008 2007 2006 2005

Years

Tim

es Fixed AssetsTurnover


Net Fixed Assets

5,190,535

3,864,527

4,082,955

1,051,723

649,244

Interpretation:

Figures shows that the company had efficiently and effectively utilize its assets to generate revenues, but after this we can see a downfall. Asset had not much role to generate revenues after 2006 which shows poor performance of management and a bad situation of the company.

5. Total Assets Turnover

= Sales Avg. Total Assets

The amount of sales generated for every dollar's worth of assets. It is calculated by dividing sales in dollars by assets in dollars. Asset



turnover measures a firm's efficiency at using its assets in generating sales or revenue - the higher the number the better. It also indicates pricing strategy: companies with low profit margins tend to have high asset turnover, while those with high profit margins have low asset turnover.

Honda Atlas Car Pakistan LimitedActivity Analysis

2009 2008 2007 2006 2005Total Assets Turnover

1.42 2.16 2.05 2.79 1.41

Net Sales 14,149,646 14,715,495

17,055,115

25,638,698

16,587,217

Avg. Assets 9,942,088 6,816,744 8,305,117 9,174,275 11,792,783

Activity Analysis

1.42

2.16 2.05

2.79

1.41

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2009 2008 2007 2006 2005

Years

TIm

es Total AssetsTurnover

Interpretation:

Figures shows that the firm has effectively utilize its assets in 2005 and 2009, but not in remaining years which shows poor management and, market downfall. As shown in above graph.


Profitability Analysis

1.25%

4.26%

0.59%

4.55%

1.71%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2009 2008 2007 2006 2005

%ag

e

Gross Profit Margin


RATIOS ANALYSISPROFITABILITY

ANALYSIS

1. Gross Profit MarginGross Profit/ Net Sales*100

Honda Atlas Car Pakistan LimitedProfitability Analysis

2009 2008 2007 2006 2005Total Assets Turnover 1.25% 4.26% 0.59% 4.55% 1.71%Gross Profit

627,494 99,934

1,167,514

283,035

627,494


14,715,495

17,055,115

25,638,698

16,587,217



1.25%

4.26%

0.59%

4.55%

1.71%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2009 2008 2007 2006 2005

%ag

e

Gross Profit Margin


2.02%

4.60%

1.60%

-4.00%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2009 2008 2007 2006 2005

%ag

e

Operating Profit Margin


Interpretation:Above figures Shows Company is very profitable in 2006 and 2008. the reason behind 2008 is downsizing. The profit margin of 2005, 2007 and 2009 is very less which is unfavorable. As shown in above graph.

2. Operating Profit MarginOperating Profit / Net Sales * 100

Honda Atlas Car Pakistan LimitedProfitability Analysis

2009 2008 2007 2006 2005Total Assets

Turnover-2.82% 2.02% -1.03% 4.60% 1.60%

Operating Profit

(399,516)

297,268 (176,158)

1,180,060

264,585


14,715,495

17,055,115

25,638,698

16,587,217



2.02%

4.60%

1.60%

-4.00%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2009 2008 2007 2006 2005

%ag

e

Operating Profit Margin


0.43%

4.42%

1.56%

-5.00%

-4.00%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2009 2008 2007 2006 2005%ag

e

Profit Before Tax Margin


Interpretation:Company is in very bad position in 2007 and in 2009, in these years operating profit margin is negative. In 2006 the operating profit margin is on the peak and shows very favorable position. While in other years it is normal, as shown in above graph.

3. Profit before Tax MarginProfit before tax / Net Sales *100

EFU LIFE ASSURANCE Pakistan LimitedProfitability Analysis


-4.40% 0.43% -2.82% 4.42% 1.56%

Profit before tax

(622,285) 63,617 (481,649) 1,133,704 258,629


14,715,495

17,055,115

25,638,698

16,587,217



0.43%

4.42%

1.56%

-5.00%

-4.00%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2009 2008 2007 2006 2005%ag

e

Profit Before Tax Margin


Interpretation:Company is in very bad position in 2007 and in 2009, in these years profit before tax margin is negative. In 2006 the profit before tax margin is on the peak and shows very favorable position. While in other years it is normal, as shown in above graph.

4.Net Profit Margin = Net Profit / Total Assets

Net Profit Margin gives us the net profit that the business is earning per dollar of sales. This margin indicates the profit after all the costs have been incurred it shows that what % of turnover is represented by the net profit. An increase in the ratios indicates that a firm is producing higher net profit of sales than before.



-2.84% 0.51% -1.55% 2.75% 0.98%

Net Profit (401,833) 75,010 (264,540) 705,294 162,179Total Assets 14,149,64

614,715,49

517,055,11

525,638,69

816,587,21

7




-2.84%

0.51%

-1.55%

2.75%

0.98%

-4.00%

-3.00%-2.00%

-1.00%0.00%

1.00%

2.00%3.00%

4.00%

2009 2008 2007 2006 2005

Years

%ag

e

Net Profit Margin

Interpretation:Company is in very bad position in 2007 and in 2009, in these years profit before tax margin is negative. In 2006 the profit before tax margin is on the peak and shows very favorable position. While in other years it is normal, as shown in above graph.

5. Total Assets Turnover = Net Sales / Total Assets



1.42 2.16 2.05 2.79 1.41


14,715,495

17,055,115

25,638,698

16,587,217

Total Assets 9,942,088

6,816,744

8,305,117

9,174,275

11,792,783




1.42

2.16 2.05

2.79

1.41

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2009 2008 2007 2006 2005

Years

Rat

ios Total Assets

Turnover

Interpretation:

In 2005 and in 2009 the firm has effectively utilized its assets to generate resources to generate profits but in other financial it has unable to effectively its resources, which show poor performance of management over the time as shown in above graph.

6. Return on Assets



-4.04%

1.10%

-3.19%

7.69%

1.38%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

2009 2008 2007 2006 2005

Years

%ag

e

Return on Assets


Net Income / total Assets * 100


2009 2008 2007 2006 2005Return on assets -4.04% 1.10% -3.19% 7.69% 1.38%Net Income (401,833) 75,010 (264,540) 705,294 162,179Total Assets 9,942,088 6,816,744 8,305,117 9,174,275 11,792,783

Interpretation:

Return on assets in 2007 and 2009 is negative which shows unfavorable position and poor management and downfall in the industry but in other years it is favorable. As shown in the above graph

7. Sales to Fixed Assets

=Net Sales/ Fixed Assets – WIP


Profitability Analsis

286.29%400.31%436.24%

2627.89%2857.19%

0.00%

500.00%

1000.00%

1500.00%

2000.00%

2500.00%

3000.00%

3500.00%

2009 2008 2007 2006 2005

Years

%ag

e

Sales To Fixed Assets



2009 2008 2007 2006 2005Sales to fixed assets

286.29% 400.31% 436.24% 2627.89% 2857.19%

Net sales 14,149,646

14,715,495

17,055,115

25,638,698

16,587,217

Fixed assets - WIP

4,942,351 3,676,031 3,909,547 975,637 580,543

Interpretation:

Honda had effectively use its fixed assets to generate sales in 2005 and 2006 but after this the management become unable to utilize its resources due to downfall in industry and bad political situation of Pakistan.. as shown in above graph.

8. Return on InvestmentEarning before Interest and Tax



-0.04

0.04

-0.02

0.13

0.02

-0.06-0.04-0.020.000.020.040.060.080.100.120.14

2009 2008 2007 2006 2005

Years

Rat

ios

Return on Investment


Average Total Assets


2009 2008 2007 2006 2005Return on investment

-0.04 0.04 -0.02 0.13 0.02

EBIT 9,942,088

6,816,744

8,305,117

9,174,275

11,792,783

Avg. Total assets

4,942,351

3,676,031

3,909,547

975,637 580,543

Interpretation:


Profirability Analysis

-0.04

0.01

-0.03

0.08

0.01

-0.06

-0.04

-0.02

0.00

0.02

0.04

0.06

0.08

0.10

2009 2008 2007 2006 2005

Years

Rat

ios

Return on Equity


In 2007 and 2009 the company face –ve return due bad situation of the country but in remaining years the company gain some returns but not up to the mark. As shown above figure.

9. Return on EquityHonda Atlas Car Pakistan Limited

Profitability Analysis2009 2008 2007 2006 2005

Return on investment

-0.04 0.01 -0.03 0.08 0.01

EBIT (401,833) 75,010 (264,540) 705,294 162,179Avg. Total assets 9,942,088 6,816,744 8,305,117 9,174,275 11,792,783

Interpretation:



Return on equity is normal in 2005 and 2008 and good in 2006 but it become risky in the financial year of 2007 and 2009 due to bad country situation and poor management. As shown in above figure and table.

10. Return on Operating Assets


2009 2008 2007 2006 2005Return on Operating Assets

-4.10% 4.40% -2.14% 12.91% 2.25%

EBIT (401,833) 75,010 (264,540) 705,294 162,179Operating assets 9,746,258 6,752,108 8,239,214 9,141,073 11,776,856

Profitabolity Analysis

-4.10%

4.40%

-2.14%

12.91%

2.25%

-6.00%-4.00%-2.00%0.00%2.00%4.00%6.00%8.00%

10.00%12.00%14.00%

2009 2008 2007 2006 2005

Years

%ag

e Return on OperatingAssets

Interpretation:


=( Operating Income ) 100Operating Assets

Investor Anlatsis

16.79

-5.00

0.00

5.00

10.00

15.00

20.00

2009 2008 2007 2006 2005


Return on operating assets in 2005 is 2.25% and in increasing trend till 2006 which is 12.91%. It is negative in 2007 which is -2.14% in 2008 return on operating assets is 4.04% and become negative in 2009 which is -4.10% due to weak policies.

Earning Per Share (EPS)

Shows the earnings available to the owners of each share of common stock

EFU LIFE ASSURANCE Pakistan LimitedInvestor Analysis

2009 2008 2007 2006 2005Earning Per Share -2.81 0.53 -3.71 16.79 3.86Net income - Preferred stock dividend

(401,833) 75,010 (264,540) 705,294 162,179

Number of outstanding shares

142,800 142,800 71,400 42,000 42,000


= Net income - Preferred stock dividendNumber of outstanding shares

Investor Anlatsis

16.79

-5.00

0.00

5.00

10.00

15.00

20.00

2009 2008 2007 2006 2005


Interpretation:

Earning per share in increasing trend from 2005 to 2006 and the difference is 12.93 which is a handsome increase in EPS it is due to high sales revenue after 2006 EPS in decreasing trend and in 2009 there is negative impact on EPS.

Price Earning Ratio

=


2009 2008 2007 2006 2005Price Earning Ratio

-2.81 0.53 -3.71 16.79 3.86

Market price per 12 44 58 112 74


Market price per shareEarning per share

Investor Analysis

-4.26

83.76

-15.65

6.6719.16

-40.00

-20.00

0.00

20.00

40.00

60.00

80.00

100.00

2009 2008 2007 2006 2005

Years

Tim

es

Price Earning Ratio


shareEarning per share -2.81 0.53 -3.71 16.79 3.86

Interpretation:Price earning ratio is achieved by dividing market price per share with EPS it is the amount that investors are willing to pay for each dollar of a firm’s earnings. Higher the P/E ratio greater is the investor confidence. P/E in decreasing trend from 2005 to 2008 as shown in graph, in 2008 P/E ratio is 83.76 and in 2009 become negative.

Dividends Pay out Ratio

=


2009 2008 2007 2006 2005Dividend Payout Ratio

0 0 0 0 181.28%

Dividend per 0 0 0 0 7


Dividend per shareEarning per share


shareEarning per share 142,800 142,800 71,400 42,000 42,000

Investor Analysis

0 0 0 0

181.28%

0

0.5

1

1.5

2

2009 2008 2007 2006 2005

Years

%ag

e

Dividend Payout Ratio

Interpretation:Dividends pay out ratio show the firm ability to pay dividend. Greater the dividend pay out ratio greater the firm ability to pay dividend. Dividend payout ratio is 181.28% only in 2005 and in decreasing trend towards 2009.

Book Value per Share

=

Honda Atlas Car Pakistan LimitedInvestor Analysis

2009 2008 2007 2006 2005Book Value per Share

30 26 62 80 50

Total Shareholder's equity – P.S

4,327,845

3,729,678

4,399,002

3,377,303

2,094,414


Total Shareholder's equity - preferred stock equityNumber of outstanding common shares


No of outstanding common shares

142,800 142,800 71,400 42,000 42,000

Invester Analysis

30 26

62

80

50

0

1020

3040

5060

708090

2009 2008 2007 2006 2005

Years

Rs Book Valu Per Share

Interpretation:It relates the market value of the firm’s share to their book value. It provides an assessment of how investor views the firm’s performance. In 2005 book value of Honda Atlas shares is Rs 50 and in increasing trend till 2006 after this it is in decreasing trend by 2009.



Conclusion

If we look at the overall performance of the company, then it is not hard to say that the company was in a good position whether it is liquidity wise or

profitability wise.By and large, the company is performing not so well and is facing any

serious imminent financial or management failure.Investing in the company is not feasible in current situation for the

opportunity seekers.



FutureRecommendations



FUTURE RECOMENDATIOS

To achieve its mission EFU LIFE ASSURANCE LTDEFU LIFE ASSURANCE LTD will have to:

Give highest priority to Health and Safety policies, Environment and Ethical matters.

Ensure our products provide maximum value to customers by maintaining dependable trust, consistent quality, and reliability.

Uphold excellent service levels to foster long-term relationships with customers and aliens.

Achieve the highest possible operating efficiencies and lowest costs, and expand the business through selective capacity increase and new policy plans launches.

Develop and retain a team of highly capable people dedicated to delivering the mission.

Have a close look on their competitors and having flexible strategies. Never compromise with quality which is major strength of EFU Life

Assurance ltd. Maintain financial strength and make good financial structure. More and more innovations. Maximum entrance in potential and emerging markets.



REFERENCES

Internet

www.allprojectreports.com


http://www.allprojectreports.com/


www.scribd.com

www.ministryofcommerce.com.pk

Books1. Principles of Managerial Finance (Eleventh Edition) By Lawrence J. Gitman

Reports1. Annual Report EFU LIFE ASSURANCE LimitedEFU LIFE ASSURANCE Limited 20052. Annual Report EFU LIFE ASSURANCEEFU LIFE ASSURANCE Limited 20063. Annual Report EFU LIFE ASSURANCE EFU LIFE ASSURANCE Limited 20074. Annual Report EFU LIFE ASSURANCE EFU LIFE ASSURANCE Limited 20085. Annual Report EFU LIFE ASSURANCE EFU LIFE ASSURANCE Limited 2009

Newspapers1. Dawn 2. The News3. Business Recorder


http://www.ministryofcommerce.com.pk/

http://www.scribd.com/


ANNEXURE




Summarized Balance SheetAs on December' 31

2009 2008 2007 2006 2005( Rupees in ' 000' )

AssetsNon-Current Asets

Fixed Assts

Leased hold land 417,319

417,319

417,319

417,319

51,553

Furniture and Equipment 98,454

90,640

84,404

45,801

35,026

Vehicles 150,627

118,166

116,867

95,020

69,362

Equipments 72,026

68,159

62,384

47,175

43,228

Computers 45,380

39,410

33,149

26,014

17,149

Total Fixed assets (at cost) 783,806

733,694

714,123

631,329

216,318

- Accumulated Depreciation (2,181,192)

(1,812,178)

(1,364,242)

(1,087,356)

(971,094)

Net Fixed Assets (1,397,386)

(1,078,484)

(650,119)

(456,027)

(754,776)

Drawing 192,803

61,059

60,973

33,202

15,927

Software 3,027

3,577

4,930

-

-

Intengible assets 195,830

64,636

65,903

33,202

15,927

Civil works -

-

1,335

741,890

-

Advance for laons -

-

-

66,171

-

Others 183

5,008

2,657

9,832

1,253

Capital work-in-progress 183

5,008

3,992

817,893

1,253

Long term investment -

-

-

509,039

758,419

Long term loans and advances 31,503

29,050

28,105

36,163

36,060

Long term deposits 4,042

4,091

4,091

-

-

Defferd taxation 571,214

338,165

251,008

-

17,814

Total Non-Current Assets (594,614)

(637,534)

(297,020)

940,270

74,697

Current Assets

Premium due but unpaid 101,942

83,101

50,316

29,736

22,878

Work in process 248,184

188,496

173,408

76,086

68,701

Finished goods

-Self created 1,065,836

400,312

672,368

1,071,827

68,400

-Services including in transit 377,068

258,911

373,299

190,853

-

Stoke in trade 1,691,088

847,719

1,219,075

1,338,766

137,101

Considered plans -

-

-

-

-

efu cmplt

Documents

page efu life assurance

life insurance industry

largest life company

efu life assurance ltdpakistan

innovative insurance

individual life business

efu lif e

insurance companies