project on aviva

7/29/2019 PROJECT ON AVIVA

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APROJECT REPORTON

ANALYSIS OF PROFITIBILITY ANDFINANCIAL POSITION OF AVIVA LIFEINSURANCESUBMITTED FOR THE PARTIAL FULFILLMENT OFTHEMASTER OF BUSINESS ADMINISTRATIONPROGRAMME

2008-2010UNDER GUIDANCESUBMITTED BYPREFACE

A comprehensive study ofWORKINGCAPITAL is a supplement to the theoreticalclassroom knowledge. It helps to understandthe subject more precisely and practicalimplications of various concepts.This report tries to outline idea of professionalworld and helps in understanding thepragmatic

aspect of management function. Ownobservations are significant towards thecontribution inlearning the subject. The report is thereforedesigned as a reference of organizationfunctioning

rather than copy down instrument.


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THE PURPOSE OF PROJECT IS TO MAKEME FAMILIAR WITH DAY TO DAYFUNCTIONING OF BUSINESS. THEPRESENT REPORT IS AN EFFORT IN THISDIRECTION.My humble endeavor and motive in presentingthe project report is to impart a balancedintroduction and knowledge of Financial

Analysis, which is an important integral part offinancial management.It is hoped that this project will serve assupportive document to research worker asefforts hasbeen tired to make this report an informative,

stimulating, and self-explanatory.2ACKNOWLEDGMENTNothing concrete can be achieved without anoptimal combination inspiration andperspiration.

No work can be accompanied without takenthe guidance of experts. It is only critics fromingenious that help transform a product into aquality product.For this, I am grateful to Mr. RITESHAGARWAL for his constant encouragement

and


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invaluable critical suggestions given duringthe review meetings. His timely advice andhelpproved his commitment and welfare of hisstudents and the institute as a whole.Last but not the least, our sincere thanks to allthe members who were a vital thrust to ourthoughts and needs throughout the functions

assigned to group to get done and prove ourbest.Finally thanks to others at KCMT, who put innumerous hours to make the intangibletangibleANKIT AGARWAL

3CONTENT

Certificate 1

Preface 2

Acknowledgement 3

Objective 5

Introduction 6Company Profile 7

Literature & Review 12

Research Methodology 37

Financial Statements 39-41

Data Representation 49


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Conclusion 56

Finding 57

Limitation 58Bibliography 5945OBJECTIVEThe main objective of this project is to

understand the financial position of AVIVALIFE INSURENCE and to know the impact ofprofitability on its market value. Theseare the primary and secondary objective if myproject.With the help of this project I can understand

that how I can analyses the financialstatement of any company and what are theratios any key indicators by which anyonecan understand the financial status ofcompany.Aviva Life Insurance India

6It is a private insurance company formed fromcollaboration between the Avivainsurance group of UK and the Daburgroup,one of India's oldest and top producers oftraditional health care products.Aviva's

products are meant to provide customers


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flexibility, transparency and value for money.

To demonstrate our commitment to "One

Aviva, twice the value" we are aiming todouble earnings per share by 2012.

This ambition is based on total IFRS return,including investment volatility andnonoperatingitems over the weighted average number of

shares.COMPANY PROFILE7Aviva insurance group in UK with a historydating back to 1696, today stands as oneof the leading provider of life and pension

products to Europe and other parts of theworld. The history ofAviva Life InsuranceIndia starts at 1834 during nationalizationwhen Aviva was the largest foreign insurancegroup in terms of the compensation paidby the Indian Government. In 1995 Aviva was

the first foreign insurance company tostart its representative office in India. Atpresent in Aviva Life InsuranceIndia, the Aviva group is a 26% share holderand the Daburgroup holds 74% shares inthe joint venture.


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The products ofAviva insurance group ofIndia are:

LifeLongLifeSaverorEasyLife Plus

Young Achiever

LifeBond and LifeBond Plus

PensionPlus

LifeShield

Freedom LifePlanLifeBond5The fund management operations ofAvivaLife Insurance India are controlled fromMumbai and the fund options includesUnitized With-Profits Fund and fourUnit

Linked funds:Protector Fund - The fund comprises ofdebt securities in the range of 60-100%,equities in the range of 0-20% and moneymarket and cash in the range of 0-20%.

Secure Fund - The fund comprises of debtsecurities in the range of 50-100%,equities in the range of 0-20% and moneymarket and cash in the range of 0-20%.

Balanced Fund - The fund comprises ofdebt securities in the range of 50-90%,


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equities in the range of 0-45% and moneymarket and cash in the range of 0-10%.8

Growth Fund - The fund will comprise ofdebt securities in the range of 0-50%,equities in the range of 0-85% and moneymarket and cash in the range of 0-20%.These funds provide investment security to

the capital of the customers.Through their association with Basix (a microfinancial institution) and otherNGOs, Aviva Life Insurance India havebeen able to reach out to thoseunderprivileged who had no access to

insurances till day.In Aviva Life Insurance India, thus, bycombining protection and long term savingsthe customers can safeguard and provide lifeproducts for their family with theirchanging needs. Aviva is the worlds fifth-

largest insurance group and the largestinsurance services provider in the UK.We are one of the leading providers of life andpension products in Europe and areactively growing our long-term savingsbusinesses in Asia Pacific and the USA. Its

main


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activities are long-term savings, fundmanagement and general insurance.Vision: One Aviva, twice the value.By working together across our businesses,we will optimize our performance in theglobal marketplace and maximize the valuewe can generate for all our stakeholders.9

INTRODUCTIONAN INTRODUCTION TO INSURANCESECTOR IN INDIAInsurance in India started without anyregulation in the Nineteenth Century. Itwas a typical story of a colonial era: a few

British insurance companies dominating themarket serving mostly large urban centres.After the independence, it took a dramaticturn. Insurance was nationalized. First, the lifeinsurance companies were nationalized in1956, and then the general insurance

business was nationalized in 1972. Only in1999private insurance companies have beenallowed back into the business of insurancewitha maximum of 26% of foreign holding. In what

follows, we describe how and why of


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regulation and deregulation. The entry of theState Bank of India with its proposal ofbank assurance brings a new dynamics in thegame. We study the collective experienceof the other countries in Asia alreadyderegulated their markets and have allowedforeigncompanies to participate. If the experience of

the other countries is any guide, thedominance of the Life Insurance Corporationand the General Insurance Corporation isnot going to disappear any time soon.Insurance under the British RajLife insurance in the modern form was first set

up in India through a Britishcompany called the Oriental Life InsuranceCompany in 1818 followed by the BombayAssurance Company in 1823 and the MadrasEquitable Life Insurance Society in 1829.All of these companies operated in India but

did not insure the lives of Indians. Theywere there insuring the lives of Europeansliving in India. Some of the companies thatstarted later did provide insurance for Indians.But, they were treated as "substandard"and therefore had to pay an extra premium of

20% or more. The first company that had


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policies that could be bought by Indians with"fair value" was the Bombay Mutual LifeAssurance Society starting in 1871.The first general insurance company, TritonInsurance Company Ltd., wasestablished in 1850. It was owned andoperated by the British. The first indigenousgeneral insurance company was the Indian

Mercantile Insurance Company Limited setup in Bombay in 1907. By 1938, the insurancemarket in India was buzzing with 176companies (both life and non-life). However,the industry was plagued by fraud. Hence,10

a comprehensive set of regulations was put inplace to stem this problem (see Table 1).By 1956, there were 154 Indian insurancecompanies, 16 non-Indian insurancecompanies and 75 provident societies thatwere issuing life insurance policies. Most of

these policies were cantered in the cities(especially around big cities like Bombay,Calcutta, Delhi and Madras). In 1956, the thenfinance minister S. D. Deshmukhannounced nationalization of the lifeinsurance business.

Monopoly Raj


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The nationalization of life insurance wasjustified mainly on three counts.(1) It was perceived that private companieswould not promote insurance in rural areas.(2) The Government would be in a betterposition to channel resources for saving andinvestment by taking over the business of lifeinsurance.

(3) Bankruptcies of life insurance companieshad become a big problem (at the time oftakeover, 25 insurance companies werealready bankrupt and another 25 were on theverge of bankruptcy). The experience of thenext four decades would temper these

views.11AN OVERVIEW OF INSURANCE INDUSTRYInsurance has a long history in India. LifeInsurance in its current form was introducedin 1818 when Oriental Life Insurance

Company began its operations in India.GeneralInsurance was however a comparatively lateentrant in 1850 when Triton Insurancecompany set up its base in Kolkata. History ofInsurance in India can be broadly


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bifurcated into three eras: a) PreNationalization b) Nationalization and c) PostNationalization. Life Insurance was the first tonationalize in 1956. Life InsuranceCorporation of India was formed byconsolidating the operations of variousinsurancecompanies. General Insurance followed suit

and was nationalized in 1973. GeneralInsurance Corporation of India was set up asthe controlling body with New India,United India, National and Oriental as itssubsidiaries. The process of opening up theinsurance sector was initiated against the

background of Economic Reform processwhich commenced from 1991. For thispurpose Malhotra Committee was formedduringthis year who submitted their report in 1994and Insurance Regulatory Development Act

(IRDA) was passed in 1999. ResultantlyIndian Insurance was opened for privatecompanies and Private Insurance Companyeffectively started operations from 2001.12LITRATURE REVIEW

Insurance Market- Present:


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The insurance sector was opened up forprivate participation four years ago. For yearsnow, the private players are active in theliberalized environment. The insurance markethave witnessed dynamic changes whichincludes presence of a fairly large number ofinsurers both life and non-life segment. Mostof the private insurance companies have

formed joint venture partnering wellrecognized foreign players across the globe.There are now 29 insurance companiesoperating in the Indian market 14 private lifeinsurers, nine private non-life insurers and sixpublic sector companies. With many more

joint ventures in the offing, the insuranceindustry in India today stands at a crossroadsas competition intensifies and companiesprepare survival strategies in scenario.There is pressure from both within the countryand outside on the Government to

increase the Foreign Direct Investment (FDI)limit from the current 26% to 49%, whichwould help JV partners to bring in funds forexpansion.There are opportunities in the pensions sectorwhere regulations are being framed. Less


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than 10 % of Indians above the age of 60receive pensions. The IRDA has issued thefirst license for a standalone health companyin the country as many more players waitto enter. The health insurance sector hastremendous growth potential, and as itmaturesand new players enter, product innovation

and enhancement will increase. Thedeepening of the health database over timewill also allow players to develop and priceproducts for larger segments of society.State Insurers Continue To Dominate Theremay be room for many more

players in a large underinsured market likeIndia with a population of over one billion.But the reality is that the intense competitionin the last five years has made it difficultfor new entrants to keep pace with the leadersand thereby failing to make any impact in

the market.13Also as the private sector controls over26.18% of the life insurance market and over26.53% of the non-life market, the publicsector companies still call the shots.


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The countrys largest life insurer, LifeInsurance Corporation of India (LIC), had ashareof 74.82% in new business premium incomein November 2005.Similarly, the four public-sector non-lifeinsurers New India Assurance, NationalInsurance, Oriental Insurance and United

India Insurance had a combined marketshareof 73.47% as of October 2005. ICICIPrudential Life Insurance Company continuestolead the private sector with a 7.26% market

share in terms of fresh premium, whereasICICI Lombard General Insurance Companyis the leader among the private non-lifeplayers with a 8.11% market share. ICICILombard has focused on growing the marketfor general insurance products and increasing

penetration within existing customersthrough product innovation and distribution.Reaching Out To Customers No doubt, thecustomer profile in the insuranceindustry is changing with the introduction oflarge number of divergent intermediaries


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such as brokers, corporate agents, andbancassurance.The industry now deals with customers whoknow what they want and when, and aremore demanding in terms of better serviceand speedier responses. With the industry allset to move to a detariffed regime by 2007,there will be considerable improvement in

customer service levels, product innovationand newer standards of underwriting.Intense Competition In a de-tariffedenvironment, competition will manifest itselfin prices, products, underwriting criteria,innovative sales methods and

creditworthiness.Insurance companies will vie with each otherto capture market share through betterpricing and client segmentation.The battle has so far been fought in the bigurban cities, but in the next few years,

increased competition will drive insurers torural and semi-urban markets.14Global Standards While the world is eyeingIndia for growth and expansion, Indiancompanies are becoming increasingly world

class. Take the case of LIC, which has set


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its sight on becoming a major global playerfollowing a Rs280-crore investment fromthe Indian government. The company nowoperates in Mauritius, Fiji, the UK, SriLanka, and Nepal and will soon startoperations in Saudi Arabia. It also plans toventureinto the African and Asia-Pacific regions in

2006.The year 2005 was a testing phase for thegeneral insurance industry with a series ofcatastrophes hitting the Indian sub-continent.However, with robust reinsurance programs inplace, insurers have successfully

managed to tide over the crisis without anyadverse impact on their balance sheets.With life insurance premiums being just 2.5%of GDP and general insurance premiumsbeing 0.65% of GDP, the opportunities in theIndian market place is immense. The next

five years will be challenging but those thatcan build scale and market share willsurvive and prosper.15SWOT ANALYSISThe SWOT analysis of Insurance sector is as

follows:-


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1. Strength-Very good policies of lifecoverage.2. Weaknesses:-unable to convince thepeople about the products. There are notmuch advisors for the insurance companies3. Oppourtunities:-Untapped rural sector andsmall towns4. Threats:-growing competition from larger

MNC's.16INDIAN COMPANIES WITH FOREIGNPARTNERSHIPIndian Partner International PartnerAlpic Finance Allianz Holding, Germany

Tata American Int. Group, USCK Birla Group Zurich Insurance, SwitzerlandICICI Prudential, UKSundaram Finance Winterthur Insurance,SwitzerlandHindustan Times Commercial Union, UK

Ranbaxy Cigna, USHDFC Standard Life, UKBombay Dyeing General Accident, UKDCM Shriram Royal Sun Alliance, UKDabur Group Allstate, USKotak Mahindra Chubb, US

Godrej J Rothschild, UK


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Sanmar Group Gio, AustraliaCholamandalam Guardian Royal Exchange,UKSK Modi Group Legal & General, Australia20th Century Finance Canada LifeM A Chidambaram Met LifeVysya Bank ING17

Directors ReportREVIEW OF OPERATIONS:The turnover of the company during the yearis Rs.50.28.Lacs compared to 1423.33Lacs. Showing decrease by Rs.1373.05 Lacsfrom the corresponding year ended 31st

March, 2007 due to fall in marketingconditions.FIXED DEPOSIT:The company has not accepted any fixeddeposits during the year.AUDITORS:

Auditors of the company M/s. J. P. Saboo &Co. Chartered Accountants of Surat, willretire at the conclusion of the ensuing 24thAnnual Genera Meeting from the office ofthe Auditors and being eligible offerthemselves for re-appointment from the end of

the


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ensuing Annual General Meeting till the.conclusion of the next Annual General Meetinat a remuneration payable as may bedecided. As required under the provisions ofSection 224(lB),the Company has receivedcertificate that the. appointment, if madeshall be within the limits as set down in saidsection.

DIRECTORS;In accordance with Article 116 of the Articlesof Association of the company, Shri JatinGupta & Sbri Pawan Gupta retire by rotationand being eligible, offers himself for-theirre-appointment. The Board recommends their

re-appointment Shri Mohan Gupta, ShriShyamsunder Gupta and Shri SunilkumarGupta had resigned as Directors of theCompany w.cf. 15-12-2007,15- 12-2007 and05-01-2008 respectively.PARTICULARS OF EMPLOYEE :

None of the employee is in receipt ofremuneration as prescribed under Companies(Particulars of Employees) Rule, 1975 andhence information as required under section217{2AA) read with Companies (Particulars ofEmployees) Rule, 1975 not provided

herewith.


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18CONSERVATION OF ENRGY,TECHNOLOGY ABSORPTION, FOREIGNEARNING & OUTGO:The particulars prescribed by the Companies(Disclosure of Particulars in the Report ofBoard of Directors) Rules, 1988 as toconservation of energy; technology absorption

isNot Applicable since project is yet to start.There is no Foreign Exchange earning andOutgo.INSURANCE:The company has made necessary

arrangements for adequately insuringinterests invarious properties.DIRECTORS RESPONSIBILITYSTATEMENT:As required under section 217(2AA) of the

Companies Act, 1956 your Directors state:1. That in the preparation of the annualaccounts, the applicable accountingstandardshave been followed.2. That the accounting policies selected and

applied are consistent and the judgments


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and estimates made are reasonable andprudent so as to give a true and fair view ofthestate of affairs of the company at the end ofthe financial year ended 31st March, 2008and of the profit or loss of the company forthat period.3. That proper and sufficient care has been

taken for the maintenance of adequateaccounting records in accordance with theprovisions of the Companies Act, 1956 forsafeguarding the assets of the company andfor preventing and detecting fraud and otherirregularities.

4. That the annual accounts have beenprepared on a going concern basis.CORPORATE GOVERNANCE REPORT:Your company is committed to maintain thehighest standards of corporate governance.Your Directors adhere to the requirements set

out by the Securities and Exchange Boardof India in respect of Corporate GovernancePractices and have implemented all19stipulations prescribed, Report on CorporateGovernance as stipulated under clause 49


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of the listing agreement with stock exchangeis annexed which forms part of the annualreport. Certificate from Statutory Auditors,confirming compliance of conditions ofcorporate governance as stipulated underaforesaid clause 49 is annexed to this report.COMPLIANCE CERTIFICATE :The Company has availed Secretarial

Compliance Certificate for the under reviewformthe Practicing Company Secretary pursuant tothe proviso of section 383 A of theCompanies Act, 1956 and a copy of the sameis attached with this report.

LISTING:The shares of your company are listed onBombay Stock Exchange. The listing fees forthe year 2008-09 have been paid to TheBombay Stock Exchange Limited.DEPOSITORY SYSTEM:

Your company has established electronicconnectivity with the both the depositories,NSDL & CDSL. In view of numerousadvantages offered by the depository system,members of the company are requested toavail the facility of dematerialization of the

companys shares on NSDL SCDSL.


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ACKOWLEDGEMENT;The Directors place on record theappreciation and gratitude for the co-operations andassistance extended by the Banks,Government etc. The company will make alleffort tomeet the aspiration of its shareholders and

wish to sincerely thank them for their wholehearted co- operation and support at all times.Find your favourite sections instantly with oneswift search StockrecommendationsSmart stock picks to build awealthy portfolio Chat with expertsReal

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investing in sharesScared of investing inshares? Don't be. We make it easy. TaxcalculatorSee how the budget impacted yourpocket.Going ConcernAs a consequence of the Companysconsiderable financial resources, the directorsbelieve that the Company is well placed to

manage its business risks successfullydespite the current uncertain economicoutlook.After making enquiries, the directors have areasonable expectation that theCompany has adequate resources to continue

in operational existence for theforeseeable future. For this reason, theycontinue to adopt the going concernbasis in preparing the financial statements.The Company is expected to continue togenerate positive cash flows on its own

account for the foreseeable future. TheCompany participates in the AvivaGroups centralized treasury arrangementsand so shares banking arrangementswith fellow subsidiaries.The directors, having assessed the responses

of the directors of a fellow group


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company, Aviva International InsuranceLimited, which maintains the centralizedarrangement, have no reason to believe that amaterial uncertainty exists that maycast doubt about the ability to continue withthe current banking arrangements.Financial Position and PerformanceThe financial position of the Company at 31

December 2009 is shown in thestatement of financial position shown belowFinancial instrumentsThe business of the Company includes use offinancial instruments. Details of theCompany's risk management objectives and

policies and exposures to risk relating tofinancial instruments are set out in note 8 tothe financial statements.Dividends21Interim ordinary dividends of 340 million

were declared and paid during 2009(2008: 475 million). The directors do notrecommend a final ordinary dividend forthe year (2008: nil). The total cost ofdividends paid during the year, includingpreference dividends, amounted to

361million (2008: 567 million, including the


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2007 final dividend).Directors interestsNone of the directors who held office at 31December 2009 held any interest in theCompanys shares.Authority to purchase own sharesAt the Annual General Meeting held on 25April 2006, shareholders renewed

the Companys authority to make marketpurchases of up to 140 million 8 7/8 %preference shares and up to 110 million 7 7/8% preference shares. This authorityremains in place until 24 April 2011 but wasnot used in the year.

Creditor payment policy and practiceThe Company has no trade creditors.Directors LiabilitiesAviva plc, the Companys parent, has grantedan indemnity to the directorsagainst liability in respect of proceedings

brought by third parties, subject to theconditions set out in the Companies Act 1985.This indemnity was granted in 2004and the provisions in the Company's Articlesof Association constitute "qualifyingthird party indemnities" for the purposes of

sections 309A to 309C of the Companies


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Act 1985. These qualifying third partyindemnity provisions remain in force as at thedate of approving the Directors report byvirtue of the transitional provisions to theCompanies Act 2006.Disclosure of Information to the AuditorEach person who was a director of theCompany on the date that this report

22was approved, confirms that so far as thedirector is aware, there is norelevant audit information, being informationneeded by the auditor inconnection with preparing his report, of which

the auditor is unaware. Each directorhas taken all the steps that he ought to havetaken as a director in order to makehimself aware of any relevant auditinformation and to establish that the auditor isaware of that information.

AuditorA resolution is to be proposed at the AnnualGeneral Meeting for the reappointmentof Ernst & Young LLP as auditor of theCompany. A resolution will also beproposed authorizing the directors to

determine the auditors remuneration.


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The Combined Code on CorporateGovernanceThe Company is a wholly-owned subsidiary ofAviva plc, a company listedon the London Stock Exchange. TheCombined Code on Corporate Governancesets out standards of good practice in theform of principles and provisions on how

companies should be directed and controlledto follow good governance practice.The Financial Services Authority requirescompanies listed in the UK to disclose, inrelation to Section 1 of the Combined Code,how they have applied its principles and

whether they have complied wit its provisionsthroughout the accounting year.Where the provisions have not been compliedwith companies must provide anexplanation for this.It is the Boards view that Aviva plc has been

fully compliant throughout theaccounting period with the provisions setdown in Section 1 of the CombinedCode, apart from a period during the yearwhen the majority of the members of theNomination Committee was not independent

non-executive directors. This was due


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to the resignation of Nikesh Arora, a non-executive director, who resigned followinghis relocation to the United States. The Avivaplc Directors Report setsout details of how the Aviva group has appliedthe principles and compliedwith the provisions of the Combined Codeduring 2009.

The Company has listed preference sharesand the payment of dividends to thepreference shareholders is reviewed by theAviva plc Audit Committee and approved23by the directors of the Company. There are no

other significant risks associated withthe Companys assets and liabilities, and theCompany seeks to maintain sufficientfunds to meet dividends payable on thepreference shares as they fall due.Statement of Directors Responsibilities

The directors are required to prepare financialstatements for each accountingperiod that comply with the relevant provisionsof the Companies Act 1985, theCompanies Act 2006 and InternationalFinancial Reporting Standards (IFRS) as


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adopted by the European Union (EU), andwhich present fairly the financialposition, financial performance and cash flowsof the Company at the end of theaccounting period. A fair presentation of thefinancial statements in accordance withIFRS requires the directors to:

select suitable accounting policies and

verify they are appliedconsistently in preparing the financialstatements on a going concern basis unlessit is inappropriate to presume that theCompany will continue in business;

Present information, including accountingpolicies, in a manner thatprovides relevant, reliable, comparable andunderstandable information;

provide additional disclosures when

compliance with the specificrequirements in IFRS is insufficient to enableusers to understand the impact ofparticular transactions, other events andconditions on the Companys financialposition and financial performance; and


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state that the Company has complied withapplicable IFRS, subject

to any material departures disclosed andexplained in the financial statements.The directors are responsible for maintainingproper accounting records whichare intended to disclose with reasonableaccuracy, at any time, the financial

position of the Company. They are alsoultimately responsible for the systems ofinternal control maintained for safeguardingthe assets of the Company and for theprevention and detection of fraud and otherirregularities.

24Directors responsibility statementpursuant to the Disclosure andTransparency Rule 4The directors confirm that, to the best of eachpersons knowledge:a) the Company financial statements in thisreport, which have beenprepared in accordance with IFRS as adoptedby the EU, InternationalFinancial Reporting InterpretationsCommittees interpretations and those


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parts of the Companies Act 2006 applicable tocompanies reporting underIFRS, give a true and fair view of the assets,liabilities, financial positionand results of the Company; andb) the directors report contained in this reportincludes a fair reviewof the development and performance of the

business and the position of theCompany, together with a description of theprincipal risks and uncertainties thatthey face.25Independent auditors report to the

members of General Accident plcWe have audited the financial statements ofGeneral Accident plc for the year ended31 December 2009 which comprise theAccounting Policies, the Income Statement,the Statement of Comprehensive Income, and

the Statement of Changes in Equity,the Statement of Financial Position, theStatement of Cash Flows, and the relatednotes 1 to 10. The financial reportingframework that has been applied in theirpreparation is applicable law and International

Financial Reporting Standards


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(IFRSs) as adopted by the European Union.This report is made solely to the companysmembers, as a body, in accordance withChapter 3 of Part 16 of the Companies Act2006. Our audit work has beenundertaken so that we might state to thecompanys members those matters we arerequired to state to them in an auditors report

and for no other purpose. To thefullest extent permitted by law, we do notaccept or assume responsibility to anyoneotherthan the company and the companysmembers as a body, for our audit work,for this report, or for the opinions we have

formed.Respective responsibilities of directorsand auditorsAs explained more fully in the DirectorsResponsibilities Statement (set out on page6), the directors are responsible for the

preparation of the financial statements and forbeing satisfied that they give a true and fairview. Our responsibility is to audit thefinancial statements in accordance withapplicable law and International Standardson Auditing (UK and Ireland). Those

standards require us to comply with the


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Auditing Practices Boards Ethical Standardsfor Auditors.Scope of the audit of the financialstatementsAn audit involves obtaining evidence aboutthe amounts and disclosures in thefinancial statements sufficient to givereasonable assurance that the financial

statements are free from materialmisstatement, whether caused by fraud orerror.This includes an assessment of: whether theaccounting policies are appropriate tothe companys circumstances and have been

consistently applied and adequatelydisclosed; the reasonableness of significantaccounting estimates made by the26directors; and the overall presentation of thefinancial statements.

Opinion on financial statementsIn our opinion the financial statements:

Give a true and fair view of the state of the

companys affairs as at 31December 2009 and of its profit for the yearthen ended;


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have been properly prepared inaccordance with IFRSs as adopted by the

European Union; andhave been prepared in accordance with the

requirements of theCompanies Act 2006.Opinion on other matters prescribed by

the Companies Act 2006In our opinion, the information given in theDirectors Report for the financial yearfor which the financial statements areprepared is consistent with the financialstatements.

27Auditor's Report1. We have audited the attached balancesheet of AVIVA INDUSTRIES LIMITED,MUMBAI as at 31st March 2008, the profitand loss account and also the (cash flow

statement) for the year ended on that dateannexed thereto. These financial statementsare the responsibility of the companysmanagement. Our responsibility is to expressanopinion on these financial statements based

on our audit.


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2. We conducted our audit in accordancewith.the auditing standards generallyacceptedin India. Those Standards require that we planand perform the audit to obtainreasonable assurance about whether thefinancial statements are free of materialmisstatement. An audit includes examining,

on a test basis, evidence supporting theamounts and disclosure in the financialstatement. An audit also includes assessingtheaccounting principal used and significantestimates made by management, as well as

evaluating the overall financial statementpresentation: We believe that our auditprovides a reasonable basis for our opinion.3. As required by the Companies (AuditorsReport) Order, 2003 issued by the CentralGovernment of India in term of sub - section

(4A) of section 227 of the Companies Act,1956, we enclose in the Annexure astatement on the matters specified inparagraphs 4 .and 5 of the said Order.4. Further to our comments in the Annexure

referred to above, we report that.


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(i) We have obtained all the information andexplanations, which to the best of ourknowledge and belief were necessary for thepurposes of our audit.(ii) In our opinion, proper books of account, asrequired by law have been kept by thecompany so far as appears from ourexamination of those books.

(iii) The balance sheet, profit and loss accountand cash flow statement dealt with by28this report are in agreement with the books ofaccount.(iv) In pur opinion, the balance sheet, profit

and loss account and cash flow statementdealt with by this report comply with theaccounting standards referred to in sub^section (3C) of section 211 of the CompaniesAct, 1956.(v) On the basis of written representation

received from the directors, as on 31st March2008 and taken on record by the Board ofDirectors, we report that none of the directorsIs disqualified as on 31st March 2008, frombeing appointed as a . director in teiius ofclause (g) of sub - section (1) of section 274

of the Companies Act, 1956


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(vi) In our opinion and to the best of ourinformation and according to the explanationsgiven to us, the said accounts give theinformation required by the Companies Act,1956, in the manner so required and give atrue and fair view in conformity with theaccounting principles generally accepted inIndia.

(a) in the case of the balance sheet, of thestate of affairs of the company as at 31stMarch 2008 .(b) in the case 67 the profit and loss account,of the Loss for the year ended on thatdate ; and

(c) in the case of the cash flow statement, ofthe cash flows for the year ended on thatdate.Annexure referred to in paragraph 3 of ourreport of even date.(i) (a) The company has maintained proper

records showing full particulars, includingquantitative details and situation of fixedassets;(b) All the assets have not been physicallyverified by the management during the year


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but there is a regular programme ofverification which, in our opinion, isreasonable29having regard to the size of the company andthe nature of its assets. No materialdiscrepancies were noticed to suchverification

(c) Some part of old fixed assets has beendisposed off during the period. According tothe information and explanations given to us,we are of the opinion that the sale of thesaid part of fixed assets has not affected thegoing concern status of the company.

(ii) (a) The inventory has been physicallyverified during the year by the management.In our opinion the frequency of verification isreasonable.(b) The procedures of physical verification ofinventories followed by the management

are reasonable and adequate in relation to thesize of the company and the nature of itsbusiness.(c) The company Is maintaining properrecords of inventory. The discrepanciesnoticed


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on verification between the physical stocksand the books records were not material.(iii) (a) The company has not granted/takenloans to/from companies, firms or otherparties listed in the register maintained undersection 301 of the Companies Act, 1956.(iv) In our opinion and according to theinformation and explanations given to us,

thereare adequate internal control procedurescommensurate with the size of the companyandthe nature of its business with regard topurchases of inventory, fixed assets and with

regard to the sale of goods. During the courseof our audit, we have notobserved anycontinuing failure to correct majorweaknesses in internal controls.(v) (a) According to the information andexplanations given to us, we are of the

opinionthat the transactions that need to be enteredinto the register maintained under section301 of the Companies Act, 1956 have beenSo entered.(b) In our opinion and according to the

informations and explanations given to us, the


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30transactions made in pursuance of thecontracts or arrangements entered in theregistermaintained under section 301 of theCompanies Act, 1956 and exceeding thevalue ofrupees five lacs In respect of any party during

the year have been.made at.prices whichare reasonable having regard to prevailing.market prices at the relevant time.(vi) In our opinion and according to theinformation and explanations given to us, thecompany has complied with the provisions of

sections 58A arid 58AA of the CompaniesAct;1956 and the Companies (acceptance ofDeposits) Rules, 1975.vii) In our opinion, the company has aninternal control system commensurate withthe

size and nature of its business.(viii) Since this is being Trading unit, hencesec 209 (1) (d) of the Companies Act, 1956is not applicable.(ix) (a) The company is regular in depositingwith appropriate authorities undisputed


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statutory dues including income tax, sales tax,custom duty, cess and other materialstatutory dues applicable to it.(b) According to the information andexplanations given to us, no undisputedamountspayable in respect income tax, wealth tax,sales tax, custom duty, excise duty and cess

were in arrears, as at 31st March, 2008 for aperiod of more than six months from thedate they became payable, other than incometax for the immediate previous year.(c) According to the information andexplanation given to us, there are no dues of

saletax, customs duty, wealth tax, excise duty andcess, which have not been deposited onaccount of any dispute.(x) The company has incurred cash lossesduring the financial year covered by our audit

and immediately preceding financial year andalso company has no accumulated losses.31(xi) In our opinion and according to theinformation and explanations given to us, thecompany has not defaulted in repayment of

dues to a financial institution, bank or


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debenture holders.(xii) The company has not granted loans andadvances on the basis of security by wayof a pledge of share, debentures and othersecurities.(xiil) The company is not a chit fund or a nidhimutual benefit fund/society. Therefore;the provisions of clause 4 (xiil) of the

Companies (Authors Report) Order, 2003 arenotapplicable to the company.(xiv) The company is not dealing in or tradingin shares, securities, debentures andother investments except as an investment.

Accordingly, the provisions of clause 4 (xiv)of the Companies (Auditors Report) Order,2003 are not appllcable to the company.(xv) in our opinion and informed by themanagement, the company has not givenguarantees for loans taken by others from

banks or financial institutions.(xvi) In our opinion, the term loans have beenapplied for the purpose for which theywere raised.?;(xvii) According to the information andexplanations given to us and on an overall


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examination of the balance sheet of thecompany, we report that the no funds raisedonshort- term basis have been used for long- term investment. No long - term funds havebeen used to finance short- term assets except permanent working

capital.(xviii) According to the information andexplanations given to us, the company hasnotmade any allotment of preferential sharesduring the financial year.

32(xix) The company has no issued and / oroutstanding debentures at the end of the year.(xx) The company has not issued and raisedmoney by public issues during the year.(xxi) According to the information and

explanations given to us, no fraud on or bytheCompany has been noticed or reported duringthe course of our audit. Find yourfavourite sections instantly with one swiftsearch Stock recommendationsSmart stock


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picks to build a wealthy portfolio Chat withexpertsReal time, personalised stock advicefrom experts Fund manager picksWhichstocks are favourites with fund managers?IPOCalendarCheck out all upcoming IPOs so youcan keep your funds ready CommoditypicksWhat positions should you take? Brokers

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33Accounting policiesGeneral Accident plc (the Company) is apublic limited companyincorporated and domiciled in the UnitedKingdom (UK). The following

accounting policies have been appliedconsistently in dealing with items whichare considered material in relation to theCompanys financial statements.1. GENERALi) The Financial Statements have generally

been prepared on the historical cost


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convention.ii) Accounting policies not specifically referredto otherwise are in consonance withgenerally accepted2. BASIS OF ACCOUNTINGThe company follows the mercantile system ofaccounting generally exceptotherwise stated herein below.

3. FIXED ASSETSFixed Assets are stated at cost lessaccumulated depreciation.4. DEPRECIATIONa) Depreciation on fixed assets has beenprovided at the rates and in accordance with

the provisions of Schedule XIV of theCompanies Act,1956 on SLM Method on daysprorata on basis of date put to use of theassests. However, no depreciation has beencharged on fixed assets during the year andprofit of the company has been affected

adversely to that extent.345. INVENTORIESThe inventory has been valued at lower ofcost or net relisable price, however thereis no closing stock at the


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6. REVENUE AND EXPENDITURERECOGNITIONRevenue Is recognised and expendeiture isaccounted for on their accrual exceptclaims in respect of goods purchased andsold & Insurance, which are accounted foron cash basis.7. INVESTMENT

Investment are valued at Cost. No provisionhas been made for depreciation of themarket value of the Investment.(A)Basis of presentationThe financial statements of the Companyhave been prepared in accordance

with International Financial ReportingStandards (IFRS) issued by theInternational Accounting Standards Board(IASB) and applicable at 31December 2009, and endorsed by theEuropean Union. The date of transition to

IFRS was 1 January 2004.(B)Use of estimatesThe preparation of financial statementsrequires the Company to make estimates andassumptions that affect items reported in thestatement of financial position and


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income statement and the disclosure ofcontingent assets and liabilities at the date ofthe financial statements. Although theseestimates are based on managementsbest knowledge of current facts,circumstances and to, some extent, futureevents and actions, actual results ultimatelymay differ from those estimates,

possibly significantly.35(C)Investment incomeInvestment income consists of interestreceivable for the year. Interest receivable isrecognized as it accrues, taking into account

the effective yield on the investment.(D)Financial instrumentsLoans to, or from other Aviva Groupcompanies are recognized when cash isadvanced to, or received from thesecompanies. These loans are subsequently

carried at amortized cost. The Companyreviews the carrying value of loans on aregular basis. If the carrying value of the loanis greater than the recoverable amount,the carrying value is reduced through acharge to the income statement in the period

of impairment.


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(E) Cash and cash equivalentsCash and cash equivalents consist of cash atbanks and in hand.(F) Income taxesThe current tax expense is based on thetaxable result for the year, after anyadjustments in respect of prior years. Tax,including tax relief for losses if

applicable, is allocated over profits beforetaxation and amounts charged orcredited to reserves as appropriate.Provision is made for deferred tax liabilities, orcredit taken for deferred taxassets, using the liability method, on all

material temporary differences betweenthe tax bases of assets and liabilities and theircarrying amounts in the financialstatements. Deferred tax assets arerecognized to the extent that it is probable thatfuture taxable profit will be available against

which the temporary differences can beutilized.36(G) Share capitalEquity instrumentsAn equity instrument is a contract that

evidences a residual interest in the


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assets of an entity after deducting all itsliabilities. Accordingly, a financialinstrument is treated as equity if:I. There is no contractual obligation to delivercash or other financialassets or to exchange financial assets orliabilities on terms that may beunfavorable; and

II. The instrument is a non-derivative thatcontains no contractual obligationto deliver a variable number of shares, or is aderivative that will be settledonly by the Company exchanging a fixedamount of cash or other assets for a

fixed number of the Companys own equityinstruments.DividendsDividends on ordinary shares are recognizedin equity in the period in whichthey are paid and, for the final dividend,

approved by shareholders. Dividendson preference shares are recognized in theperiod in which they are declaredand appropriately approved.37Research Methodology


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Market research is the process ofsystematic gathering, recording andanalyzing ofdata about customers, competitors and themarket. Marketing research (also calledconsumer research) is a form of businessresearch. It is a form of applied sociologywhich concentrates on understanding the

behaviors, whims and preferences, ofconsumers in a market-based economy.Market research can help create a businessplan, launch a new product or service, finetune existing products and services, expandinto new markets etc. It can be used to

determine which portion of the population willpurchase the product/service, based onvariables like age, gender, location andincomelevel. It can be found out what marketcharacteristics your target market has. With

market research companies can learn moreabout current and potential customers.The purpose of market research is to helpcompanies make better business decisionsabout the development and marketing of newproducts and in the case of financial


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market research, it shows the companyworthiness and position in front of people.Market Research ProcessDefining the Research Problem

Selecting and Establishing Research Design

Select the Research Design

Identify Information types and Sources

Determining and Design Research

InstrumentCollecting and Analyzing Data

Formulate Findings38Method Adopting of Data CollectionThere are two types of data collection

technique. i.e.Primary Data and

Secondary Data.In my research project there is no need tocollect primary data. I want only secondarydata that I have been collected by differentsources.Internet- From the internet we have take thehistories of companies for the introductionpart. We search some data from the websiteof company and search engine like Google.


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Books- Books are also helpful us for the dataresearch. We have taken help of books tocalculate the ratios and analyzing the financialstatements like Profit & Loss account andBalance sheet etc.39FINANCIAL STATEMENTProfit & loss Account, Balance Sheet and

Key Ratio of Avivalife insuranceProfit & Loss account ofAviva life insurance------------------- in Rs. Cr. -------------------Mar '05 Mar '06 Mar '07 Mar '08 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mthsIncomeSales Turnover 0.00 10.15 0.00 14.23 0.47Excise Duty 0.00 0.00 0.00 0.00 0.00Net Sales 0.00 10.15 0.00 14.23 0.47Other Income 0.06 0.05 0.05 0.01 0.03

Stock Adjustments 0.00 0.00 0.00 0.00 0.00Total Income 0.06 10.20 0.05 14.24 0.50ExpenditureRaw Materials 0.00 7.77 0.00 13.91 0.45Power & Fuel Cost 0.00 0.30 0.00 0.00 0.00Employee Cost 0.00 0.36 0.00 0.09 0.01


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Other Manufacturing Expenses 0.00 1.59 0.000.00 0.0040Selling and Admin Expenses 0.00 0.00 0.000.00 0.00Miscellaneous Expenses 0.01 0.11 0.01 0.110.06Preoperative Exp Capitalized 0.00 0.00 0.00

0.00 0.00Total Expenses 0.01 10.13 0.01 14.110.52Mar '0 Mar '06 Mar '07 Mar '08 Mar '0912 mths 12 mths 12 mths 12 mths 12 mthsOperating Profit -0.01 0.02 -0.01 0.12 -0.05

PBDIT 0.05 0.07 0.04 0.13 -0.02Interest 0.00 0.00 0.00 0.00 0.00PBDT 0.05 0.07 0.04 0.13 -0.02Depreciation 0.01 0.01 0.01 0.00 0.00Other Written Off 0.00 0.00 0.00 0.00 0.00Profit Before Tax 0.04 0.06 0.03 0.13 -0.02

Extra-ordinary items 0.00 0.00 -0.01 0.00 0.00PBT (Post Extra-ord Items) 0.04 0.06 0.020.13 -0.02Tax 0.00 0.00 0.00 0.05 0.01Reported Net Profit 0.04 0.06 0.03 0.07 -0.02

Total Value Addition 0.01 2.36 0.01 0.19 0.07


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Preference Dividend 0.00 0.00 0.00 0.00 0.00Equity Dividend 0.00 0.00 0.00 0.00 0.00Corporate Dividend Tax 0.00 0.00 0.00 0.000.00Per share data (annualized)Shares in issue (lakhs) 15.00 14.99 14.9914.99 14.99Earning Per Share (Rs) 0.27 0.42 0.18 0.50 -

0.1241Equity Dividend (%) 0.00 0.00 0.00 0.00 0.00Book Value (Rs) 11.73 12.16 12.34 30.9930.8742

Mar '05 Mar '06 Mar '07 Mar '08 Mar '0912 mths 12 mths 12 mths 12 mths 12 mthsSources Of FundsTotal Share Capital 1.50 1.50 1.50 1.50 1.50Equity Share Capital 1.50 1.50 1.50 1.50 1.50Share Application Money 0.00 0.00 0.00 0.00

0.00Preference Share Capital 0.00 0.00 0.00 0.000.00Reserves 0.26 0.32 0.35 3.15 3.13Revaluation Reserves 0.00 0.00 0.00 0.000.00

Net worth 1.76 1.82 1.85 4.65 4.63


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Secured Loans 0.01 0.00 0.00 0.02 0.01Unsecured Loans 0.00 0.00 0.09 1.00 0.75Total Debt 0.01 0.00 0.09 1.02 0.76Total Liabilities 1.77 1.82 1.94 5.67 5.39Mar '05 Mar '06 Mar '07 Mar '08 Mar '0912 mths 12 mths 12 mths 12 mths 12 mthsApplication Of Funds43

Balance Sheet of Avivalife insurance------------------- in Rs. Cr. -------------------Gross Block 0.13 0.13 0.13 0.80 0.69Less: Accum. Depreciation 0.09 0.10 0.110.08 0.07

Net Block 0.04 0.03 0.02 0.72 0.62Capital Work in Progress 0.00 0.00 0.00 0.000.00Investments 0.69 0.69 0.69 1.24 1.24Inventories 0.00 0.00 0.00 0.00 0.00Sundry Debtors 0.00 0.31 0.00 1.07 1.38

Cash and Bank Balance 0.03 0.08 0.03 0.100.08Total Current Assets 0.03 0.39 0.03 1.17 1.46Loans and Advances 1.02 1.76 1.22 3.46 3.69Fixed Deposits 0.00 0.00 0.00 0.00 0.00Total CA, Loans & Advances 1.05 2.15 1.25

4.63 5.15


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Deffered Credit 0.00 0.00 0.00 0.00 0.00Current Liabilities 0.01 1.04 0.03 2.21 2.92Provisions 0.00 0.00 0.00 0.04 0.04Total CL & Provisions 0.01 1.04 0.03 2.252.96Net Current Assets 1.04 1.11 1.22 2.38 2.19Miscellaneous Expenses 0.00 0.00 0.00 1.311.35

Total Assets 1.77 1.83 1.93 5.65 5.40Contingent Liabilities 0.00 0.00 0.00 0.00 0.00Book Value (Rs) 11.73 12.16 12.34 30.9930.8744Key Financial Ratios of

Aviva.------------------- in Rs. Cr. -------------------Mar '05 Mar '06 Mar '07 Mar '08 Mar '09Investment Valuation RatiosFace Value 10.00 10.00 10.00 10.00 10.00Dividend Per Share -- -- -- -- --

Operating Profit Per Share (Rs) -0.07 0.12 -0.05 0.84 -0.27Net Operating Profit Per Share (Rs) -- 67.70 --94.91 3.16Free Reserves Per Share (Rs) -- -- -- -8.77 -9.00

Bonus in Equity Capital -- -- -- -- --


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Profitability RatiosOperating Profit Margin (%) -- -- -- -- --Profit Before Interest And Tax Margin (%) -- ---- -- --Gross Profit Margin (%) -- -- -- -- --Cash Profit Margin (%) -- -- -- -- --Adjusted Cash Margin (%) 83.33 0.70 92.300.55 -3.67

Net Profit Margin (%) 66.66 0.61 52.42 0.52 -3.67Adjusted Net Profit Margin (%) -- -- -- -- --Return On Capital Employed (%) -- -- -- -- --Return On Net Worth (%) 2.27 3.42 1.46 -- --Adjusted Return on Net Worth (%) 2.27 3.42

2.18 2.28 -0.56Return on Assets Excluding Revaluations2.25 2.17 1.37 0.94 -0.22Return on Assets Including Revaluations 2.252.17 1.37 0.94 -0.22Return on Long Term Funds (%) 2.25 3.39

1.89 2.28 -0.21Liquidity And Solvency RatiosCurrent Ratio 105.00 2.05 37.47 2.06 1.7345Quick Ratio 105.00 2.04 37.20 2.06 1.73Debt Equity Ratio 0.01 -- 0.05 0.22 0.16


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Long Term Debt Equity Ratio 0.01 -- 0.05 0.220.16Debt Coverage RatiosInterest Cover -- -- -- -- --Total Debt to Owners Fund 0.01 -- 0.05 0.220.16Financial Charges Coverage Ratio -- -- -- -- --Financial Charges Coverage Ratio Post Tax --

-- -- -- --Management Efficiency RatiosInventory Turnover Ratio -- -- -- -- --Debtors Turnover Ratio -- 32.81 -- -- 0.39Investments Turnover Ratio -- -- -- -- --Fixed Assets Turnover Ratio -- 278.39 -- -- --

Total Assets Turnover Ratio -- -- -- -- --Asset Turnover Ratio -- 75.58 -- 17.74 0.69Average Raw Material Holding -- -- -- -- --Average Finished Goods Held -- -- -- --Number of Days In Working Capital -- 39.05 --60.42 1,654.04

Profit & Loss Account RatiosMaterial Cost Composition -- 76.54 -- 97.7694.37Imported Composition of Raw MaterialConsumed -- -- -- -- --Selling Distribution Cost Composition -- -- -- --

--


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Expenses as Composition of Total Sales -- -- -- -- --Cash Flow Indicator RatiosDividend Payout Ratio Net Profit -- -- -- -- --Dividend Payout Ratio Cash Profit -- -- -- -- --Earning Retention Ratio 100.00 100.00100.00 100.00 --Cash Earning Retention Ratio 100.00 100.00

100.00 100.00 --Adjusted Cash Flow Times 0.20 -- 1.84 12.95--46Mar '05 Mar '06 Mar '07 Mar '08 Mar '09Earnings Per Share 0.27 0.42 0.18 0.50 -0.12

Book Value 11.73 12.16 12.34 30.99 30.8747CREDIT RATINGAt Aviva we consider it important to keepcustomers and investors up to date withdevelopments affecting the Group. In this

section we show the Insurer FinancialStrength ratings of our core operatingsubsidiaries and the ratings of our long andshortterm debt.Insurer financial strength

S&P Moodys AM Best


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RatingAA- Aa3 ADescription Very strong Excellent ExcellentOutlook Negative Negative StableDebt ratingsS&P Moody's AM BestSenior (guaranteed)A A1 a-SubordinatedA-/BBB+ A3 bbb+Direct capital instrument BBB+ Baa1 bbb

Commercial paper (guaranteed)A-1+ P-1not rated*Ratings as at 5 August 200948CASH FLOWCash Flow of Aviva Industries

------------------- in Rs. Cr. -------------------Mar '03 Mar '04 Mar '0812 mths 12 mths 12 mthsNet Profit Before Tax 0.06 0.04 -0.01Net Cash From Operating Activities 0.00 -0.180.18

Net Cash (used in)/fromInvesting Activities 0.06 0.04 0.06Net Cash (used in)/from FinancingActivities-0.01 0.09 -0.26Net (decrease)/increase In Cash and Cash

Equivalents 0.05 -0.04 -0.02


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Opening Cash & Cash Equivalents 0.03 0.080.10Closing Cash & Cash Equivalents 0.08 0.030.0849DATA REPRESENTATIONEarnings per shareTheir IFRS earnings per share for 2009 were

37.8 pence (2008: 36.8 pence loss). Thismainly reflects the improvement in financialmarkets in 2009. Economic and investmentreturn assumptions during the year were inline with our long-term expectations with apositive variance of 77 million (2008: 2,544

million adverse).As condition of insurance market was verybad in 2006 to 2008 mid after that itimproved a lot and from that graph we canunderstand that because of market slowdownit happened.

50Debt Equity RatioDebt equity ratio is also saying that itimproved a lot from the year 2007 mid till2008but after that because of return the have

faced the slowdown.


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51Quick RatioQuick ratio shows also decline position itmeans that the ability to change currentassetsinto money or liquidate power is decliningbecause of market trends. The liquid assetsare very few and they are not utilizing

properly. As market down in year 2005 so itsspeedily declined after year 2006 its slowlyrecovered but in the year 2008 and 2009 itwas stagnant.52Current Ratio

The difference of current assets and currentliabilities shows that ratio. As it shows thatif working capital is high so liquidity ofbusiness is respectively high. By this graph Ican understand the financial position of thecompany like in the year 2005 the ratio

shows the good position but because ofmarket slowdown its fluctuating and after2008it become stable. That shows that company isrecovering its financial position.53

Net Profit Margin (in %)


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In every graph we can see that position wasvery fluctuating of the company, it isbecause market slowdown. In this graph I cansay that company is trying to recover thelosses by reducing the indirect expenses. Asin the year 2008 and 2009 the position waslittle bit stable then other year.54

Operating Profit per ShareOperating profit per share is decline veryspeedily, it is because after slowdown itbecome tough to survive in that position andto overcome from this situation they needfund and the company can adjust fund only by

reducing expense and taking help bybank or its shareholders. So here because ofexpense operating profit reduce per sharetill the year 2009.55Return on equity shareholders' funds - %

The improvement in 2009 to 16.2% (2008:11.0%) reflects the increase in the post-taxMCEV operating result and the impact oflower opening equity shareholder's fundsfollowing falls in asset values in 2008.Return on equity shareholders' funds is

calculated as after-tax operating return, before


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adjusting items, on opening equityshareholders' funds, including life profits on amarketconsistent embedded value (MCEV) basis.56ConclusionAs the project is to Analysis of FinancialPosition & Profitability of Aviva Life

Insurance and the main objective tounderstand the financial position or conditionofcompany. After completing the project I knowthat how ability of management canperform work in difficult situation. Because

during the recession they faced very badcondition but as India condition will improvethey will also improve. As company istrying to reduce its expenses for earning goodprofit.57

FindingBy this project I found that company positionis not that much good rightnow because of slowdown in year 2005-06and that impacted a lot on companysratio.


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The ratio like Current Ratio, Quick Ratio,Earning par share, Return on

Capital Employed or Shareholder Funds,Operating Profit, Net Profit Margin andDebt-Equity Ratio are in decline position.

These ratios show that company is notutilizing its fund properly and theworking capital requirement is highly.

By this project I found that the operatingexpenses are very high due torecovery period from global slowdown.

I found that if company will focus on itsliabilities so they can overcomefrom the negative growth.

The cash flow statement shows its working.The credit rating that the company got inyear 2205 was very good. Butafter that recession it changed, here creditrating play very important role becausealmost 60% investors invest their money on

the basis of goodwill or credit ratingthat a company hold in the market.5859Limitation

The data collection was little bit toughbecause latest data is not available


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on the internet.

Finding the data of Insurance sector is very

difficult.Problem occurred due to lack of time andfacility of internet.60Bibliography

Books

www.google.comwww.moneycontrol.com

http://www.moneycontrol.com/financials/avivaindustries/profit-loss/AI55

http://www.moneycontrol.com/financials/avivaindustries/balancesheet/

AI556162

project on aviva

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