A n n u a l R e p o r t 2011 - 12 - AIC OF INDIA LTD. · Mr. R.K. Deka Mr. P.K. Bhagat Deputy...

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Agriculture Insurance Company of India Limited

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CONTENTSDirectors and Management 2

Board of Directors 3

Senior Management Team 4

Team of Regional Managers 5

Chairman’s Speech 6

C & AG Report 9

Auditors’ Report 10

Directors’ Report 13

Management Report 27

Revenue Account 29

Profit & Loss Account 30

Balance Sheet 32

Schedules to the Accounts 33

Significant Accounting Policies and Notes Forming Part of Accounts 42

Summary of Financial Statements 64

Summary of Accounting Ratios 65

Cash Flow Statement 66

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DIRECTORS AND MANAGEMENTChairman-cum-Managing Director

Mr. Milind A. Kharat

DirectorsMr. R.K. Tiwari Mr. Mukesh Khullar Mr. Shashank Saksena

Mr. K.N. Bhandari Mr. Gopal Naik Mr. S.K. Mitra

Mr. S.K. Chanana Mr. Kuldip Singh Mr. P.J. Joseph

Mr. R.K. Deka Mr. P.K. Bhagat

Deputy General ManagersMr. R. Alagar Mr. K.N. Rao

Mr. M.K. Poddar Mr. Avinanda Ghosh

Mr. Rajeev Chaudhary Mr. P. Nagarjuna

Appointed ActuaryMr. S. Chidambram

Company SecretaryMs. Kanika Sharma Shandil

AuditorsM/s S.C. Vasudeva & Co., Chartered Accounts

M/s K.K. Ghei & Co., Chartered Accountants

Registered Office“Ambadeep” (13th Floor)

14, Kasturba Gandhi Marg, New Delhi- 110001Phone : 011-46869800, Fax : 011-46869815


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BOARD OF DIRECTORS

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SENIOR MANAGEMENT TEAM


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TEAM OF REGIONAL MANAGERS

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CHAIRMAN’S SPEECH

Dear Shareholders,I have great pleasure in welcoming you all to the 9th Annual General Meeting of Agriculture Insurance Company ofIndia Limited.The Annual Report containing the Directors’ Report and the Audited Accounts for the year ended 31st March 2012has been sent and, I am sure, you have had the opportunity to peruse them.Crop insurance was introduced by Government of India,in the year 1985, and GIC was the first implementingagency. Later on with effect from April, 2003, AIC took up the responsibility. Since then AIC has grown multifold,and provides crop insurance cover to nearly 2.5 crore farmers. Currently, AIC is the implementing agency for theflagship Government Scheme viz., National Agricultural Insurance Scheme (NAIS). Further, AIC is also implementingModified NAIS (MNAIS), Weather Based Crop Insurance Scheme (WBCIS) & Pilot Coconut Insurance Schemesand other commercial crop insurance scheme.Internationally crop insurance has many facets. Mexico has a well-defined public-private partnership for agriculturalinsurance termed as the National System for Insurance of the Rural Sector. In China insurance is operated as asocial welfare mechanism to protect farmers against natural disasters where as in Brazil the federal governmentformed PROAGRO (Guarantee Program for Agriculture and Livestock Activities), a national, individual growermulti-peril crop insurance (MPCI) program linked to crop credit. There is one common feature internationally thatis the public support for agricultural insurance.COMPANY’S PERFORMANCEIn the given context, I would like to place the performance of your Company during FY 2011-12. Your Company hasachieved 32% growth in gross direct premium. The management expenses have been reduced to 1.6% from 2.3%over last financial year. Further annual average yield on investment income increased to 8.98% as compared to7.85% during 2010-11. The Profit After Tax during the financial year 2011-12 is 502 crore as against 380 croreof financial year 2010-11, registering a growth of 32%. Your Company has transferred 473.07 crore to theGeneral Reserve from the balance amount of ‘Profit after Tax and Appropriations’, after recommending a dividendof 12.5% aggregating to 25 crore (exclusive of dividend tax).The Company has insured nearly 2.5 crore farmers covering 3.43 crore hectares of land with sum insured of


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50439 crore in the financial year 2011-12.I would also like to inform you that your Company has successfully completed the mandate given by the Governmentof India for completion of Annual Accounts 2011-12 well within the timelimit i.e. on 14th May, 2012.DIVIDENDThe Company continues to evaluate and manage its dividend policy to build long term Shareholder value. For thefinancial year 2011-12, a dividend of 12.5% ( 1.25/- per share) is recommended aggregating to 25 crore(exclusive of corporate dividend tax) to be approved by the Members of the Company.DECADE OF PROGRESSYour Company was incorporated on 20th December, 2002 and has completed a decade of dedicated service to thefarmers of the Country. The progress of your Company is certainly commendable at the completion of the firstdecade. The turnover of the Company has increased by more than 7 times, from 369 crore to 2577 crore, and thenet worth increased by 8 times to 1596 crore as on 31st March, 2012. The point which needs to be highlighted hereis that the multifold growth has been achieved over the decade without much addition in infrastructure and HR costs.NEW INITIATIVESThe Company has taken many new initiatives. The details are as follows:-Remote Sensing-Based Information and Insurance for Crops in Emerging Economies (RIICE)Remote Sensing-Based Information and Insurance for Crops in Emerging Economies (RIICE) uses SyntheticAperture Radar technology (SAR) and crop modeling tools to gather data related to rice yield and design effectiverisk management solutions to support index-based crop insurance products. RIICE is expected to estimate theyields at village level far more accurately. AIC is partnering RIICE project with GIZ, (German International Coop)Allianz Re, International Rice Research Institute (IRRI), Philipines & Tamil Nadu Agricultural University. The projectis to commence during 2012-13 in two or three districts of Tamil Nadu where MNAIS is being implemented. RIICEdeveloped village level yields shall be validated with Crop Cutting Experiments (CCEs) based yield estimates. Thiswould help to move from the manual CCEs based yield estimation to technology based yield estimation, and thus,improve the accuracy of yield estimation as well as faster settlement of claims.Terrestrial Observation and Prediction System (TOPS)TOPS (Terrestrial Observation and Prediction System) technology, developed by National Aeronautics and SpaceAdministration (NASA) scientists, integrates surface weather, satellite data with empirical/mechanistic models tomonitor and predict crop growth profiles, crop stress and yields. In order to generate village level historical weatherdata of past 15 years as well as future three years, AIC commissioned a pilot in Maharashtra wherein the dailydata will be generated for over 30,000 villages. This data is expected to assist AIC in fine-tuning the WBCISproducts, as also in minimizing the basic risk. If found feasible, TOPS could be used to supplement / complementthe existing weather station network, hugely minimizing the investment in setting up weather stations.Crop Yield Audit SystemsCurrently, more than 1.2 million Crop Cutting Experiments are conducted every season to collect crop yield dataused for both policy purpose and insurance purpose. AIC with assistance from the World Bank started a pilot touse GPS enabled cellular phones to geo-tag, time-stamp, record, and transmit the data on near real-time basis.The pilot commenced with deployment of 50 cellular phones in Maharashtra for Rabi 2010-11 season, which wasextended to Rajasthan during Rabi 2011-12 season by deploying additional 50 cellular phones. Re-insurers haveresponded positively to the initiatives, indicating the potential benefits if adopted nationally. The project is expectedto (i) create and implement centralized data management system to accept incoming data for all States;(ii) develop formal data monitoring, auditing, and cleaning techniques; and (iii) provide data to insurance providersand Government in a standard format as appropriate.Index-Plus Insurance ProductsIn order to capture and mitigate the hailstorm risk of apples and grapes, AIC with approval from the Government ofIndia launched a pilot on ‘index plus’ insurance. The product gives payout based on weather deviations in case ofparametric weather, and on individual loss assessment basis for hailstorm and other localized risks. The pilot isintroduced during Rabi 2011-12 for apple in Shimla (HP) and for grapes in Nasik (Maharashtra).During the year, we have taken steps towards aligning our processes and systems. We have fine-tuned some ofthe accounting policies so that they are better aligned to the exclusive nature of our business. These havereflected in the results for the financial year 2011-12.

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IT IMPLEMENTATIONThe Technology enablement Project of the Company, ANNAPOORNA, is in an advanced stage of deployment, andmost of the major Applications have been automated. The Business Operations are live, and so are the FinancialManagement System and a host of other Applications. Change Management initiatives have ensured the comfortof the users in adapting to the new regime and acceptance of the new system by them. The farmers of the countryhave been enabled to voice their grievances (if any) directly to the Company from their own place, through theonline facility provided in our Portal. In the coming year, we plan to further empower the farmers by enabling themto take “anytime-anywhere” online crop insurance coverage, by operationalizing the Online Window in our Portal.AWARDSThe fundamentals of the Project ANNAPOORNA are strong in terms of connectivity matrix, security architectureetc. which has received industry recognition by way of the “CISO (Chief Information Security Officer) 2012” Awardfor the second consecutive year.

HUMAN RESOURCE MANAGEMENTThe senior officials of Ministry of Finance headed by Chief Liaison Officer & Director appointed for review ofimplementation of policies in respect of SC/ST & OBC employees and Persons with Disabilities have appreciatedthe implementations by the Company.The FY 2011-12 witnessed completion of the promotion exercise in accordance with the HR Consultants Report.The Company promoted 47 Officers in various cadres of Class I. Apart from this, I would like to share with you thatCompanyhas booked 6 flats in CWG DDA flats and further,we are in the process of recruiting Scale I Officers,which we hope to complete by September, 2012.I hope you will appreciate the good financial performance on both growth and profitability fronts during 2011-12.However, there is huge scope for increasing coverage as out of 120 million farmers only 25 millions are insuredunder crop insurance schemes. Majority of the farmers, nearly 90% are loanee farmers where as penetration ofnon-loanee farmers are abysmally low at 10%.Your Company therefore,would be utilizing agency network ofGIPSA Companies to solicit crop insurance from non-loanee farmers. The Government of India has a plan todouble the farmers’ coverage during 12th plan from 25 million to 50 million.CHALLENGESCompetition in the crop insurance is hotting up through the entry of more and more private company players. Forour Company the absence of country wide distribution network has been one of the obstacles in reaching out tofarmers/banks/co-operatives for business expansion and increasing farmers’ coverage. Availability of wide spreadnetwork of Automated Weather Station (AWS) is required for WBCIS. Another major challenge is continuation offarmers’ participation in crop insurance schemes on sustained basis.Shortage of the staff at Regional Office level has been a hindrance in the customer service. There is also need fortraining & continuous up-gradation of skills of the staff. Delay in full scale IT implementation is also hindering theprogress of the Company.Further, I would like to inform that the risk sharing pattern under NAIS has been modified with effect from Kharif2011 whereby your Company will be liable for entire claims wherever actuarial premium is charged. Henceforthyour Company will be liable for (i) all additional claims arising out of additional coverage/ higher indemnity levelopted under the provisions of the scheme and also for (ii) all claims arising under Annual Commercial & HorticulturalCrops. Your Company has taken adequate measure to mitigate this additional risk and accordingly amended thepricing methodology under NAIS and also has arranged for adequate reinsurance protection.ACKNOWLEDGEMENTSI would like to thank the outgoing Board members for their contribution and support and welcome the new membersof the Board. I would also like to thank all of our stakeholders- Clients, Business partners, Bankers, Center / StateGovernment(s) and various Government Authorities for the constant encouragement and support throughout theyear. I also like to record the appreciation for the efforts of all the AIC’ites- for their total dedication and hard work.I am sure the future holds some of the best and brightest moments for the Company.


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COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 619(4) OF THECOMPANIES ACT, 1956 ON THE ACCOUNTS OF AGRICULTURE INSURANCE COMPANY OF INDIA LIMITED,NEW DELHI FOR THE YEAR ENDED 31ST MARCH 2012

The preparation of financial statements of Agriculture Insurance Company of India Limited, for the year ended 31st

March 2012 in accordance with the financial reporting framework prescribed under the Insurance Act,1938 readwith the Insurance Regulatory and Development Authority (Preparation of Financial Statement and Auditor’s Reportof Insurance Companies) Regulation, 2002 and the Companies Act, 1956, is the responsibility of the managementof the Company. The Statutory Auditors appointed by the Comptroller and Auditor General of India under section619(2) of the Companies Act, 1956 are responsible for expressing opinion on these financial statements undersection 227 of the Companies Act,1956 based on independent audit in accordance with the auditing and assurancestandards prescribed by their professional body, the Institute of Chartered Accountants of India. This is stated tohave been done by them vide their Audit Report dated 14th May 2012.

I, on behalf of the Comptroller and Auditor General of India, have decided not to review the report of the StatutoryAuditors on the accounts of Agriculture Insurance Company of India Limited, for the year ended 31st March 2012and as such have no comments to make under section 619(4) of Companies Act, 1956.

for and on behalf of theComptroller and Auditor General of India

Sd/-(Naina A.Kumar)

Principal Director of Commercial Audit & Ex-Officio Member, Audit Board-IINew Delhi

Place: New DelhiDate: 20-June-2012

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M/s S. C. Vasudeva & Co., M/s. K. K. Ghei & Co.,Chartered Accountants, Chartered Accountants,B-41, Panchsheel Enclave, 806, Hemkunt House, 6New Delhi – 110017 Rajendra Place, New Delhi-110008

AUDITORS’ REPORTTo the Members ofAGRICULTURE INSURANCE COMPANY OF INDIA LIMITED1. We have audited the attached Balance Sheet of AGRICULTURE INSURANCE COMPANY OF INDIA

LIMITED as at 31st March 2012, the annexed Revenue Account and Profit and Loss Account in respect ofcrop insurance business and Cash Flow Statement for the year ended on that date, in which are incorporatedthe returns of seventeen Regional Offices audited by the other firms of Chartered Accountants, which havebeen taken into consideration by us. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financial statements based on ouraudit.

2. The Balance Sheet, Profit and Loss Account and Revenue Account have been prepared in accordancewith the provisions of Section 11(1) of the Insurance Act, 1938, read with the provisions of sub sections(1), (2) and (5) of Section 211 and sub section (5) of Section 227 of the Companies Act, 1956, to the extentapplicable and also as per the provisions of the Insurance Regulatory and Development Authority (IRDA)Act, 1999.

3. We conducted our audit in accordance with the auditing standards generally accepted in India.Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by the management, as well asevaluating the overall financial statement presentation.We believe that our audit provides a reasonablebasis for our opinion.

4. We report that:(a) During the Financial Year 2009-10, the company has paid an amount of 200,00,00 thousands

to the Consolidated Fund of India in terms of Govt. letter Ref. F.No.C-13014/16/2004-Ins.I dated23.12.2009 as a prelude to the recasting of the National Agricultural Insurance Scheme and thesame is continued to be shown as ‘Advances and Other Assets’ in the Balance Sheet. Thisamount has not been adjusted against the retained profits / reserves, pending recasting of thesaid scheme. This has resulted in overstatement of Advances and Other Assets and Reserves ofthe company to that extent. (Refer Note 4.12 of Annexure 2)

(b) The company’s accounting policy (Accounting Policy No. 3.1) in respect of recognizing premiumof Government Schemes being implemented by the Company upon remittance received from theNodal Banks out of such premium collected by them and assumption of risk despite not receivingsuch premium is not in accordance with the accrual concept of accounting (FundamentalAccounting Assumptions) as laid down in Accounting Standard 1 “Disclosure of Accounting Policies”and Accounting Standard 9 “Revenue Recognition’ as prescribed under ‘The Companies (AccountingStandard) Rules, 2006’ and not compliant with Section 64 VB of the Insurance Act, 1938.Accordingly, the non accounting of balance of NAIS Premium receivable for Rabi 2011-12 ascurrent year income (as referred in Note 4.14 of Annexure-2) & non adjustment for correspondingfigures for the previous year has resulted in understatement (or overstatement) of current yearpremium. The monetary impact of the same is not ascertainable.Similarly, the non accounting of the claims relating to the above stated premium receivable (asreferred in Note 4.14 of Annexure-2) & non adjustment for corresponding figures for the previous


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year’s claims has resulted in understatement (or overstatement) of current year claims.The monetaryimpact of the same is not ascertainable.

(c) Assets and liabilities relating to crop insurance business taken over from GIC are subject toapproval of the Government of India (refer Note No. 2 of Notes on Accounts – Annexure -2).

5. We further report that:a. We have obtained all the information and explanations, which, to the best of our knowledge and

belief, were necessary for the purpose of our audit and found them satisfactory.b. In our opinion, proper books of accounts as required by law have been kept by the Company so

far as it appears from our examination of those books.c. In our opinion proper returns from the Regional Offices have been received and are adequate for

the purpose of our audit. We relied upon the work of Branch Statutory Auditors for informationcontained in such returns.

d. The Company’s Balance Sheet, Revenue Account and Profit & Loss Account and Cash FlowStatement dealt with by this report are in agreement with the books of account and returns.

e. The actuarial valuations of liabilities as at the year-end are duly certified by the Appointed Actuary.We have relied upon such certification for forming our opinion on the financial statement of theCompany.

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

g. In our opinion, the Balance Sheet, Revenue Account and Profit & Loss Account comply with theAccounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, to the extentapplicable to the Company and are also in conformity with the accounting principles as prescribedin the IRDA (Auditor’s Report) and IRDA (Preparation of Financial Statements) Regulations or anyorder or direction issued by IRDA in this behalf.

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

i. In our opinion and to the best of our information and according to the explanations given to us, thesaid accounts read with the Significant Accounting Policies and Notes thereon are prepared andgive the information as required by the Insurance Act, 1938; the Insurance Regulatory andDevelopment Authority Act, 1999, and the Companies Act, 1956, to the extent applicable and inthe manner so required and, subject to our observations and the possible effects of the mattersstated above in Paragraph 4(a), 4(b), and 4(c), having consequential effect on the RevenueAccount, Profit & loss account, Assets, Liabilities and Reserves and Surplus as on 31.03.2012to the extent as quantified as above and to the extent not ascertainable give a true and fair viewin conformity with the accounting principles generally accepted in India.(i) in the case of the Balance Sheet of the state of affairs of the Company as at 31st March,

2012;(ii) in the case of the Revenue Account, of the surplus in Crop Insurance business for the

year ended on 31st March, 2012;(iii) in the case of the Profit & Loss Account, of the Profit of the Company for the year ended

on 31st March, 2012; and(iv) in the case of Cash Flow Statement, of the cash flow for the year ended on 31st March,

2012.6. Further on the basis of our examination, we certify that:

(a) We have reviewed the management report and there is no apparent mistake or material

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inconsistency with the financial statements.(b) As per information and explanations given by the management, the terms and conditions as laid

down in Section 3(4) of the Insurance Act, 1938 regarding registration have been complied with.(c) To the best of our information and explanations given to us and representations made by the

Company, the Company is not a trustee of any trust.(d) We have verified the cash and bank balances, investments on the following basis:

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

(e) To the best of our information and explanations given to us and on the basis of representationsmade by the Company, no part of the assets of the policyholders’ funds has been directly orindirectly applied in contravention of the provisions of the Insurance Act, 1938, relating to theapplication and investments of the policyholders’ fund.

For M/s. S. C. Vasudeva & Co. For M/s. K. K. Ghei & Co.Chartered Accountants Chartered AccountantsFirm Regn. No. 00235N Firm Regn. No. 01342N

Abhinav Khosla D. S. SobtiPartner PartnerM. No. 087010 M. No. 016416

Place: New DelhiDate:14th May 2012


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Directors’ ReportToThe Shareholders of the Agriculture Insurance Company of India LimitedYour Directors take pleasure inpresenting the 9th Annual Report of the Company, along with the Audited Statementof Annual Accounts for the financial year ended on March 31, 2012.FINANCIAL PERFORMANCE

SN PARTICULARS Current Year Previous Year2011-12 2010-11

REVENUE ACCOUNT ( in crore)

1 Gross Direct Premium 2577 19502 Net Premium (net of re-insurance) 1357 12833 Net Premium Earned 1320 12764 Net Incurred Claims 1026 9505 Commission Earned (Net) (244) (137)6 Operating Expenses 41 457 Net Investment Income apportioned to Revenue A/c 150 1288 Revenue Profit/(Loss) 648 520

PROFIT & LOSS ACCOUNT8 Net Investment Income apportioned to P&L A/c 94 529 Other Incomes 5 0.6510 Prior Period Expenses & Adjustments 0 011 Other Expenses & Provisions (2.12) (0.59)12 Profit Before Tax 745 57313 Provision for Taxes 242 19314 Profit After Tax 502 38015 Previous year set-off & adjustments NIL NIL16 Proposed Dividend 25 2017 Dividend Distribution Tax 4 318 Transfer to General Reserve 473 35719 Balance of Profit c/f NIL NIL

The Board approved & adopted Annual Accounts for the year 2011-12 at its 49th Meeting held on 14.05.2012 alongwith Statutory Auditors’ Report.BUSINESS OPERATIONS & OPERATING RESULTSThe Gross Direct Premium (GDP) during 2011-12 is 2577 crore, as against 1950 crore during the previousyear, registering an accretion of 627 crore, with the growth rate of 33%. The Gross Premium booked under NAISwas 950 crore in comparison to 1012 crore in 2010-11. Though NAIS along with M NAIS contributed 11%growth, WBCIS recorded a phenomenal increase of 58% over the last financial year. The Company’s net retentionis 30% as per last year. Net Earned Premium (Net of Reinsurance) during 2011-12 is 1320 crore (previous year 1276 crore). RUR provisioning during 2011-12 has been increasedto 678.55 crore being 50% of the Net

Premium (previous year 641.66crore). Gross Incurred Claims ratio during 2011-12 is 80% (NAIS 80%,MNAIS73%& WBCIS 80%), as against 73% (NAIS 73.2 % & non-NAIS 73 %), during the previous year. ManagementExpenses during 2011-12 are 1.6% of GDPI. Investment portfolio of the Company as on 31stMarch, 2012 stands at

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3224 crore (previous year 2653crore). Investment Income during 2011-12 is 244 crore (average rate of return8.98%). Net Worth of the Company as on 31stMarch, 2011 is 1396 crore without considering 200 crore adhocpayment to Government of India(previous year 1123 crore). The Net Profit as on 31st March, 2012 502 crore incomparison to 381 crore as on 31st March, 2011.The Monsoon 2011For the Country as a whole, cumulative rainfall during year 2011 (up to 14 September 2011) was been 3% aboveLong Period Average. Out of 36 in 24 and deficient in 04 (mainly over east & northeast India) sub-divisions. In area-wise distribution, 91% area of the Country received excess/normal rainfall. 466 (77%) out of 603 districts of theCountry received normal to excess rainfall.National Agricultural Insurance SchemeThe National Agricultural Insurance Scheme (NAIS) is being implemented in the country from Rabi 1999-2000 withthe objective of providing a comprehensive insurance solution to the farmers in the event of failure of or damage toany of the notified crops as a result of natural calamities or widespread incidence of pests and diseases.The Scheme is available to all the farmers (both loanee and non-loanee) irrespective of their size of holding andoperates on the basis of “Area Approach”, wherein a particular area, viz., Tehsil or block or Gram Panchayat oreven Village is treated as unit of insurance. The states viz. Andhra Pradesh, Bihar, Karnataka, Kerala, MadhyaPradesh, Maharashtra, Sikkim, Andaman & Nicobar Islands, Tamil Nadu, Uttarakhand, Uttar Pradesh, WestBengal, Puducherry, Odishahave reduced the insurance unit to Gram Panchayat level from the initially adoptedlevel of Mandal/Block/Tehsil/Taluka/ District.The Scheme envisages coverage of all the Food Crops (cereals, millets and pulses), Oilseeds and other AnnualCommercial/Horticultural crops in respect of which the past yield data is available for adequate number of years.At present, 35 different crops in Kharif and an equal number of different crops in Rabi season are being covered.Though as per the Scheme provisions, small and marginal farmers are eligible for 10% premium subsidy but someState Governments have decided to extend additional premium subsidy to their farmers in select areas/ crops toall farmers/ small & marginal farmers. State Government of West Bengal decided to bear 100% premium apartfrom usual premium subsidy in Rabi 2011-12, while Andaman & Nicobar Islands administration decided to followthe same in Kharif 2011 and Rabi 2011-12 seasons.Efforts are being made to cover the gap between the insurable loan disbursed by the financial institutions and theloans being insured through regular liaison with the banks. NABARD Inspection reports in respect of regional ruralbanks and cooperative banks are also helpful to AIC to identify the gaps.Government of India has modified the risk sharing pattern under NAIS with effect from Kharif 2011 whereby yourCompany will be liable for entire claims wherever actuarial premium is charged, i.e., henceforth your Company willbe liable for (i) all additional claims arising out of additional coverage/ higher indemnity level opted under theprovisions of the scheme and also for (ii) all claims arising under Annual Commercial & Horticultural Crops. YourCompany has taken adequate measure to mitigate this additional risk and accordingly amended the pricingmethodology under NAIS and also has arranged for adequate reinsurance protection.During the past 24 seasons, beginning from Rabi 1999-2000 till Kharif 2011 seasons (till 15th May 2012) 18.76crore farmers have been covered for a sum insured of 244680 crore and cultivating area of 28.39 crore hectares;the total amount of claims of 23187 crore have been reported at a claim ratio of 317.42% benefiting 4.92 crorefarmers. Under the Scheme, 26% of the insured farmers have received claims. During this period, Kharif seasonshave accounted for 76% of insured farmers, 74% sum insured, 79% premium, 77% claims, 309% claim ratio and74% of benefited farmers. The share of non loanee farmers in Kharif 2011 season was 25%. During this season,Maharashtra, Andhra Pradesh and Karnataka accounted for 90% of insured non- loanee farmers while Maharashtra,Andhra Pradesh, Madhya Pradesh, Odisha, Uttar Pradesh and Chattisgarh accounted for 77% of insured farmers.Andhra Pradesh, Gujarat, Madhya Pradesh, Odisha and Maharashtra accounted for 78% premium for the season.The disbursement of claims has been expedited as claims are being disbursed without waiting for both Governmentof India and State Government share in claims to be received.Non-NAIS PortfolioThe Non-NAIS segment reported improved coverage in terms of the number of locations, number of crops insured,


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farmers covered and gross premium under different schemes/products. AIC also implemented the Modified NationalAgricultural Insurance Scheme (MNAIS) on pilot basis during 2011-12.Weather Based Crop Insurance SchemeWBCIS was implemented by the Company in 14 States in Kharif 2011 and 13 States in Rabi 2011-12, covering, inall, more than 35 different crops, including perennial crops like apple, citrus crops, grapes, mango, pomegranate,cashew nut, Oil palm etc. WBCIS intends to provide insurance protection to farmers against adverse weatherincidence, such as deficit and excess rainfall, long dry spells, fluctuations in minimum and/or maximum temperature,relative humidity, wind speed etc. which deem to impact the crop production adversely. It has the advantage toprocess claims within a short time of occurrence of adverse weather incidence. WBCIS is based on actuarialrates of premium, but to make the Scheme attractive, premium actually charged from farmers in respect of foodand oilseed crops is capped “at par” with NAIS, and for annual commercial and horticultural crops, the same hasbeen capped at 6 percent.Your Company insured about 75.96 lakh hectares of cultivable land in respect of 52.63 lakh farmers for a suminsured of 8341 crore, earning a premium of 837.01 crore during Kharif 2011 and about 38.49 lakh hectares ofland sown by about 31.10 lakh farmers for a sum insured of 6684 crore, for a premium of 564.22 crore duringRabi 2011-12. The reported claims,as on date of preparing this report, for Kharif 2011 is at 338.83 crore and thesame for Rabi 11-12 is 338.84 crore.Modified National Agricultural Insurance Scheme (MNAIS)Modified National Agricultural Insurance Scheme (MNAIS) was approved for its implementation on pilot basis in 50districts from Rabi 2010-11. During Kharif 2011, AIC implemented MNAIS in 31 districts in 13 States insuring 4.17lakh farmers for a sum insured of 1127.90 crore against premium of 111.30 crore and during Rabi 2011-12 in 37districts in 16 States insuring 5.97 lakh farmers for a sum insured of 1531 crore against premium of 144.57crore.So far total claims reported in respect of Kharif 2011 are 59.14 crore. The Pilot MNAIS is being continuedduring 2012-13 as well.Coconut Palm Insurance Scheme (CPIS)CPIS, covering death / loss of coconut bearing palms was approved by the Govt. of India, on pilot basis for 8 Statesviz. Andhra Pradesh, Maharashtra, Goa, Karnataka, Kerala, Orissa, Tamilnadu and West Bengal. The pilot, supportedby the Coconut Development Board, was implemented in six States, viz. Maharashtra, Karnataka, Kerala, Orissa,Tamilnadu and West Bengal during 2011-12. CDB provides 50 percent subsidy in premium, while the concernedState to the extent of 25%, and the grower bears the balance 25% of the premium. Under CPIS 2011, about 0.08lakh farmers’ plantations were insured for a sum insured of 45.92 crore, earning a premium of 0.23 crore duringthe year.Other ProductsApart from the above, AIC also implemented various in-house products, including Rainfall / Varsha Bima, Coffee,Bio fuel, Rubber etc.PRODUCT DEVELOPMENTYour Company continued its efforts to study design and fine-tune various farmer-friendly products to cater to thespecific insurance needs of the farming community. The Company made effort to ensure that these products,while conforming to sound actuarial (commercial) principles, are also affordable to the farmers.REINSURANCEFor the financial year 2011-12, the Company retained only 30% of its risk based premium and ceded 70% toreinsurance on quota share basis in the local and the international market. Our net retention is further protected bystop-loss cover.INVESTMENTSInvestment portfolio of the Company as on 31st March, 2012 stands at 3224 crore (previous year 2653 crore).The investible funds are placed in accordance with the Investment Policy 2011-12 under the supervision of theInvestment Committee of the Board. During 2011-12, the Company was able to earn an investment income of 244 crore (previous year 182 crore) at an annual average yield of 8.98% as compared to 7.85% during 2010-11.

The investment in government and other securities is made on ‘held to maturity’ basis; therefore, the market

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fluctuations do not have any impact on the yield.EXPENSES OF MANAGEMENTDuring financial year 2011-12, the Expenses of Management of the Company amounted to 41.18 crore (previousyear 44.80 crore), resulting in ME ratio of 1.6%(previous year 2.3%).DIVIDENDBased on the Company’s performance, the Directors are pleased to recommend for approval of the Members adividend of 1.25/- per share on 20,00,00,000 Equity Shares of 10/- each of the Company for the financial year2011-12 aggregating to 25 crore (exclusive of corporate dividend tax). The dividend, if approved, will be paid to theeligible members well within the stipulated period.TRANSFER TO GENERAL RESERVESThe Company has transferred 473.07 crore to the General Reserve from the balance amount of ‘Profit after Taxand Appropriations’.SOLVENCY MARGINYour Company has been able to maintain Solvency Ratio much above the stipulated requirement of 1.5. TheSolvency Ratio of your Company as on 31st March, 2012 stands at 3.18 (previous year 3.71). This solvency hasbeen arrived at without considering 200 crore ad-hoc payment made to the Government of India as per their letterno. F. No. C-13014/16/2004- Ins. I dated 23.12.2009, although the same, pending recasting of the NationalAgricultural Insurance Scheme, has been accounted for as ‘Other Advances’ in the Annual Accounts as on 31st

March 2012MATERIAL CHANGES AND COMMITMENTSNo material changes and commitments affecting the financial position of the Company has occurred between April1, 2011 and the date on which this Report has been signed.PUBLIC DEPOSITSDuring the year under review, the Company has not accepted any deposit from the public under Sections 58A and58AA of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975.ADDITIONAL INFORMATION REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS INTHE REPORT TO THE BOARD OF DIRECTORS) RULES, 1988Your Company is registered for crop insurance activity only and as such, there are no particulars to be disclosedunder the Companies (Disclosure of Particulars in the Report to the Board of Directors) Rules, 1988 with regard toconservation of energy / technology absorption.The particulars of Foreign Exchange earnings/outgo as required by the Companies Act under Section 217(1) (e)are as given below:-Foreign Exchange earnings : NILForeign Exchange outgo : NILSTATUTORY AUDITORS AND SUPPLEMENTARY AUDIT BY C&AGThe Statutory Audit Report by the Joint Statutory Auditors, namely, M/s S. C.Vasudeva & Co, Chartered Accountants,New Delhi & M/s K. K. Ghei & Co, Chartered Accountants, New Delhi, as appointed by the Comptroller andAuditor General of India [C&AG], is annexed to the Financial Statements for the year ended on 31st March 2012.The Board of Directors wishes to place on record its appreciation for the services rendered by the StatutoryAuditors. The observations of Statutory Auditors in their report, read with the relevant notes to accounts, are self-explanatory and, therefore, do not require any further explanation.It is pertinent to mention here that as per the provisions of Section 619 (3) of the Companies Act, 1956, theCompany’s Annual Accounts 2011-12 were also subjected to supplementary audit by the C & AG and they havedecided not to review the report of the Statutory Auditors on the accounts of the Company for the year ended 31stMarch 2012 and as such have no comments to make under Section 619(4) of the Companies Act, 1956.The Joint Statutory Auditors named above shall retire, and being eligible, offer themselves for re-appointment asthe Joint Statutory Auditors of the Company before the Annual General Meeting. The Company being subject to


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the provisions of Section 619B of the Companies Act, 1956, wherein more than 51% of the Subscribed and Paid-up Share Capital is held by Government Companies, the appointment of Auditors and the payment of remunerationto them is required to be approved by a special resolution, pursuant to Section 224-A of the Companies Act, 1956.Accordingly, the shareholders are requested to appoint the Auditors and fix their remuneration.MARKETING OF VARIOUS INSURANCE PRODUCTS BY OUR COMPANY & THROUGH INTERMEDIARIES-BANKS, BROKERS AND MI AGENTSAwareness and capacity building is done through various modes of advertisement – Newspaper, Television, Radio,etc., and also by distributing leaflets, pamphlets, & wall posters among the farmers. Moreover, the Companyconducts District level awareness programmes in selected districts among the farmers, Banking & State GovernmentOfficials for coverage of more and more farmers.

Our Company continues to focus on capacity building and detailed sensitization of all channel partners beforeengaging them for marketing activities under WBCIS, MNAIS and our own Products the Company empanels onlyIRDA approved intermediaries and provides them the requisite training and product literature. The intermediariesare trained on the various aspects of the government schemes, in-house products, financial compliances, policyholder servicing regulations, etc. The grass root level Brokers, Micro-insurance agents have managed to maintaingrowth in terms of farmers covered, policies issued and premium collected for the year 2011-12.

Our officers in the Regional Offices, District one man Offices and Krishi Bima Sahayaks are actively involved in themarketing of various insurance products

The major contribution to the Company’s insurance portfolio continues to come from the rural financial institutionsi.e. Branches of Cooperative Banks, Commercial Banks and Regional Rural Banks

INFORMATION TECHNOLOGYDuring this fiscal, the IT System Solution Project of the Company, ANNAPOORNA, has reached a level of maturity.The core Business Application has gone live for the flagship scheme, NAIS.The Financial Management System is already in operation.Other Applications, like Human Resource Management System, Legal Management System, AdministrationApplication and Knowledge Management System have also been made live during this year.The users have been given training in the usage of the systems and have thereafter started to work on the newsystems with hand-holding and support from the Annapoorna team.The farmers and general public have been empowered to lodge their Grievances from the comfort of their homesthrough the Online Grievance Registration facility afforded in our Portal.Total Connectivity has been achieved across our Offices and other support centers like DC/DR.The state-of-the-art Security Infrastructure & strategy envisioned in ANNAPOORNA has been accorded recognitionby the award of “CISO 2012” (Chief Information Security Officer) conferred on the Company for the second consecutiveyear.

PARTICULARS OF EMPLOYEESNone of the employees of the Company was in receipt of remuneration in excess of the limits prescribedunder Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules,1975, as amended.

PERSONNEL AND INDUSTRIAL RELATIONSYour Company is an organization with very lean manpower strength. Therefore, conversion of this scarce humanresource strength into a mechanism for meeting Company’s constant growth rate of more than 30% over a periodof nine years always remained a challenge for AIC & its HR Department. This challenge could be tackled byeffective Human Resource Policy incorporating AIC specific Cadre-strength norms, Recruitment Policy, PromotionPolicy, Training Policy etc. In this back-drop, the Company appointed HR consultant & on his submission of thereport, the Company has adopted five of the modules submitted namely Manpower/Cadre Strength, RecruitmentPolicy, Promotion Policy, Training Policy & Career Planning/Succession Planning for the next five FinancialYears.

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As per the terms of the Human Resource Report, the Company has initiated the process of recruitment of 46Officers for the financial year 2011-12 in various specialist disciplines in the entry cadre of Administrative Officers.On the basis of Human Resources Report, the Company undertook Promotion Exercise 2011-12 by promoting 47Officers in various cadres of Class I.Believing in consistent improvement in the skills of the employees, the Company has an effective training programmein different areas of work. Under which 37 officers were nominated to different technical & professional trainingprogrammes in prestigious institutions like National Insurance Academy at Pune, Administrative Staff College ofIndia at Hyderabad & other institutes of repute during the financial year 2011-12.Industrial relations remained cordial throughout the year and the Company continued to receive unstinted cooperationfrom its Employees and Officers.WELFARE OF SC/ST & OBCThe Company ensures that the instructions with regard to the implementation of policies in respect of SC/ST &OBC employees & Persons with Disabilities received from the Government from time to time are executed withoutany lapse. Further the reservation policy with regard to SC, ST & OBC in respect of recruitment is implementedstrictly as per norms and this fact has been corroborated in the in-depth inspection of the Company’ Implementationof Reservation Policy carried out on 20th May, 2011 by senior officials of Ministry of Finance headed by ChiefLiaison Officer & Director. Chief Liaison Officers have been appointed separately for SC/ ST and OBC employees.SC/ST cell has been created in the HR department at Head Office, for redressal of the complaints if any from SC/ST/OBC employees & complaint Registers are maintained for them. Cadre-wise Rosters for recruitment aremaintained and updated strictly as per the terms and conditions prescribed in this regard. Similarly, the interestsof SC/ST employees in cases of promotion are protected by implementation of Protection Clause in case of ClassI Officers & by application of specified percentage of the vacancies available for Class III and Class IV employees.OFFICIAL LANGUAGEThe Company is committed to implement the provisions of Official Language Act. During 2011-12, the Companyhas complied with the targets set by Department of Official Language, Ministry of Home Affairs, Government ofIndia. The Company submits all the mandatory reports to Ministry of Finance & Hindi Salahkar Samiti well in time.The Company has been enrolled under Section 10(4) of the Official Language Act of Government of India whichsignifies that 80 percent of the work force of the Company has working knowledge of the Official Language. GRIEVANCESWe have a well-defined Grievance Redressal Policy in place. In the current financial year we have received390 grievances and all stands redressed to the satisfaction of the complainants. All out efforts are being made toadhere to the turnaround time prescribed by IRDA while redressing the grievances. Highest standards ofcourteousness are being observed while handling grievances. Complainants approaching in person or throughphone are extended sympathetic hearing and their grievances are redressed as swiftly as possible.RIGHT TO INFORMATION ACTAs per the RTI Act, 2005, the Company appointed Central Public Information Officer, First Appellate Authority andTransparency Officer at Head Office and Assistant Central Public Information Officers at all the RegionalOffices.Mandatory information under Sec 4(1) has been uploaded on the website. In the current financial year 2011-12, theCompany received 136 applications and stands disposed off with in the time limits set by the Act against which wehave received only five first appeals. We have received not even a single notice or direction arising out of secondappeal from Central Information commission during the current financial year. We have submitted quarterly returnsfor the year 2011-12 on line to Ministry of Finance.REPORT ON CORPORATE GOVERNANCEUnder Corporate Governance the management of the Company assumes the role of a trustee for all others. Theset of systems, principles and processes by which the Company is governed provides guidelines as to how theCompany can be directed or controlled such that it can fulfill its goals and objectives in a manner that adds to thevalue of the Company and is also beneficial for all its stakeholders.BOARD OF DIRECTORSThe Board of Directors consists of 12 Directors, with one Director nominated by each Promoter Company and one


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by the Ministry of Finance, two by Ministry of Agriculture and other 3 Director who shall be experts in the relevantfield are nominated by the Government of India including the Chairman-cum-Managing Director (CMD)of the Company.The Company has only one Executive Director on its’ Board in the form of its CMD.The Directors appointed by Government of India are considered in the category of ‘independent director’, therebycontributing 50% of the Board towards independent category of director.To bring professional expertise in insurance field, the Board is represented by Mr. K. N. Bhandari and for managementexpertise the Company has Mr. Gopal Naik on its Board from Indian Institute of Management, Bangalore. Theagriculture competences are represented by the Ministry of Agriculture and finance proficiency are represented byMinistry of Finance, the Banking savvy is on the Board from NABARD and reinsurance capacity is better understoodby representative from GIC Re.There are no conflicts of interest between shareholders, policyholders and management. No one is holding twopositions in the Company, may it be Auditors, Appointed Actuary, Directors and Senior Officers.No family memberor a close relative (of any Director) as defined in the Companies Act or their associate (partner, director etc.) is onthe Board of the Company.The Company is paying sitting fee to its Non-Executive Directors and no other pecuniary relationship or transactionexists between them and the Company. The CMD is paid a salary as fixed by the Government of India, in additionto the Performance Linked Incentive (PLI) upon achievement of broad quantitative and qualitative performanceparameters based on the Statement of Intent of Annual Goals fixed by the Ministry of Finance, Govt. of India, withdue approval of the Remuneration Committee of the Board.The different annual and other policies/programmes of the Company related with various issues of the Companyare reviewed from time to time is assure inclusion of changed economic, legal and other related issues. Theprovisions of Companies Act, 1956, Insurance Act, 1938 and IRDA Regulations along with other statutory requirementsapplicable to the Company are complied with.Consequent upon superannuation of Mr. M Parshad, ex-CMD, on 30.11.2011, as per the nomination given by theGovernment of India, Mr. A. K. Roy, General Manager, General Insurance Corporation Limited served the Companyas Officiating CMD during December, 2011, thereafter Mr. Milind A Kharat, Director & General Manager, UnitedIndia Insurance Company Limited is the Officiating CMD of the Company since 2nd January, 2012.Mr. Mukesh Khullar, Mr K N Bhandari and Mr S K Chanana, rotational Directors who have held office for the longestperiod, will retire by rotation at the ensuing AGM and are eligible to offer themselves for re-appointment.Mr. Kuldip Singh, Mr. R. K. Deka and Mr. P. K. Bhagat were appointed as Additional Directors on the Board inplace of Mr. Sujit Das, Mr. I. S. Phukela and Ms. BhagyamRamani who have relinquished the office of Director ontheir superannuation from their respective organization.Also, consequent upon transfer of Mr. P. C. James as the Chair Professor, NIA, Pune who have been representingUnited India Insurance Company Limited on the Board of the Company, has been substituted with Mr. P. J.Joseph, General Manager, United India Insurance Company Limited as Additional Director in his place.Upon change in the nomination from Government of India Mr. Arvind Kumar, Joint Secretary, Department of FinancialServices, Govt. of India, Ministry of Finance has been substituted by Mr. Shashank Saksena, Director (BO II &PR), Department of Financial Services, Government of India, Ministry of Finance as Additional Director.The vacancy in the Board followed due to expiry of tenure of Mr. Lalit Kumar was filled up by the nomination madeby Government of India by the introduction of Prof. Gopal Naik from Indian Institute of Management, Bangalore.The above named Additional Directors will relinquish their office on the date of AGM under the provisions of Section253 of the Companies Act, 1956 and being willing and eligible, offer themselves for re-appointment. The Companyhas received nomination letters from Members for their appointment.The Board of Directors wishes to place on record its appreciation for the valuable contribution made by the ex-CMD; Ex-Officiating CMD and the other retired / outgoing Directors.COMPOSITION OF BOARDThe composition of the Board of Directors and the number of other Directorships and Committee positions held by

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the Directors during the year ended 31st March, 2012 are:Name (Mr./Ms.) Executive / Non-executive / Other Directorships held

Independent

M. Parshad Executive/ Independent NilA. K. Roy Executive/ Independent Anglo French; GIC Housing FinanceMilind A Kharat Executive/ Independent United India Insurance Company LimitedArvind Kumar Non-executive/Independent United India Insurance Company Limited; ICICI Bank(from Aug. 2011to Nov. 2011)R. K. Tiwari Non-executive/Independent Agriculture Finance CorporationMukesh Khullar Non-executive/Independent Food Corporation of IndiaShashank Non-executive/Independent Allahabad Bank, Deposit Insurance Credit GuaranteeSaksena Corporation, Industrial Investment Bank of India Limited(from Dec. 2011)K. N. Bhandari Non-executive/Independent Andhra Cements Ltd., Secunderabad; Hindalco Industries

Ltd.; Su-Rai Diamonds and Jewellery Ltd.; SaurashtraCement Ltd.; Shristi Infrastucture Development CorporationLtd.; Magma Fincorp Limited; Magma HDI General InsuranceCo. Ltd.; NRC Ltd., KSL Industries Ltd.; Jay Bharat & RealEstate Ltd. & Ken bee Consultants Ltd.

Gopal Naik Non-executive/Independent Foretell Business Private Limited;Edubridge Private Limited(from Dec. 2011)Bhagyam Ramani Non-executive General Insurance Corporation of India; IDBI Trusteeship(from April 2011 Services Ltd; National Stock Exchange of India Ltd.;to Jan 2012) Milestone Capital Advisors (P) Ltd.; L&T Ltd.S. K. Mitra Non-executive Agri Business Finance (AP) Ltd.; NABCONS MumbaiI. S. Phukela Non-executive Kesar Enterprises Ltd.; Prestige Assurance Plc., Nigeria;(from April 2011 The New India Assurance (Sierra Leone) Ltd.; The Newto Feb 2012) India International (UK) Limited; The New India Assurance

Co. Ltd., MumbaiS. K. Chanana Non-executive The Oriental Insurance Co. Ltd., The Industrial Credit Co.

Ltd.P. C. James Non-executive Nil(from April 2011to Jan 2012)Kuldip Singh Non-executive United India Insurance Co. Ltd.(from Nov. 2011)

P. J. Joseph Non-executive Nil(from Feb. 2011)R. K. Deka Non-executive Nil(from Apr. 2012)P. K. Bhagat Non-executive Nil(from May 2012)

The detail of the attendance of the Board Members in the Board Meetings held during the financial year 2011-12 is


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given here in below:-Name of Date of MeetingsDirectors(Mr./Ms.) 11.04.2011 21.06.2011 11.08.2011 26.11.2011 20.01.2012 14.02.2012M. Parshad Yes Yes Yes Yes - -(from April 2011to Nov.2011)Milind A. Kharat - - - - Yes Yes(from Jan. 2012to March 2012)Tarun Bajaj LOA Yes - - - -(from April 2011to August 2011)Arvind Kumar - - Yes Yes - -(from August 2011to Nov. 2011)Shashank Saksena - - - - Yes Yes(from Dec. 2011)R. K. Tiwari LOA LOA Yes Yes Yes LOAMukesh Khullar LOA LOA LOA LOA LOA YesK. N. Bhandari Yes Yes Yes Yes Yes YesGopal Naik - - - - Yes LOABhagyam Ramani Yes Yes Yes Yes Yes -S. K. Mitra Yes Yes LOA Yes LOA YesI. S. Phukela Yes Yes LOA LOA LOA YesS. K. Chanana LOA LOA Yes Yes LOA LOAP.C. James Yes LOA Yes LOA Yes - (from April 2011to Jan 2012)Kuldip Singh - - - - Yes Yes(from Nov. 2011)

P. J. Joseph - - - - - Yes(from Feb. 2012)

INFORMATION PLACED BEFORE THE BOARD OF DIRECTORSAs per covenants contained in the Corporate Governance Guidelines of IRDA, all the relevant and necessaryinformation is presented before the Board of the Company at their meetings and as stipulated under the CompaniesAct, 1956 and other enactments as applicable. No penalty was imposed on it by any Statutory Authority during2011-12. Your Company has complied with all the requirements of Regulatory Authority.In accordance with the IRDA (Preparations of Financial Statements) Regulations, 2002, the Company had disclosedin its financial statements the information on the following, including the basis, methods and assumptions onwhich the information is prepared and the impact of any changes therein are also disclosed in the annual accounts:

Quantitative and qualitative information on the Company’s financial and operating ratios, namely, incurredclaim, commission and expenses ratios;Actual solvency margin details vis-à-vis the required margin;Financial performance including growth rate and current financial position of the CompanyAny other matter, which has material impact on the insurer’s financial position.

AUDIT COMMITTEE

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In compliance with Section 292(A) of the Companies Act, 1956, the Company has an Audit Committee which is headedby an independent director who is also an expert of the insurance industry. Audit Committee is an important componentof effective accountability and governance of the Company. The Audit Committee is overseeing the financial reporting,and related processes on an annual, half-yearly and quarterly basis. The Committee also oversees the functioning ofthe internal controls and whether the control environment and procedures are accomplishing its objectives. The Committeereviews Auditor’s reports on internal controls and compliance with laws and regulation. It reviews and suggestsimprovements to internal controls and following up to correct the weaknesses in internal controls.The Committee is responsible for the recommendation of the appointment, remuneration, performance and oversightof the work of the auditors (internal/statutory/concurrent).The detail of members of the Committee and their attendancein the meetings held during the financial year 2011-12 are given here in below:-

Name of Date of Committee MeetingsMembers(Mr./Ms.) 11.04.2011 21.06.2011 11.08.2011 26.11.2011 20.01.2012 13.02.2012K. N. Bhandari Yes Yes Yes Yes Yes YesR. K. Tiwari LOA LOA LOA - - -(was member fromApril 2011 toAugust 2011)Bhagyam Ramani Yes Yes Yes Yes Yes -S. K. Mitra Yes Yes LOA Yes LOA YesS. K. Chanana LOA LOA Yes Yes LOA LOAP.C. James Yes LOA Yes LOA Yes -I.S. Phukela - - - LOA LOA LOA(was member fromNov. 2011 toFeb. 2012)

The meetings of the audit committee are attended by the members and the invitees viz., Chief Executive Officer ofthe Company i.e. CMD, Deputy General Manager (Finance), Appointed Actuary, Internal & Statutory Auditors.Company Secretary acts as the Secretary to the Committee. Members of the audit committee have accounting /related financial management / insurance expertise.The Statutory Auditors have access to the Board of Directors through the Audit Committee.INVESTMENT COMMITTEEThe Investment Committee of the Company consists of the CMD, 3 non-executive directors.The Committee oversees the investment policies and strategies; reviewing performance of investment transactions;reviewing the Company’s strategy, market scenario, risk mitigating tools and providing guidance to the Board onsignificant investment policies and matters, and overseeing the treasury management.The detail of members of the Committee and their attendance in the meetings held during the financial year 2011-12 are given here in below:-

Name of Members Date of Committee Meetings(Mr./Ms.) 11.04.2011 11.08.2011 26.11.2011 20.01.2012M. Parshad Yes Yes Yes -(from April 2011 to Nov.2011)Milind A. Kharat - - - Yes(from Jan. 2012 to March 2012)Bhagyam Ramani Yes Yes Yes YesS. K. Mitra Yes LOA Yes LOA


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S. K. Chanana LOA Yes LOA LOARISK MANAGEMENT COMMITTEEAs per Corporate Governance Regulation of IRDA, the Company has a Risk Management Committee which isheaded by an independent director who is an expert of the insurance industry along with CMD and other non-executive directors as detailed below assisted by the Chief Risk Officer (CRO) of the Company. The Committeeassists the Board in effective operation of the risk management system and follow-up on management actionplans, identify and evaluate new strategic risks; review the risk score card and determine the risks to be escalatedto the Board on regular basis.The detail of members of the Committee and their attendance in the meetings held during the financial year 2011-12 are given here in below:-

Name of Members Date of Committee Meetings(Mr.)

21.06.2011 11.08.2011 22.09.2011 26.011.2011 20.01.2012 14.02.2012M. Parshad Yes Yes Yes Yes - -(from April 2011to Nov.2011)Milind A. Kharat - - - - Yes Yes(from Jan. 2012to March 2012)R. K. Tiwari LOA LOA - - - LOA(was member Apr- Aug 2011 & againw.e.f. Feb 2012)K. N. Bhandari Yes Yes Yes Yes Yes YesI. S. Phukela LOA LOA LOA LOA LOA YesP C James - - Yes LOA Yes -(was member from April 2011 toJan 2012)

POLICYHOLDERS’ PROTECTION COMMITTEEAs per Corporate Governance Regulation of IRDA, the Company has a Policyholders’ Protection Committee whichis headed by an independent director who is an expert of the insurance industry along with CMD and other non-executive directors as detailed below. The Policyholders’ Protection Committee ensures that policyholder’scomplaints and grievances are addressed through proper procedures and an effective mechanism. The Committeeoversees compliance with the statutory requirements as laid down in the regulatory framework along with thereview of the mechanism at periodic intervals.The detail of members of the Committee and their attendance in the meetings held during the financial year 2011-12 are given here in below:-

Name of Members Date of Committee Meetings(Mr.) 21.06.2011 11.08.2011 26.11.2011 20.01.2012M. Parshad Yes Yes Yes -(from April 2011to Nov.2011)Milind A. Kharat - - - Yes(from Jan. 2012 toMarch 2012)Mukesh Khullar LOA LOA LOA LOAK. N. Bhandari Yes Yes Yes Yes

A n n u a l R e p o r t 2 0 1 1 - 1 2

25

S. K. Mitra LOA LOA Yes LOAREMUNERATION COMMITTEEThe Remuneration Committee is formed as in accordance with the guidelines issued by Department of FinancialServices, Ministry of Finance, Government of India in this regard.The detail of members of the Remuneration Committee and their attendance in the meeting held during thefinancial year 2011-12 is given here in below:-

Name of Members Date of Committee Meeting(Mr.) 11.08.2011

Arvind Kumar YesK. N. Bhandari YesS. K. Mitra

INFORMATION TECHNOLOGY COMMITTEEThe detail of members of the Committee and their attendance in the meetings held during the financial year 2011-12 are given here in below:-

Name of Members Date of Committee Meetings (Mr./Ms.) 19.09.2011 10.02.2012M. Parshad Yes -(from April 2011 to Nov.2011)Milind A. Kharat - Yes(from Jan. 2012 to March 2012)Mukesh Khullar Yes YesS. K. Chanana Yes Yes

PERSONNEL COMMITTEEThe detail of members of the Committee and their attendance in the meetings held during the financial year 2011-12 are given here in below:-

Name of Members Date of Committee Meetings(Mr./Ms.) 11.04.2011 21.06.2011 11.08.2011 22.09.2011 20.01.2012 13.02.2012M. Parshad Yes Yes Yes Yes - -(from April 2011to Nov.2011)Milind A. Kharat - - - - Yes Yes(from Jan.2012to March 2012)K. N. Bhandari Yes Yes Yes Yes Yes YesBhagyam Ramani Yes Yes Yes LOA Yes -(from April 2011to Jan.2012)S. K. Chanana LOA LOA Yes LOA LOA LOA

ETHICS COMMITTEEBesides the above Committees, an Ethics Committee has been constituted comprising of an independent Director(Chairperson); Director (BO II & PR), Ministry of Finance, Govt. of India; Director & GM, National Insurance & GM,United India Insurance. Meeting(s) of the Committee is held if so required. No meeting was required to be heldduring financial year 2011-12.


26

GENERAL MEETINGSAnnual General MeetingsMr.Mukesh Khullar, Mr. K N Bhandari and Mr. S K Chanana who are rotational Directors and have held office for thelongest period, will retire by rotation at the ensuing 9thAnnual General Meeting, and being eligible for re-appointmenthave offered themselves for re-appointment.The dates and venues of the last three Annual General Meetings of the Companyare:

Date of AGM Venue of AGM25th September, 2009 ‘Amba Deep’ (13th Floor), 14, Kasturba Gandhi Marg, New Delhi28th December 2010 ‘Amba Deep’ (13th Floor), 14, Kasturba Gandhi Marg, New Delhi11thAugust, 2011 ‘Amba Deep’ (13th Floor), 14, Kasturba Gandhi Marg, New Delhi

CAPITAL STRUCTUREThe Authorized Share Capital of the Company is 1500 crore, with the Paid-up Equity Share Capital of 200crore being held as under:-S. No. Shareholders of the Company Holding Percentage

( ) Holding1. General Insurance Corporation of India 700000000 35.002. National Bank for Agriculture and Rural Development 600000000 30.003. National Insurance Company Limited & its nominee 175000000 8.754. The New India Assurance Company Limited & its nominee 175000000 8.755. The Oriental Insurance Company Limited 175000000 8.756. United India Insurance Company Limited 175000000 8.75

TOTAL 2000000000 100.00

The Issued, Subscribed and Paid-up Share Capital of the Company is 200 crore as there was no further issue ofshares during 2011-12.SUBSIDIARY COMPANIESThe Company does not have any subsidiary.RENEWAL OF CERTIFICATE OF REGISTRATION ISSUED BY INSURANCE REGULATORY AND DEVELOPMENTAUTHORITY OF INDIA (IRDA)The Company has obtained the Certificate of Renewal of Registration for the year 2012-13 from IRDA on 20th

March, 2012.The Annual Accounts of the Company are drawn-up as per the IRDA (Preparation of Financial Statementsand Auditor’s Report) Regulations, 2002. The Company’s existing Paid-up EquityShareCapital of 200 croreconforms to the minimum capital requirement prescribed by IRDA.PUBLIC DISCLOSURE OF ACCOUNTS OF THE COMPANYThe quarterly/ half yearly and annual results are displayed on the website of the Company viz., www.aicofindia.com,though the limited reviewed half yearly and audited annual results were published in the newspapers well within thetime-limit stipulated under IRDA Regulation.DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that:

i in preparation of Annual Accounts for the year ended on 31st March 2012, the applicable AccountingStandards have been followed along with proper explanations relating to material departures, ifany;

ii appropriate Accounting Policies have been selected and have been applied consistently, and that

A n n u a l R e p o r t 2 0 1 1 - 1 2

27

the judgments and estimates made are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at the end of the financial year, and the Profit of theCompany for the year ended on 31st March, 2012;

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

iv Annual Accounts have been prepared on a “going concern” basis.ACKNOWLEDGEMENTSIn conclusion, the Board wishes to thank the Central and the State Governments, financial institutions, public andprivate sector banks, government agencies and non-government institutions who have extended their support inthe development and growth of your Company. We acknowledge the significant role played by the employees ofthe Company in contributing to the growth of the Company’s business. The Board would also like to thank all theshareholders for their support, faith and confidence reposed by them in the Company.

For & on behalf of the BoardSd/-

(Milind A. Kharat)Chairman-cum-Managing Director

“Certification for Compliance of the Corporate Governance Guidelines”I Kanika Sharma Shandil, Company Secretary, AIC of India Limited hereby certify that the Company has compliedwith the corporate governance guidelines for Insurance Companies as amended from time to time and nothing hasbeen concealed or suppressed.

Sd/-KANIKA SHARMA SHANDILCompany SecretaryAIC of India Limited


28

Annexure 3

MANAGEMENT REPORTIn accordance with Part IV of Schedule B of the Insurance Regulatory and Development Authority (Preparation ofFinancial Statements and Auditor’s Report of Insurance Companies) Regulations 2002, the management of theCompany hereby:1. Confirms that the registration number 126 granted by the IRDA continues to be valid.2. Certifies that all dues payable to the statutory authorities have been duly paid.3. Confirms that the shareholding pattern and any transfer of shares during the year are in accordance with

the statutory or regulatory requirements.4. Declares that the management has not directly or indirectly invested outside India the funds of the holders

of policies issued in India.5. Confirms that the company has maintained the required solvency margin.6 Certifies that the value of all the assets have been reviewed on the date of the Balance Sheet and that, in

our belief, the assets set forth in the Balance Sheet are shown in the aggregate at amounts not exceedingtheir realizable or market value under the several headings – “Loans”, “Investments”, “Agents balances”,“Outstanding Premium”, “Interest, Dividends and Rent outstanding”, “Interest, Dividends and Rent accruingbut not due”, “Amounts due from other persons or Bodies carrying on insurance business”, “SundryDebtors”, “Bills Receivable”, “Cash”, and the several items specified under “Other Accounts”.

7. Confirms that the company’s risk exposure under “National Agricultural Insurance Scheme (NAIS)” isadequately limited by the provisions of the scheme which restricts the company’s liability to 100% of thepremium for food crops & oilseeds, for all normal coverage as per the provision of the Scheme. Adequateprovision in respect of the company’s share of claims has been made in the accounts as per the actuarialcertificate. Appropriate reinsurance has been arranged in respect of Weather Based Crop Insurance Scheme(WBCIS), Modified National Agricultural Insurance Scheme (MNAIS), Company’s own products and AnnualCommercial & Horticulture crops & additional coverage of Food Crops and Oilseeds under NAIS.

8. Certifies that the company does not operate outside India.9. Ageing of claims indicating the trends in average claim settlement (in respect of total liability as per the

provision of the Scheme including Company’s and Central & State/UTs Government’s liability) time duringthe preceding five years is presented below:-Particulars No. of Claims Amount Involved

(No. of farmers) ( in lakh)30 days 6619202 247995.7430 days to 6 months 1069327 43822.526 months to 1 year 127933 23047.111 year to 5 years 1303 184.155 years and above 0 0.00Total 7817765 315049.53

10. Certifies that the value of investments, stocks and shares, as shown in the Balance Sheet, have beenarrived at as stated in the “Significant Accounting Policies” (No. 5).

11. Certifies that the review of quality and performance of investments is as mentioned in the “Notes formingpart of Accounts” (No. 8). No loans, except loans to staff members, have been granted by the company

12. Confirms that:-(i) In the preparation of financial statements, the applicable accounting standards, principles and

policies have been followed along with proper explanations for material departures, if any;(ii) The management has adopted accounting policies and applied them consistently (including those

A n n u a l R e p o r t 2 0 1 1 - 1 2

29

specifically required by various IRDA Regulations) and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of the company atthe end of the financial year and of the profit of the company for the year;

(iii) The management has taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the applicable provisions of the Insurance Act, 1938 (4 of 1938)/Companies Act, 1956 (1 of 1956), for safeguarding the assets of the company and for preventingand detecting fraud and other irregularities;

(iv) The management has prepared the financial statements on a “going concern” basis;(v) The management has ensured that an internal audit system commensurate with the size and

nature of the business exists and is operating effectively;(vi) Certifies that no payment has been made to individuals, firms, companies and organizations in

which the Directors of the company are interested.

(Kanika Sharma Shandil) (K. K. Gupta) (M. K. Poddar)Company Secretary Manager Dy. Gen. Manager

(K.N. Bhandari) (S. K. Mitra) (Milind A. Kharat)Director Director Chairman-cum-Managing DirectorDIN 00191219 DIN 00760048 DIN 02502200

Date: 14.05.2012Place: New Delhi


30

REGISTRATION NO. 126DATE OF REGISTRATION WITH IRDA: OCTOBER 30, 2003

REVENUE ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2012CROP INSURANCE BUSINESS

S N PARTICULARS Schedule Current Year Previous year31.03.12 31.03.11( ‘000) ( ‘000)

1 Premium Earned (Net) 1 13202136 127591642 Profit/Loss on Sale/Redemption of Investments 36 151863 Others 0 04 Interest, Dividend & Rent -Gross 1501627 1284843

TOTAL (A) 14703799 14059193

1 Claims Incurred (Net) 2 10257502 95014642 Commission 3 (2461462) (1310760)3 Operating Expenses related to Insurance Business 4 411821 4480414 Expenses related to Investments :

a) Amortization of Premium on Investments 10406 16662b) Stock Holding Charges 854 866c) Bank Interest & Charges 1680 113d) Cenvat Credit Input Claimed 0 200000

TOTAL (B) 8220801 8856386

Operating Profit from Crop Insurance Business C=(A-B) 6482998 5202806

APPROPRIATIONSTransfer to Shareholders’ Account 6482998 5202807Transfer to Catastrophe Reserve 0 0Transfer to Other Reserves 0 0

TOTAL 6482998 5202807

As required by Section 40 C (2) of the Insurance Act, 1938, we certify that to the best of our knowledge and according tothe information and explanations given to us and so far as it appears from our examination of the books of accounts ofthe Company, all expenses of management, wherever incurred, whether directly or indirectly in respect of Crop InsuranceBusiness have been fully debited in the Revenue Account as expenses in accordance with Accounting Policy as perAnnexure 1.

(Kanika Sharma Shandil) (K.K. Gupta) (M.K.Poddar)Company Secretary Manager Dy. Gen. Manager

(K.N. Bhandari) (S.K. Mitra) (Milind A.Kharat)Director Director Chairman-cum-Managing DirectorDIN 00191219 DIN 00760048 DIN 02502200

for M/s S.C.VASUDEVA & CO. for M/s K.K.GHEI & CO.Chartered Accountants Chartered AccountantsFirm Regn. No. 000235N Firm Regn. No. 001342N

(Abhinav Khosla) (D.S.Sobti)Partner PartnerM.No. 087010 M.No.016416

Place: New DelhiDate: 14.05.2012

A n n u a l R e p o r t 2 0 1 1 - 1 2

31


PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2012CROP INSURANCE BUSINESS

S N PARTICULARS Schedule Current Year Previous year31.03.12 31.03.11( ‘000) ( ‘000)

1. OPERATING PROFIT/(LOSS)

Crop Insurance Business 6482998 5202807

2. INCOME FROM INVESTMENTS

a) Interest,Dividend & Rent-Gross 937701 519907

b) Profit on Sale of Investments 22 6145

3. OTHER INCOME

a) Miscellaneous Receipts 45964 6288

b) Profit on Sale of Assets 0 163

c) Prior Period Income 0 0

TOTAL (A) 7466685 5735310

4. PROVISIONS (other than Taxation)

a) Dimunition in the value of Investments 0 0

b) Provision for Doubtful Debts 0 (13550)

c) Provision on Standard Assets 12430 8391

5. OTHER EXPENSES

a) Expenses other than those related to insurance business 0 0

b) Amortisation of Premium on Investments 6498 10649

c) Stock Holding Charges 534 350

d) Bank Interest & Charges 1049 46

e) Loss on Sale of Assets 728 0

f) Preliminary Expenses Written off 0 0

g) Prior Period Expenses 0 0

TOTAL (B) 21239 5886

PROFIT BEFORE TAX (C=A-B) 7445446 5729424


32

PROVISION FOR TAXATIONa) Income Tax (Current Year) 2430000 1914949

b) Income Tax (pertaining to earlier years) 5450 2836

c) Wealth Tax 386 358

d) Fringe Benefit Tax 0 0

e) Deferred Tax (11677) 8322

TOTAL (D) 2424159 1926465

PROFIT AFTER TAX AVAILABLE FOR 5021287 3802959APPROPRIATION (E=C-D)

APPROPRIATIONSa) Interim Dividend paid during the year 0 0

b) Proposed Final Dividend 250000 200000

c) Dividend Distribution Tax 40556 32446

d) Transfer to General Reserve 4730731 3570513

TOTAL 5021287 3802959

PROFIT AFTER TAX & APPROPRIATIONS 0 0

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

BALANCE C/F TO BALANCE SHEET 0 0

Basic Earning per Share 25.11 19.01

Diluted Earning per Share - -

Number of Equity Shares 20,00,00,000 20,00,00,000

Nominal Value per Share 10/- 10/-

Accounting Policies and Notes on Accounts are as per Annexure-1 & 2 respectively






A n n u a l R e p o r t 2 0 1 1 - 1 2

33


BALANCE SHEET AS AT 31ST MARCH, 2012CROP INSURANCE BUSINESS

PARTICULARS Schedule Current Year Previous year31.03.12 31.03.11( ‘000) ( ‘000)

SOURCES OF FUNDSShare Capital 5 2000000 2000000Reserves & Surplus 6 13959014 9228283Fair Value Change Account (37935) 38217Borrowings 7 0 0

TOTAL 15921079 11266500APPLICATION OF FUNDSInvestments 8 20035484 15648366Loans 9 11919 12469Fixed Assets 10 197678 234924Deferred Tax Asset (Net) 31029 19352Current Assets:Cash & Bank Balances 11 12265140 16294625Advances & Other Assets 12 5444394 4953470

Sub - Total (A) 17709534 21248095Current Liabilities 13 14372045 19074289Provisions 14 7692520 6822417

Sub - Total (B) 22064565 25896706Net Current Assets (C) = (A) - (B) (4355031) (4648611)

Miscellaneous Expenditure(to the extent not written off or adjusted) 0 0Debit Balance in Profit and Loss Account 0 0

TOTAL 15921079 11266500Contingent LiabilitiesClaims, other than against Policies, notacknowledged as debts by the Company 0 0

Accounting Policies and Notes on Accounts are as per Annexure-1 & 2 respectively







34

SCHEDULES FORMING PART OF FINANCIAL STATEMENTSFOR THE YEAR ENDED 31ST MARCH, 2012

SCHEDULE 1 : PREMIUM EARNED (NET)PARTICULARS Schedule Current Year Previous year

31.03.12 31.03.11( ‘000) ( ‘000)

Premium from Direct Business written 25768510 19500541Add: Premium on Reinsurance Accepted 0 212Less: Premium on Reinsurance Ceded 12197489 6667502Net Premium 13571021 12833251Adjustment for change in Reserve for Unexpired Risks (368885) (74087)

TOTAL PREMIUM EARNED (NET) 13202136 12759164

SCHEDULE 2 : CLAIMS INCURRED (NET)PARTICULARS Current Year Previous year

31.03.12 31.03.11( ‘000) ( ‘000)

Claims Paid - Direct 14355904 12487672Add: Reinsurance Accepted 0 280Less: Reinsurance Ceded 4034519 1968684Net Claims paid 10321385 10519268Add: Claims Outstanding at the end of the Current period 21856196 15605975Add: Reinsurance Accepted 0 0Less: Reinsurance Ceded 10355830 4041726Net Claims Outstanding at the end of Current period 11500366 11564249Less: Claims Outstanding at the end of the Previous Year 15605975 13836948Add: Reinsurance Accepted 0 0Less: Reinsurance Ceded 4041726 1254895Net Claims Outstanding at the end of the Previous Year 11564249 12582053Gross Incurred Claims 20606125 14256699Add: Reinsurance Accepted 0 280Less: Reinsurance Ceded 10348623 4755515NET CLAIMS INCURRED 10257502 9501464

SCHEDULE 3 : COMMISSIONPARTICULARS Current Year Previous year

31.03.12 31.03.11( ‘000) ( ‘000)

Commission Paid - Direct 243890 137006Add: Reinsurance Accepted 0 42Less: Commission on Reinsurance Ceded* 2705352 1447808

NET COMMISSION (2461462) (1310760)Break- up of the expenses (gross) incurred to procure business to be furnished as per details indicated below:Agents 0 0Brokers 7786 7372Corporate Agency 0 0Referral 0 0Micro Insurance Agents/NGO's etc. 6222 2797Others (Bank Service Charges to Banks, as per scheme) 229882 126837

TOTAL (B) 243890 137006*includes Loss Assessment Expenses recovered from re-insurers as part of commission amounting 95429 thousand (previous year42082 thousand, netted from Research & Development expenses under S.No. 11 of Schedule 4 amounting 36178 thousands)

A n n u a l R e p o r t 2 0 1 1 - 1 2

35

SCHEDULE 4 : OPERATING EXPENSES RELATED TO INSURANCE BUSINESS

S N PARTICULARS Current Year Previous year31.03.12 31.03.11( ‘000) ( ‘000)

1 Employees’ Remuneration & Welfare benefits 132531 1514122 Travel, Conveyance and Vehicle running expenses 15873 129233 Training Expenses 947 6624 Rent, Rates & Taxes 32743 276615 Repairs 4204 57576 Printing & Stationery 3166 35467 Communication 4289 43328 Legal & Professional charges 14120 252339 Auditor’s fees, expenses etc.

a) as Auditor 885 746b) as Advisor or in any other capacity, in respect of

(i) Taxation matters 194 142(ii) Insurance matters 0 0(iii) Management Services 0 0

c) in any other capacity 0 010 Advertisement & Publicity 4375 280411 Research & Development Expenses 48094 3617812 Fees & Subscription to Statutory Authorities 14904 3039313 Interest & Bank Charges 135 8214 Depreciation 47969 3108515 Information Technology 74410 10412316 Others 12982 10962

TOTAL 411821 448041

1) S.No. 11 includes expenses incurred on procurement of weather data (Previous year figure of (5904)thousand)arrived at after expenses of 36178 thousands netted against Loss Assessment expenses recovered 42082thousand).

2) S.No. 14: Total depreciation for the year is 51786 thousands (previous year 34686 thousands), includingamortisation of intangible assets 17917 thousand (previous year 6085 thousand), however shown here 47969thousands ( previous year 31085 thousands), net of Government share in terms of NAI Scheme of reimbursementof 3817 thousands (previous year 3601 thousands)

SCHEDULE 5 : SHARE CAPITAL

S N PARTICULARS Current Year Previous year31.03.12 31.03.11( ‘000) ( ‘000)

1 Authorised Capital150 crore Equity Shares of 10/- each 15000000 15000000

2 Issued Capital20 crore Equity Shares of 10/- each 2000000 2000000

3 Subscribed Capital20 crore Equity Shares of 10/- each 2000000 2000000

4 Called-up & Paid-up Capital20 crore Equity Shares of 10/- each 2000000 2000000Less: Preliminary Expenses 0 0

TOTAL 2000000 2000000


36

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

S N Shareholders Current Year Previous Year31.03.12 31.03.11

Number of % of Number of % ofShares (‘000) Holding Shares (‘000) Holding

A. PROMOTERS - INDIAN1 General Insurance Corporation of India 70000 35% 70000 35%2 National Agriculture Bank for Rural

Development 60000 30% 60000 30%3 National Insurance Company Ltd.

& its nominee 17500 8.75% 17500 8.75%4 The New India Assurance Company Ltd.

& its nominee 17500 8.75% 17500 8.75%5 The Oriental Insurance Company Ltd. 17500 8.75% 17500 8.75%6 United India Insurance Company Ltd. 17500 8.75% 17500 8.75%

TOTAL: 200000 100% 200000 100%

B. PROMOTERS - FOREIGN NIL NIL NIL NIL

TOTAL 200000 100% 200000 100%

SCHEDULE 6 : RESERVES & SURPLUS

S N PARTICULARS Current Year Previous Year31.03.12 31.03.11( ‘000) ( ‘000)

1 Capital Reserve 0 02 Capital Redemption Reserve 0 03 Share Premium 0 04 General Reserve

Opening Balance 9228283 5657770Less:Charge on account of transitionalprovisions under Accounting Standard 15 0 0Add: Profit transferred during the year 4730731 13959014 3570513 9228283

5 Catastrophe Reserve 0 06 Other Reserves 0 0

Balance of Profit in Profit & Loss Account 0 0

TOTAL 13959014 9228283

SCHEDULE 7 : BORROWINGS


1 Debentures & Bonds 0 02 Banks (Secured against Deposits) 0 03 Financial Institutions 0 04 Others 0 0

TOTAL 0 0

A n n u a l R e p o r t 2 0 1 1 - 1 2

37

SCHEDULE 8 : INVESTMENTS


A. LONG TERM INVESTMENTS1 Government Securities and

Govt. Guaranteed Bonds including Treasury Bills 9657476 80796942 Other Approved Securities - Housing Sector Bonds 2496753 23789703 Other Investments:

a) Shares(i) Equity 326417 398063(ii) Preference 0 0

b) Mutual Funds 0 0c) Derivative Instruments 0 0d) Debentures/Bonds 650000 400000e) Other Securities-Tier II Bonds 120000 120000f) Subsidiaries 0 0Investment in Properties - Real Estate 0 0

4 Investments in Infrastructure & Social Sector 4421223 33398225 Other than Approved Securities 0 0

Sub - Total (A) 17671869 14716549

B. SHORT TERM INVESTMENTS1 Government Securities and

Govt. Guaranteed Bonds including Treasury Bills 59946 2517812 Other Approved Securities - Housing Sector Bonds 506893 1000003 Other Investments:

a) Shares:(i) Equity 0 0(ii) Preference 0 0

b) Mutual Funds 1107276 0c) Derivative Instruments 0 0d) Debentures/Bonds 0 0e) Other Securities (Commercial Papers) 292025 48636f) Subsidiaries 0 0g) Investment in Properties - Real Estate 0 0

4 Investments in Infrastructure & Social Sector 397475 5314005 Other than Approved Securities 0 0

Sub - Total (B) 2363615 931817

GRAND TOTAL (A+B) 20035484 15648366

Note: A provision of 73640 thousand (Previous Year 61210 thousand) on Standard Assets in respect ofinvestment in Debentures/Bonds appears under item 5 (iv) in Schdule 14.

Market Value of Investments on 31.03.2012 32199556 26568768Less: Fair Value Change Account (37935) 38217Book Value of Investments as on 31.03.2012 32237491 26530551


38

SCHEDULE 9 : LOANS


1 SECURITY-WISE CLASSIFICATIONA. Secured:

a) On mortgage of Property:(i) In India 0 0(ii) Outside India 0 0

b) On Shares, Bonds, Government Securities 0 0c) Others

(i) Loans to Staff 11919 12469B. Unsecured 0 0

TOTAL 11919 12469

2 BORROWER-WISE CLASSIFICATIONa) Central & State Governments 0 0b) Banks & Financial Institutions 0 0

Subsidiaries 0 0d) Industrial Undertakings 0 0e) Others (Loans to Staff) 11919 12469

TOTAL 11919 12469

3 PERFORMANCE-WISE CLASSIFICATIONa) Loans classified as Standard:

(i) In India 11919 12469(ii) Outside India 0 0

b) Non-Performing Loans, less provisions:(i) In India 0 0(ii) Outside India 0 0

TOTAL 11919 12469

4 MATURITY-WISE CLASSIFICATIONa) Short Term 0 0b) Long Term 11919 12469

TOTAL 11919 12469

A n n u a l R e p o r t 2 0 1 1 - 1 2

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40

SCHEDULE 11 : CASH AND BANK BALANCES


1 Cash (including Cheques, Drafts & Stamps) 94 1493992 Bank Balances

a) Deposit Account(i) Short term (due within 12 months) 12063890 10819610(ii) Others 35 4801642

b) (i) Current Accounts 201016 466167ii) Others 105 385

c) Others (Remittances in Transit) 0 574223 Money at Call and Short Notice

a) With Banks 0 0b) With Other Institutions 0 0

4 Others 0 0TOTAL 12265140 16294625

SCHEDULE 12 : ADVANCES AND OTHER ASSETS


A. ADVANCES1 Reserve Deposits with Ceding Companies 0 02 Application Money for Investments 0 03 Pre-payments 23406 191954 Advances to Officers & Staff 3859 27525 Advance Tax Paid & Taxes Deducted at Source

(Net of Provision for Taxation) 0 4331486 Others:a) Advance Rent paid 0 8b) Sundry Advances 251 63

Sub - Total (A) 27516 455166B. OTHER ASSETS1 (a) Income accrued on investments 1155860 8818161 (b) Income accrued on flexi deposit 0 1221642 Outstanding Premium 0 03 Agents’ Balances 0 04 Due from other entities carrying on Insurance

Business (including reinsurers) 234660 499955 Due from subsidiaries/holding company 0 06 Deposit with Reserve Bank of India

(Pursuant to Section 7 of Insurance Act, 1938) 100182 100793

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41

7 Others:a) Sundry Deposits 33110 32126b) Advance against Capital Assets 15943 6328c) Short Collection of Premium 14551 17798d) Premium Receivable 0 0e) Others (Adhoc payment to Govt. of India) 2000000 2000000f) Government (Centre/States/UTs/Coffee Board) 1812246 1235063g) Sundry Debtors 25189 27983h) Cenvat Credit Receivable 25137 24238

Sub - Total (B) 5416878 4498304GRAND TOTAL (A+B) 5444394 4953470

SCHEDULE 13 : CURRENT LIABILITIES


1 Agents Balances 0 02 Balance Due to other Insurance Companies 344549 102323 Deposits held on Reinsurance Ceded 0 04 Premium received in advance 0 05 Unallocated Premium 0 06 Sundry Creditors

a) Cheques issued to insureds, but not encashed 60493 40982b) Sundry Creditors, other than 6(a) 208743 214360

7 Due to Subsidiary/Holding Company 0 08 Claims Outstanding

a) Claims settled but not paid 503964 371860b) Claims outstanding, other than 8(a) 10996402 11192389

9 Due to Officers/Directors 0 010 OTHERS:

a) Excess Collection of Premium 98704 119411b) Expenses Payable 236132 150474c) Earnest Money Deposit 2445 2640d) Government (Centre/States/UTs/Coffee Board) 1920613 6971941

TOTAL 14372045 19074289Note: Unclaimed amount of Policyholders/Insureds comprises:(1) Sum due to insured/policyholders on maturity or other wise NIL (previous year NIL)(2) The amount 6,04,93 thousand (previous year 4,09,82 thousand) mentioned against line item 6(a)pertains tocheques rendered stale. In addition, valid cheques amounting to 11,64,78 thousand (previous year 73,19,35)issued to insureds for settlement of claims/excess collection but not encashed.


42

SCHEDULE 14 : PROVISIONS


1. Reserve for Unexpired Risk 6785511 64166262. For Taxation (Net of Advance Tax & TDS) 421459 03. For Proposed Dividend 250000 2000004. For Dividend Distribution Tax 40556 324455. Others:

i) Provision for Retirement Benefits 91353 81063ii) Provision for Doubtful Debts 47 47iii) Provision for Premium Defalcation 18733 18733iv) Provision on Standard Assets 73640 61210v) Provision for Outstanding Expenses 11221 12293

TOTAL 7692520 6822417

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


1. Discount allowed in issue of shares 0 02 Research & Development Expenses 0 03 Preliminary Expenses 0 04 Others 0 0

TOTAL 0 0

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Annexure 1

SIGNIFICANT ACCOUNTING POLICIES1 Accounting Convention1.1 The Balance Sheet, Profit & Loss Account and Revenue Account are drawn up in accordance with the

provisions of Section 11 (1) of the Insurance Act, 1938, read with the provisions of sub-sections (1), (2) and(5) of Section 211 and sub-section (5) of Section 227 of the Companies Act, 1956.

1.2 The Financial Statements conform to the stipulations specified under the Insurance Regulatory andDevelopment Authority (Preparation of Financial Statements and Auditors’ Report of Insurance Companies)Regulations, 2002, to the extent applicable.

1.3 The said statements are prepared on “Historical Cost” convention, on “Accrual” & “Going Concern” basis,in accordance with the generally accepted Accounting Principles, and other Statutory provisions andpractices prevailing in the general insurance industry in India, to the extent applicable, complying with theAccounting Standards issued under The Companies (Accounting Standards) Rules, 2006 and the relevantprovisions of the Companies Act, 1956, except as stated otherwise.

2 Policyholders’ Fund and Shareholders’ Fund2.1 The Policyholders’ Fund includes Technical Reserves (including Reserve for Unexpired Risks) and Provision

for Outstanding Claims (including IBNR & IBNER).2.2 The Shareholders’ Fund includes Share Capital, General Reserve, any other free Reserve, balance in

Profit & Loss A/c and Capital Reserves.3 Revenue Recognition3.1 Premium is recognized, net of reinsurance, based on assumption of risk, in the Revenue Account. In

respect of Government Schemes being implemented by the Company, premium is recognized uponremittance received from the Nodal Banks out of such premium collected by them. Risk however, isassumed in accordance with the provisions of the relevant Scheme, notwithstanding the delay, if any, inreceipt of premium by the Company from the nodal agencies/ Central / States/ UTs Government/ GovernmentAgencies, as allowed by IRDA vide its letter no. 34-1/IRDA/Act1/IBNR/AIC/2009-10 dated 26/08/2010.

3.2 Premium refunds/adjustments are accounted for on the basis of endorsements passed during the year.3.3 Interest Income is accounted for on accrual basis in respect of investments in Fixed Deposits with Banks,

Government Securities, Bonds & other Instruments.3.4 Dividend is accounted for in the year when the right to receive has been established. Dividend/Interest on

Shares/Debentures pending delivery/under objection is accounted for on realization. Interim Dividend isaccounted for where the warrants are issued by 31st March of the concerned financial year

4 Fixed AssetsFixed assets are stated at cost less accumulated depreciation. Cost includes the purchase price and anycost directly attributable to bringing the asset to its working condition for its intended use. Subsequentexpenditure incurred on fixed assets is expensed out except where such expenditure increases the futurebenefits from the existing assets.

4.1 Depreciation on Fixed Assets: Depreciation on Fixed Assets is charged on “Written Down Value” at therates specified in Schedule XIV of the Companies Act, 1956. Depreciation on addition / deletion of FixedAssets during the year is charged on pro-rata basis. Assets costing up to 5,000 (Rupees five thousand)are fully depreciated in the year of acquisition.

4.2 Intangible Assets: Intangible assets are recognized when it is probable that future economic benefitattributable to the assets will flow to the company and the cost of the assets can be measured reliably. Suchassets are stated at cost less accumulated amortization.

4.3 Amortization of Intangible Assets: Computer software which is not an integral part of the related hardwareis classified as Intangible Asset and is amortized over its estimated useful life not exceeding the period ofthirty six months.


44

4.4 Impairment of assets: Management periodically assesses, using external and internal sources, whetherthere is any indication that an asset may be impaired. Impairment occurs where the carrying value exceedsthe present value of future cash flows expected to arise from the continuing use of the asset and itseventual disposal. The impairment loss to be expensed is determined as the excess of the carryingamount over the higher of the asset’s net sales price or present value as determined above. If at thebalance sheet date there is an indication that a previously assessed impairment loss no longer exists, therecoverable amount is reassessed and the asset is reflected at the recoverable amount, subject to amaximum of depreciable historical cost.

5 Investments5.1 Investment in debt securities including Government Securities are considered as held to maturity securities

and valued at historical cost. In terms of IRDA regulations, the premium paid at the time of acquisition ofsuch securities is amortized over the residual period of maturity.

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

5.3 Investment Portfolio in respect of Equity / Equity related instruments is segregated into Actively Tradedand Thinly Traded as prescribed by IRDA Regulations. A security is treated as thinly traded taking intoconsideration the prescribed SEBI guidelines governing mutual funds.

5.4 Actively traded equity / equity related instruments are shown at their Fair Value. “Fair Value” for thispurpose is the lower of the closing prices at NSE and BSE on the Balance Sheet date, as per IRDARegulations and the net unrealized gain/loss on such valuation is reflected in the “Fair Value ChangeAccount”. On realization it is reported in the Profit & Loss Account and un-realized gains/losses arisingdue to changes in the fair value of actively traded equity shares are accounted in “Fair Value ChangeAccount.” Pending realization, the credit balance in the “Fair Value Change Account” is not available fordistribution.Profit/Loss on sale/redemption of equity investment, if any, is accounted for on “First in First out” (FIFO)method.

5.5 Investment in thinly traded equity shares and unlisted equity shares are shown at cost. However, differencebetween cost and break-up value is provided for as diminution in value. If the break-up value is negativethen the provision is made for the entire cost. Further, if the published accounts of an unlisted companyare not available for last three accounting years ending on or immediately preceding the date of workingout diminution in value, then provision is made for the entire cost.

5.6 Investment in listed Equity/Equity related instruments/Preference Shares made in those companies whichare making losses continuously for the last 3 years and where capital is eroded, are considered to haveimpaired in value. Further, if the published accounts of a company are not available for the last threeaccounting years ending on or immediately preceding the date of working out the impairment in value, itis presumed that the value of investment is fully impaired and is written off to a value of 1/- per company.Valuation of such investments is done as under:-

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

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

5.7 “Collateralized Borrowing and Lending Obligation” (CBLO) which is issued at discount to the Face Value,is treated as Money Market Instrument as per RBI Notification. Discount earned, if any, at the time of

A n n u a l R e p o r t 2 0 1 1 - 1 2

45

lending through CBLO is shown as income, which is apportioned on time basis.5.8.1 Provisions for standard/non-performing loans/debt securities are made on the basis of prudential norms

issued by RBI as applicable to Financial Institutions, as required by IRDA.5.8.2 The investment in Government Securities and corporate Bonds are considered as standard assets on

which provision @ 0.40% is made.5.9 In respect of Crop Insurance schemes sponsored by the Government, the income on investment of funds

received from the Government towards specific Funds (viz. “NAIS-Corpus Fund”) is credited to the relevantFund; no credit for investment income, if any, is given to the Government in respect of other amountsreceived to meet the financial liabilities under the Scheme as these amounts are meant for implementationof the Scheme and are required to be kept in readiness for disbursement of claims/meeting out of otherfinancial obligations at short notice.

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

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

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

7 Short and Excess CollectionShort and Excess Collection of Premium is accounted for Scheme-wise, State/UT-wise. Recovery ofShort Collection, Refund of Excess Collection and adjustment of Short against Excess of the same NodalBank, are made season-wise, from time to time.

8 Provision in respect of Crop Insurance BusinessProvision in this regard is made at the time of annual closing of accounts. Currently, as per the statutoryrequirements and the Policy of the Company in force, the following Provisions are made:Reserve for Unexpired Risks [RUR]RUR is made to the extent of 50% of Net Premium Income of the year.Net Premium = Direct Premium + Premium on reinsurance accepted – Premium on reinsurance ceded

9 Provision in respect of Crop Insurance ClaimsProvisions are made at the time of annual closing of accounts. The total of the Provision for OutstandingClaims (including IBNR & IBNER) under NAIS (normal coverage) is not to exceed the “Maximum PotentialLiability” [MPL] of the Company, as the claims in excess thereof are borne by the Government. Currently,as per the statutory requirements and the Policy of the Company in force, the following Provisions aremade:

9.1 Provision for Outstanding ClaimsEstimated Liability for Outstanding Claims in respect of Crop Insurance Business is provided for at theyear-end, in terms of the concerned scheme/policy provisions.No Provision is made for claims contested by the claimants through litigation but not acknowledged asdebt by the Company.In respect of litigation cases, where awards have been made against the Company, appropriate Provisionsare made to the extent of the Company’s liability

9.2 Claims – IBNR & IBNER: Provisions for Claims Incurred but Not Reported (IBNR) and for Claims Incurredbut Not Enough Reported (IBNER) are made as per the Actuarial Certification.


46

10 Reinsurance Business(a) Reinsurance premium ceded is accounted for at the time of recognition of premium income in accordance

with the treaty or in-principle arrangement with the reinsurers.(b) Commission received on reinsurance ceded is recognized as income in the period in which reinsurance

premium is ceded.11 Accounting for Taxes on Income

Income tax expense is accrued in accordance with Accounting Standard (AS) – 22 “Accounting for Taxeson Income” as specified in Companies (Accounting Standards) Rules, 2006.

11.1 Current Tax: Current income tax is aggregate of Income tax determined to be payable in respect of taxeson income for the year.

11.2 Deferred Tax: Deferred tax reflects the impact of current year timing differences between taxable incomeand accounting income for the year and reversal of timing differences of earlier years. Deferred tax assetsand liabilities are measured using the tax rates and tax laws that have been enacted or substantivelyenacted by the balance sheet date. Deferred tax assets are recognised for all deductible timing differencesonly if there is reasonable certainty as to its realisation. However, where there are unabsorbed tax lossesincluding unabsorbed depreciation, deferred tax asset are recognised only if there is virtual certainty thatsuch deferred tax assets can be realised against future taxable income.The carrying amount of deferred tax assets is reviewed at each balance sheet date and adjusted to theextent that it is no longer probable that sufficient taxable income will be available to allow all or part of thedeferred tax asset to be realized.

12 Employees’ Benefits12.1 Short Term Employee Benefits

Short Term Employee Benefits are recognized as an expense on an undiscounted basis in the Profit andLoss account of the year in which the related service is rendered.

12.2 Post-Employment BenefitsDefined Contribution Plans

(a) The employer’s contribution to Provident Fund and Employees Pension Scheme, of employees absorbedfrom GIC is a defined contribution plan and is made in accordance with the GIC Pension / Provident Fundand the funding continues to be with GIC Pension / Provident Fund Trust.

(b) For the employees directly appointed by the Company on or after January, 2004 the employer’s contributionto pension fund is made in accordance with the New Pension Scheme, 2004 (i.e. recognised on accrual& paid monthly).Defined Benefit Plans

(a) Gratuity: The Employees Gratuity Fund Scheme is a defined benefit plan. The liability for gratuity isprovided on actuarial valuation at the end of the year, without any funding arrangement.

(b) Pension: The Pension plan of the Company is a defined benefit. The present value of the Company’sobligations under Pension in respect of erstwhile employees absorbed from GIC is recognized on thebasis of an actuarial valuation as at the end of the year in proportion to the service rendered to GIC and thecompany. The liability is not funded.In respect of employees covered under New Pension Scheme, the matching employer’s contribution isrecognized on accrual and paid monthly

12.3 Long Term Employee BenefitsThe liability for leave encashment, sick leave and leave travel subsidy is recognized on the basis ofactuarial valuation at the end of the year.

13 Earning per ShareBasic earnings per share are calculated by dividing the net profit or loss for the period attributable toequity shareholders by the weighted average number of equity shares outstanding during the period. For

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47

the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable toequity shareholders and the weighted average number of shares outstanding during the period are adjustedfor the effects of all dilutive potential equity shares

14 Contingent LiabilitiesContingent liability is disclosed in the case of:

(a) a present obligation arising from a past event when it is not probable that an outflow of resources embodyingeconomic benefits will be required to settle the obligation or;

(b) a possible obligation, unless the probability of outflow in settlement is remote15 Contingent Assets

Contingent Assets are neither recognized nor disclosed.16 Accounting for Government Grants

Government Grants related to revenue are recognized in the profit and loss account on a systematic basisover the periods necessary to match them with the related costs which they are intended to compensate.Such grants are deducted in reporting the related expense.

17 MiscellaneousTelephone/Electricity/Water or such other deposits with the Local /Statutory Authorities have been chargedoff to the Revenue Account after retaining 1 under the Deposit Head, for control purposes. If any amountis subsequently recovered towards these deposits, the same is credited to “Miscellaneous Income”

Only those prepaid expenses which are 10,000/- or more are carried forward to the next financial year.



for M/s S C Vasudeva & Company for M/s K K Ghei & CompanyChartered Accountants Chartered AccountantsFirm Regn. No. 000235N Firm Regn. No. 001342N

(Abhinav Khosla) (D S Sobti)Partner PartnerM.No. 087010 M.No. 016416



48

Annexure – 2

Notes Forming Part of Accounts1. IRDA Compliance

The Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors’Report of Insurance Companies) Regulations, 2002, have been complied with in the presentation of theseaccounts, to the extent applicable.

2 2.1 Takeover of Crop Insurance BusinessThe Company was designated as the Implementing Agency for ‘National Agricultural InsuranceScheme’ with effect from 1st April 2003 by the Ministry of Agriculture, Government of India, vide itsletter dated 22nd October 2003. Accordingly, the crop insurance business was taken over by thecompany from the General Insurance Corporation of India (GIC). Based on their audited statement,assets amounting to 58,95,66 thousand and liabilities amounting to 4,50,03,29 thousandrelating to crop insurance business as on 31st March, 2003 were received from GIC vide their letterdated 3rd February 2004 and were incorporated in the books of accounts of the company.

2.2 Reserve for Unexpired Risks amounting to 184,91,47 thousand as on the date of transfer of businessfrom GIC to the company i.e., 01st April, 2003 has not yet been transferred by GIC to the company.

3 Business & Geographical SegmentAs per the Accounting Standard 17 -”Segment Reporting”, the company has only one Business Segment,i.e. “CROP INSURANCE”, and only one Geographical Segment, i.e. “INDIA”.

4. Disclosures Forming Part of Financial Statements4.1 Contingent liabilities4.1.1 Partly paid-up Investments: NIL (previous year NIL)

Underwriting commitments outstanding: NIL (previous year NIL)4.1.2 Claims against the company, other than those under Policies, not acknowledged as debt: NIL

(previous year NIL)Claims against the company, those under Policies, not acknowledged as debt: 16,45,90 thousand(previous year 59,81,08 thousand)

4.1.3 Guarantees given by or on behalf of the Company: NIL (previous year NIL)4.1.4 Statutory Demands /Liabilities in dispute not provided for: NIL (previous year NIL)4.1.5 Reinsurance obligations to the extent not provided for in Accounts: NIL (previous year NIL)4.1.6 Others: NIL (previous year NIL)4.2 As at 31st March 2012, all the assets of the company are free from encumbrances, except (as

mandatory under Section 7 of Insurance Act, 1938) Central Government Security – 6.72%, 2012,amounting to 10,01,82 thousand (previous year 10,07,93 thousand) deposited with PNB Gilt(approved by RBI) and grouped under Loans and Advances (schedule 12).

4.3 Commitment made and outstanding as on 31st March, 2012 for :-i Loans and Investments: NIL (previous year NIL) ]ii ERP Project “Annapoorna” under implementation: 31,12,76 thousand (previous year

37,13,35 thousand)iii Others: 38,71 thousand (previous year 25, 97 thousand)

4.4 Ageing of claims is presented below, distinguishing between “Claims Outstanding for more thansix months” and “Other Claims i.e. Claims Outstanding up to six months”:-

in thousandParticulars 2011-12 2010-11Foreign Business NOT APPLICABLEIndian BusinessClaims o/s for more than six months 92,30,04 44,21,19Claims o/s up to six months 8,41,40,72 1,76,92,95

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49

4.5 Short collection of Premium included under ‘Schedule of Advances and Other Assets’ representamounts receivable from Nodal banks of 1,45,51 thousands as at 31.03.2012 remains unconfirmed.Excess collection of Premium included under ‘Schedule of Current liabilities’ which representamounts payable to Nodal banks of 9,87,04 thousands as at 31.03.2012 remains unconfirmed.

4.6 Value of Contracts in relation to Investments for :-4.6.1 Purchases where deliveries are pending: NIL (previous year NIL)4.6.2 Sales where payments are overdue: NIL (previous year NIL)4.7 The historical cost of those Investments which are valued on “Fair Value” basis is 37,16,27

thousand (previous year 35,98,46 thousand).4.8 Computation of managerial remuneration as per Section 198 [pursuant to sub-section (A) of

Section II of Part II of Schedule XIII] of the Companies Act, 1956 given toMr. M Parshad from April 2011 to November 2011,Mr. A. K. Roy for December, 2011Mr. Milind A. Kharat from January 2012 to March, 2012 is presented below:-

Amount in Rupees

Gross Salary Co’s Contribution to OtherPF/ Pension Fund Perquisites

Current Previous Current Previous Current PreviousYear Year Year Year Year Year

24,21,053 21,28,454 99,593 96,000 - 21,600

4.9 The basis of amortization of Debt Securities is stated in the Significant Accounting Policy No.5.1. The total amount of 1,69,04 thousand has been amortized during the year (previous year

2,73,11 thousand).4.10 The Company does not hold any immovable property for investment purposes.4.11 As per IRDA Circular Ref.:005/IRDA/F&A/CIR/May-09 dated 07.05.2009, the details of various

penal actions taken by various Government Authorities during the year is as under:-Non- Amount in

S N Authority Compliance Penalty Penalty Penalty/ violation Awarded Paid Waived/

Reduced1 Insurance Regulatory and Development Authority NIL NIL NIL NIL2 Service Tax Authorities NIL NIL NIL NIL3 Income Tax Authorities NIL NIL NIL NIL4 Any other Tax Authorities NIL NIL NIL NIL5 Enforcement Directorate/ Adjudicating NIL NIL NIL NIL

Authority/ Tribunal or any Authority under FEMA6 Registrar of Companies/NCLT/CLB/ NIL NIL NIL NIL

Department of Corporate Affairs orany Authority under Companies Act, 1956

7 Penalty awarded by any Court/Tribunal for any matter including claimsettlement but excluding compensation NIL NIL NIL NIL

8 Securities and Exchange Board of India* N. A. N. A. N. A. N. A.9 Competition Commission of India NIL NIL NIL NIL10 Any other Central/State/ Local Govt. NIL NIL NIL NIL

/Statutory Authority

*Post listing.


50

4.12 The Government of India vide their letter no. F. No. C-13014/16/2004- Ins. I dated 23.12.2009, calledfor 200,00,00 thousand from the Company from the retained profits/reserves (created out of NAISactivity), as a prelude to the recasting of the Scheme as an ad-hoc payment. Accordingly, anamount of 200,00,00 thousand was paid to the Government of India, with due approval of theBoard; and concurrence of IRDA vide their letter dated 01.01.2010 and the same being an ad-hocpayment has been accounted for as ‘Other Advances’ under Schedule 12 of the Annual Accountsas on 31st March 2012 i.e., ‘Advances and Other Assets’ pending recast of the Scheme.

4.13 Details of expenses incurred under the following heads:-Outsourcing 91,61 thousand (previous year 79,47 thousand)(for non-core functions)

Business development 46,15 thousand (previous year 56,60 thousand)Marketing support NIL(previous year NIL)

4.14.1 Under Insurance Act 1938 (Section 64VB), risk can be assumed only when the requisite premiumis received.However, the company assumes risk but recognizes the premium upon the same being remittedby the collecting bank at a later date since the company cannot anticipate the accrual in theabsence of such receipt. Thereby, the assumption of risk is strictly not in accordance with theprovisions of the aforesaid section.However, in response to company’s letter dated 9th August, 2010 IRDA vide its letter dated 26thAugust, 2010 has allowed the company to continue with this practice, till further orders.

4.14.2 The balance of NAIS Premium for Rabi 2011-12 collected by the banks from the farmers hasneither been remitted to the company nor any consequential provision for claims accounted for inthe absence of requisite data upto 31st March, 2012. The amount is not ascertainable as on date.

4.15 The Government of India (Ministry of Agriculture) vide their letter dated 12th July 2011 revised theclaim sharing under NAIS in respect of annual commercial & horticultural crops (ACH) and additionalcoverage within Food Crops and Oilseed (FCOS) with effect from Kharif 2011 season.The Company could arrange for reinsurance protection in respect of ACH crops only for Kharif2011 season, whereas the risk under additional coverage within FCOS crops’, having Sum Insuredof 275,00,79 thousand and premium of 18,69,63 thousand could not be reinsured andaccordingly, the entire risk was retained within the Company. Against this additional coveragewithin FCOS crops as on 31st March 2012, claims amounting to 9,45,67 thousand have alreadybeen incurred.From next season i.e. Rabi 2011-12 onwards, the reinsurance for both the crop groups has beenarranged.

5 5.1 Related Party Disclosure as per Accounting Standard – 18Key Management Personnel·

Mr. M Parshad, Chairman-cum-Managing Director (From April 2011 to November 2011),Mr. A. K. Roy Officiating Chairman-cum-Managing Director (December 2011)Mr. Milind A. Kharat Officiating Chairman-cum-Managing Director (From January 2012 to

March 2012)Nature of Transactions:

1. Salaries, allowances and contributions as on 31st March 2012: 25,21 thousand (previousyear 22,24 thousand)

2. Loan balances due as on 31st March 2012: NIL (previous year NIL)6 6.1 During the year, the Company has received the following amounts from the Government (Central/

States/UTs) towards implementation of NAIS and towards Premium Subsidy in respect of PilotScheme on Weather Based Crop Insurance & Modified NAIS:

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in thousandSN Particulars Current Year Previous Year

2011-12 2010-111. NAIS – Premium Subsidy 1,15,08,02 95,38,462. NAIS–Bank Service Charges 15,85,95 12,88,913. NAIS – Claim Share 11,85,10,36 45,94,27,344. NAIS - Corpus Fund 50,29,87 35,37,885. WBCIS – Premium Subsidy 13,16,44,24 8,18,44,986. Modified NAIS– Premium Subsidy 1,11,71,58 26,00,92

TOTAL 27,94,50,02 55,82,38,49

Further, the Government-wise balances as at 31st March, 2012 are detailed in Annexure-7.

6.2 The Opening Balance under National Agricultural Innovation Project (NAIP) NAIP was 58 thousand.During the year, the Company has received an amount of 4,61 thousand for implementation of‘Risk Assessment and Insurance Products for Agriculture’ under NAIP, out of which an amount of

2,85 thousand has been utilized under basic and strategic research during the year. Out of theunspent amount of 234 thousand 200 thousand has been refunded.

7 Sharing of Expenses of National Agricultural Insurance SchemeAs per NAIS provisions, the Administrative & Operating Expenses are shared among the Company, theGovt. of India, and the State/Union Territory Government on a specified basis. For the year under review,20% (previous year 20%) of the total Administrative & Operating Expenses incurred for NAIS are recoverablefrom the Govt. of India and the respective State/UT Governments. The total recovered/recoverable shareamounts to 3,05,13 thousand (previous year 4,89,96 thousand).Accordingly, the Company has received the following amounts from the Government (Central/States/UTs)towards reimbursement of following expenses related to NAIS :

in thousandS N Particulars Current Year Previous Year

2011-12 2010-111. NAIS – A & O Expenses 76,44 2,09,832. NAIS – Publicity Expenses 43,79 10,10

Expenses incurred towards NAIS shown under Schedule 4 are net of the Government’s (Centre/ States /UTs) share of 20% (previous year 20%) received/receivable from the respective Governments.

8 InvestmentsThe company has invested its funds as per the investment pattern prescribed by the IRDA Regulations onInvestments, and the Company’s Investment Policy. The Book value of Investments of the Company as on31st March, 2012 is 3223,74,90 thousand (previous year 2653,05,51 thousand), and the Market valueof the Company’s Investments as on that date is 3219,95,56 thousand (previous year 2656,87,68thousand). Gross Income from Investments amounted to 252,56,33 thousand during the financial yearunder review (previous year Rs. 189,76,86 thousand) which includes an investment income of 8,62,47thousand (previous year 71,604 thousand), credited to NAIS Corpus Fund.

9 Reinsurance CededDuring the year under review, the company paid a sum of 1219,74,89 thousand (previous year

666,75,02 thousand) as Reinsurance Premium and earned a commission of 270,53,52 thousand(previous year 144,78,08 thousand), and has accounted for Reinsurance Claims recovery of 1034,86,23thousand (previous year 475,55,15 thousand).


52

10 Borrowings

As at the end of the year under review, the company has no borrowings (previous year NIL).

11 Retirement Benefits to Employees

11.1.1 The company’s liabilities on account of Retirement Benefits towards Pension, Gratuity, LeaveEncashment, Sick Leave and Leave Travel Subsidy (LTS) in respect of employees have been dulyprovided for as per actuarial valuation in terms of Accounting Standard 15 issued by the Instituteof Chartered Accountants of India and the same has been accounted for under the head “RetirementBenefits, in Schedule 14 of the Balance Sheet.

11.1.2 The Provident/Pension Fund of the employees of the Company absorbed from GIC is continued tobe funded with GIC Pension/ Provident Trust.

11.1.3 The Pension Fund of the employees directly recruited by the Company is as per the provisions ofNew Pension Scheme (NPS) stipulated by Pension Fund Regulatory Development Authority(PFRDA).

11.1.4 The estimates of future salary increases, considered in actuarial valuation, take account of inflation,seniority, promotion and other relevant factors such as supply and demand in employee market.

11.2 The summarized position of Post-employment benefits and long term employee benefits recognizedin the Profit & Loss Account and Balance Sheet as required in accordance with AccountingStandard – 15 (Revised) are as under:-

(Amount in )

Gratuity Leave Pension LeaveSN Particulars Encashment Plan Travel

(PL+SL) Subsidy(Unfunded) (Unfunded) (Unfunded) (Unfunded)

Change in the present value of obligationsa Obligation as at 40,192,471 33,205,649 4,923,824 2,740,685

April 01, 2011 [1,85,23,286] [2,17,11,285] [43,37,434] [26,79,422]

b Current Service Cost 2,608,021 5,988,199 1,352,673 1,861,238[23,52,185] [60,61,252] [7,26,143] [15,49,974]

c Interest Cost 3,319,719 2,895,980 448,013 293,704 [15,75,950] [19,79,353] [3,76,040] [2,76,353]

d Actuarial (Gain) / Loss (628,347) (8,296,687) 4,316,795 (32,899) [2,02,24,600] [43,30,838] [(5,15,793)] [10,66,370]

e Benefits paid (1,000,000) (1,264,000) - (1,571,664) [(24,83,550)] [(8,77,079)] [0.00] [(28,31,434)]

f Obligation as at 44,491,864 32,529,141 11,041,305 3,291,064March 31, 2012 [4,01,92,471] [3,32,05,649] [49,23,824] [27,40,685]

Change in fair value of plan assets

a Fair Value of Plan Assets 0 0 0 0as at April 01,2011 [0.00] [0.00] [0.00] [0.00]

b Expected return 0 0 0 0on Plan Asset [0.00] [0.00] [0.00] [0.00]

c Contributions 0 0 0 0[0.00] [0.00] [0.00] [0.00]

A n n u a l R e p o r t 2 0 1 1 - 1 2

53

d Benefits paid 0 0 0 0[0.00] [0.00] [0.00] [0.00]

e Fair Value of Plan Assets 0 0 0 0as at March 31, 2012 [0.00] [0.00] [0.00] [0.00]

Reconciliation of fair value of assets and obligations

a Present value of obligation 44,491,864 32,529,141 11,041,305 3,291,064 as at March 31, 2012 [4,01,92,471] [3,32,05,649] [49,23,824] [27,40,685]

b Fair Value of Plan Assets - - - -as at March 31, 2012

c Unfunded amount 44,491,864 32,529,141 11,041,305 3,291,064recognized in the [4,01,92,471] [3,32,05,649] [49,23,824] [27,40,685]Balance Sheet

Expense recognized in the Statement of Profit & Loss Account

a Current Service Cost 2,608,021 5,988,199 1,352,673 1,861,238[23,52,185] [60,61,252] [7,26,143] [15,49,974]

b Interest Cost 3,319,719 2,895,980 448,013 293,704 [15,75,950] [19,79,353] 3,76,040 [2,76,353]

c Past Service Cost - - - -

d Expected return on - - - -Plan Assets

e Actuarial (Gain) / Loss (628,347) (8,296,687) 4,316,795 (32,899) [2,02,24,600] [43,30,838] [(5,15,793)] [10,66,370]

f Expenses recognized 5,299,393 587,492 6,117,481 2,122,043during the year [2,41,52,735] [1,23,71,443] [5,86,390] [28,92,697]

Amount recognized in balance sheet

a Opening Net Liability 40,192,471 33,205,649 4,923,824 2,740,685 [1,85,23,286] [2,17,11,285] [43,37,434] [26,79,422]

b Expense as above 5,299,393 587,492 6,117,481 2,122,043 [2,41,52,735] [1,23,71,443] [5,86,390] [28,92,697]

c Additional contribution (1,000,000) (1,264,000) - (1,571,664)over and above mandatory [(24,83,550)] [(8,77,079)] [-] [(28,31,434)]

d Closing Net liability 44,491,864 32,529,141 11,041,305 3,291,064 [4,01,92,471] [3,32,05,649] [49,23,824] [27,40,685]

Principal actuarial assumption as expressed as weighted average Rate per annuma Discount Rate (per annum) 8.00% 8.00% 8.00% 8.00%

[8.00%] [8.00%] [8.00%] [8.00%]b Expected rate of N.A N.A N.A N.A

return on Plan Assets [N.A] [N.A] [N.A] [N.A](per annum)

c Rate of escalation 5.00% 5.00% 6.00% 6.00%in salary (per annum) [5.00%] [5.00%] [6.00%] [6.00%]

**[figures in square brackets are previous year’s figures ]


54

12 Deferred Tax Assets / LiabilityThe computation of Deferred Tax Asset/ Liability in accordance with Accounting Standard – 22 “Accountingfor Taxes on Income”, has resulted in a Deferred Tax Asset of 3,10,29 thousand as at 31st March 2012(previous year 1,93,52 thousand) and the same has been provided for in the books of account asunder:-

in thousand

Deferred Tax Assets As on 31.03.2012 As on 31.03.2011

Difference in WDV (69,39) (3,51,00)

Retirement Benefits 9,13,53 8,10,63

Provision for PLI & Fees tostatutory bodies 1,12,21 1,22,93

TOTAL 9,56,35 5,82,56

Deferred Tax Assets 3,10,29 1,93,52

13 Impairment in the Value of Fixed Assets

In accordance with the Accounting Standard – 28 “Impairment of Assets”, the company has assessed ason the balance sheet date, whether there are any indications (listed in paragraphs 8 to 10 of the Standard)with regard to impairment of any of the assets. Based on such assessment, it has been ascertained thatno potential loss is present and therefore, formal estimate of recoverable amount has not been made.Accordingly, no impairment loss has been provided in the books of account.

14 The title deeds in respect of three residential flats, costing 45,51 thousand located at Bangalore, inpossession of the Company, are yet to be transferred from GIC to the Company.

15 Cash Flow Statement

The Company has prepared the “Cash Flow Statement” for the year under review, adopting the DirectMethod as required under the IRDA Regulations (Annexure - 4).

16 Summary of Financial Statements

The “Summary of Financial Statements”, as required under the IRDA Regulations, is as per Annexure - 5.

17 Accounting Ratios

“Accounting Ratios”, as required under the IRDA Regulations, is as per Annexure - 6.

18 Earnings Per Share [EPS]

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

PARTICULARS Current Year Previous Year2011-12 2010-11

Profit after Tax (net of prior-period adjustments) 502,21,87 thousand 380,29,60 thousand

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

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

Basic & Diluted EPS 25.11 19.01

A n n u a l R e p o r t 2 0 1 1 - 1 2

55

19 Legal Cases

In respect of legal cases filed by the insured farmers under NAIS which have been awarded against theCompany by the Original Court of jurisdiction, necessary provision there-against have been made to theextent of the liability of the Company as per the provisions of the Scheme.

20 Micro, Small and Medium Enterprises Development Act, 2006

The Company has no suppliers who fall into the category of Micro, Small and Medium Enterprises asdefined in ‘The Micro, Small and Medium Enterprises Development Act, 2006’. Hence there is no amountdue to Micro, Small and Medium Enterprises for the year ended 31st March, 2012. (Previous Year Rs.Nil).

21 Presentation

Figures in brackets, unless stated otherwise, reflect negative figures.

22 Previous Year’s Figures

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

Statement showing the Age-wise Analysis of the Unclaimed amount of the Policyholders as on 31.03.2012

SN Particulars Total AGE-WISE ANALYSISAmount 1-6 7-12 13-18 19-24 25-30 31-36 Beyond 36

months months months months months months months

(Amount in thousands)

1 Claims settled but not 503,964 287,193 211,716 260 613 1,245 2,925 13paid to the policyholders/insureds due to anyreasons except underlitigation from the insured/policyholders

2 Sum due to the insured / 0 0 0 0 0 0 0 0policyholders on maturityor otherwise

3 Any excess collectionof the premium/tax orany other charges whichis refundable to the 98,704 51,389 11,891 23,480 4,649 6,491 322 482policyholders either asterms of conditions of thepolicy or as per law or asmay be directed by theAuthority but not refundedso far


56

4 Cheques issued by theinsurer for Settlement ofClaims/excess collection 176,971 116,478 21,237 17,833 9,000 6,926 2,696 2,802etc. and cheques have notbeen encashed by thepolicyholders/ insured



for M/s S C Vasudeva & Company for M/s K K Ghei & CompanyChartered Accountants Chartered AccountantsFirm Regn. No. 000235N Firm Regn. No. 001342N

(Abhinav Khosla) (D S Sobti)Partner PartnerM.No. 087010 M.No. 016416


A n n u a l R e p o r t 2 0 1 1 - 1 2

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4(70

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43.61

8,843

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1,122

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25,87

6,423

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29,51

7,026

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44,48

0,604

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t inco

me on

Gov

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edit-a

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6,200

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08,5

22,34

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2,489

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02,5

01,05

4.87

19,71

2,399

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edit-a

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45,20

7.24)

(27,02

2,255

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(17,21

1,345

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Clos

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2,341

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5,182

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12.00

33,61

3,245

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71.70

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11JA

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(379,8

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6.58

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3,363

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3,363

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23,78

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12 (A

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5,683

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6,434

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8,471

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11,00

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9,450

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16,80

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180,9

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8.10

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2,517

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67.23

123,8

84,49

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249,4

56,99

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1,503

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363,9

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13,58

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6.42

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0.57

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1,350

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3,174

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A n n u a l R e p o r t 2 0 1 1 - 1 2

65

ANNEXURE-5

SUMMARY OF FINANCIAL STATEMENTSFOR THE YEAR ENDED 31ST MARCH, 2012

in ‘000’S N PARTICULARS 2011-12 2010-11 2009-10 2008-09 2007-08

OPERATING RESULTS1 Gross Premium Written 25768510 19500541 15203969 8334426 83510842 Net Premium Income Earned 13202136 12759164 10225168 7426091 63614253 Income from Investments (Net) 1488722 1082388 1095853 1028616 9606994 Profit on Exchange Fluctuation 0 0 0 0 05 Total Income 14690858 13841552 11321021 8454707 73221246 Commissions 2461463 1268678 442967 89428 2193697 Brokerage 0 0 0 0 08 Operating Expenses (411821) (405959) (202399) (158839) (141240)9 Claims Incurred (Net) (10257502) (9501464) (11891903) (5296233) (5295375)10 Operating Profit/Loss 6482998 5202806 (330313) 3089063 2104878

NON-OPERATING RESULTS

11 Total Income under Shareholder’s 962448 526617 694487 470369 388728account (Net)

12 Profit before Tax 7445446 5729423 364174 3559431 249360613 Provision for Tax & (2424159) (1926465) (30150) (1233348) (880543)

Deferred Tax Liability14 Profit after Tax 5021287 3802958 334024 2326083 1613063

MISCELLANEOUS

15 POLICYHOLDERS’ ACCOUNTTotal Funds 18285876 17980874 18924592 11949633 11190614Total Investments 17213977 16331990 16868589 11621770 10330848Yield on Investments 8.98 7.85 9.13 9.32 10.33

16 SHAREHOLDERS’ ACCOUNTTotal Funds *13959013 11228283 7657770 7323746 5231653Total Investments 15023513 10198610 6825815 7122803 4829709Yield on Investments 8.98 7.85 9.13 9.32 10.33

17 Paid up Equity Captial 2000000 2000000 2000000 2000000 200000018 Net Worth *13959013 11228283 7657770 7323746 523165319 Total Assets 38023578 37124989 28649553 21638226 1812551620 Yield on Total Investments 8.98 7.85 9.13 9.32 10.3321 Earnings per Share ( ) 25.11 19.01 1.67 11.63 8.0722 Book Value per share ( ) 79.80 56.14 38.29 36.62 26.1623 Total Dividend 250000 200000 NIL 200000 20000024 Dividend per Share ( ) 1.25 1 NIL 1 1

*Does not include 200 crore adhoc payment to Government of India.


66

ANNEXURE-6

KEY ACCOUNTING RATIOSS N PARTICULARS 2011-12 2010-11

Percentage/Ratio Percentage/Ratio

1 Gross Premium Growth Rate 32.14% 28.26%

2 Gross Premium to Shareholders’ Fund *184.60 173.09

3 Growth Rate of Shareholders’ Fund *24.32% 45.95%

4 Net Retention Ratio 52.67 65.81

5 Net Commission Ratio (18.14) (9.89)

6 Expenses of Management to Gross Premium Ratio 2.54 2.78

7 Combined Ratio 82.51 75.89

8 Technical Reserves to Net Premium Ratio 134.74 140.11

9 Underwriting Balance Ratio 36.80 32.11

10 Operating Profit Ratio 54.78 46.34

11 Liquid Assets to Liabilities Ratio 80.07 95.87

12 Net Earnings Ratio 37.00 29.63

13 Return on Net Worth *35.97 33.75

14 Available Solvency Margin Ratio to Required Solvency Margin Ratio *3.18 3.71

15 NPA Ratio 0.00 0.00

Gross NPA Ratio 0.00 0.00

Net NPA Ratio 0.00 0.00

*Does not include 200 crore adhoc payment to Government of India.

A n n u a l R e p o r t 2 0 1 1 - 1 2

67

ANNEXURE - 4

CASH FLOW STATEMENTFOR THE YEAR ENDED 31ST MARCH, 2012

(As per Direct Method )S N PARTICULARS Current Year Previous Year

01.04.11 to 31.03.12 01.04.10 to 31.03.11( ‘000) ( ‘000)

A) CASH FLOW FROM OPERATING ACTIVITIES1 Cash receipts from Premium income 25751050 25751050 19533589 19533589

Less:2 Cash paid for Claims payment 14355904 105192683 Cash paid for Reinsurance Premium 5701508 5398824

(less Commission net ofReinsurance & Re-insurance claims))

4 Cash paid for expenses 269370 20326782 376390 16294482Cash generated from Operations 5424268 3239107

5 Miscellaneous receipts 45964 64516 Income Tax paid/refunds (1581229) (1663023)7 Cash Flow before extraordinary items 3889003 15825358 (Increase) / Decrease in Loans given 550 0

Net Cash from Operating Activities (A) 3889553 1582535B) CASH FLOW FROM INVESTING ACTIVITIES9 Purchase of Fixed Assets (15470) (26069)10 Proceeds from sale of Fixed Assets 202 011 Investments made (5723843) (2809539)12 Interest Income 2287506 183621313 Expenses incurred (4117) (1376)14 (Increase) / Decrease in Funds Advanced (Sch 12) (771839) (396470)

Net Cash used in Investing Activities (B) (4227561) (1397241)C) CASH FLOW FROM FINANCING ACTIVITIES15 Issue of Share Capital 0 016 Increase in Borrowings 0 017 Dividend and dividend distibution tax paid (232445) 018 Increase / (Decrease) in Liabilities (Sch 13 & 14) (4703312) 5191192

Net Cash from Financing Activities(C) (4935757) 5191192Net increase in Cash & Cash equivalents: (5273765) 5376486

19 Cash & Cash equivalents at the end of the period 201250 547501520 Cash & Cash equivalents at the beginning of the period 5475015 98529

Net increase in Cash & Cash equivalents (5273765) 5376486

Kanika Sharma Shandil) (K. K. Gupta) (M. K. Poddar)Company Secretary Manager Dy. Gen. Manager(K.N. Bhandari) (S. K. Mitra) (Milind A. Kharat)Director Director Chairman-cum-Managing DirectorDIN 00191219 DIN 00760048 DIN 02502200for M/s S C Vasudeva & Company for M/s K K Ghei & CompanyChartered Accountants Chartered AccountantsFirm Regn. No. 000235N Firm Regn. No. 001342N(Abhinav Khosla) (D S Sobti)Partner PartnerM.No. 087010 M.No. 016416Place: New DelhiDate: 14.05.2012


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A n n u a l R e p o r t 2011 - 12 - AIC OF INDIA LTD. · Mr. R.K. Deka Mr. P.K. Bhagat Deputy...

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