APROJECT REPORT

ON“ANALYSIS OF

PROFITIBILITY ANDFINANCIAL POSITION OF FUTURE GENERALI LIFE

INSURANCE”

SUBMITTED FOR THE PARTIAL FULFILLMENT OF

THEMASTER OF BUSINESS ADMINISTRATION

PROGRAMME2009-2011

UNDER GUIDANCEMR. RAHUL DHIMAN

SUBMITTED BY

NISHA KUMARI ROLL NO.90172232916

PREFACE A comprehensive study of “working capital” is a supplement to the theoretical classroom Knowledge. It helps to understand the subject more precisely and practical implications of various concepts. Pragmatic aspect of management function. Own observations are significant towards this report tries to outline idea of professional world and helps in understanding Contribution in learning the subject.The report is therefore designed as a reference of organization functioning rather than copy down instrument.The purpose of project is to make me familiar with day to day functioning of business. The present report is an effort in this direction.My humble endeavor and motive in presenting the project report is to impart a balanced introduction and knowledge of financial analysis, which is an important integral part of financial management. It is hoped that this project will serve as supportive document to research worker as efforts has been tried to make this report an informative, stimulating, and self-explanatory.

ACKNOWLEDGMENT Nothing concrete can be achieved without an optimal combination inspiration and

perspiration. No work can be accompanied without taken the guidance of experts.

It is only critics from ingenious that help transform a product into a quality

product.

For this, I am grateful to Mr. RAHUL DHIMAN for his constant encouragement

and invaluable critical suggestions given during the review meetings. His timely

advice and help proved his commitment and welfare of his students and the

institute as a whole. Last but not the least, our sincere thanks to all the members

who were a vital thrust to our thoughts and needs throughout the functions

assigned to group to get done and prove our best. Finally thanks to others at

KCMT, who put in numerous hours to make the intangible tangible

NISHA KUMARI

CONTENT • Certificate 1 • Preface 2 • Acknowledgement 3 • Objective 5 • Introduction 6 • Company Profile 7 • Literature & Review 12 • Research Methodology 37 • Financial Statements 39-41 • Data Representation 49 • Conclusion 56 • Finding 57 • Limitation 58 Bibliography 59

\

OBJECTIVE The main objective of this project is to understand the financial position of AVIVA

LIFE INSURENCE and to know the impact of profitability on its market value.

These are the primary and secondary objective if my project.

With the help of this project I can understand that how I can analyses the financial

statement of any company and what are the ratios any key indicators by which

anyone can understand the financial status of company.

Growth Fund - The fund will comprise of debt securities in the range of 0-50%, equities in the range of 0-85% and money market and cash in the range of 0-20%.

These funds provide investment security to the capital of the customers. Through

their association withBas ix (a micro financial institution) and other NGOs, Aviva

Life Insurance India have been able to reach out to those underprivileged who had

no access to insurances till day. In Aviva Life Insurance India, thus, by combining

protection and long term savings the customers can safeguard and provide life

products for their family with their changing needs. Aviva is the world’s fifth-

largest insurance group and the largest insurance services provider in the UK.

We are one of the leading providers of life and pension products in Europe and are

actively growing our long-term savings businesses in Asia Pacific and the USA. Its

main activities are long-term savings, fund management and general insurance. Vision: “One Aviva, twice the value”. By working together across our businesses, we will optimize our performance in the global marketplace and maximize the value we can generate for all our stakeholders

INTRODUCTION AN INTRODUCTION TO INSURANCE SECTOR IN INDIA

Insurance in India started without any regulation in the Nineteenth Century.

It was a typical story of a colonial era: a few British insurance companies

dominating the market serving mostly large urban centres. After the independence,

it took a dramatic turn. Insurance was nationalized. First, the life insurance

companies were nationalized in 1956, and then the general insurance business was

nationalized in 1972. Only in 1999 private insurance companies have been allowed

back into the business of insurance with a maximum of 26% of foreign holding. In

what follows, we describe how and why of regulation and deregulation. The entry

of the State Bank of India with its proposal of bank assurance brings a new

dynamics in the game. We study the collective experience of the other countries in

Asia already deregulated their markets and have allowed foreign companies to

participate. If the experience of the other countries is any guide, the dominance of

the Life Insurance Corporation and the General Insurance Corporation is not going

to disappear any time soon. Insurance under the British Raj

Life insurance in the modern form was first set up in India through a British

company called the Oriental Life Insurance Company in 1818 followed by the

Bombay Assurance Company in 1823 and the Madras Equitable Life Insurance

Society in 1829. All of these companies operated in India but did not insure the

lives of Indians. They were there insuring the lives of Europeans living in India.

Some of the companies that started later did provide insurance for Indians. But,

they were treated as "substandard" and therefore had to pay an extra premium of

20% or more. The first company that had policies that could be bought by Indians

with "fair value" was the Bombay Mutual Life Assurance Society starting in 1871.

The first general insurance company, Triton Insurance Company Ltd., was

established in 1850. It was owned and operated by the British. The first indigenous

general insurance company was the Indian Mercantile Insurance Company Limited

set up in Bombay in 1907. By 1938, the insurance market in India was buzzing

with 176 companies (both life and non-life). However, the industry was plagued by

fraud. Hence, a comprehensive set of regulations was put in place to stem this

problem (see Table 1). By 1956, there were 154 Indian insurance companies, 16

non-Indian insurance companies and 75 provident societies that were issuing life

insurance policies. Most of these policies were cantered in the cities (especially

around big cities like Bombay, Calcutta, Delhi and Madras). In 1956, the then

finance minister S. D. Deshmukh announced nationalization of the life insurance

business. Monopoly Raj The nationalization of life insurance was justified mainly on three counts.

(1) It was perceived that private companies would not promote insurance in rural

areas. (2) The Government would be in a better position to channel resources for

saving and investment by taking over the business of life insurance.

(3) Bankruptcies of life insurance companies had become a big problem (at the

time of takeover, 25 insurance companies were already bankrupt and another 25

were on the verge of bankruptcy). The experience of the next four decades would

temper these views.

AN OVERVIEW OF INSURANCE INDUSTRY

Insurance has a long history in India. Life Insurance in its current form was

introduced in 1818 when Oriental Life Insurance Company began its operations in

India. General Insurance was however a comparatively late entrant in 1850 when

Triton Insurance company set up its base in Kolkata. History of Insurance in India

can be broadly bifurcated into three eras: a) Pre Nationalization b) Nationalization

and c) Post Nationalization. Life Insurance was the first to nationalize in 1956. Life

Insurance Corporation of India was formed by consolidating the operations of

various insurance companies. General Insurance followed suit and was

nationalized in 1973. General Insurance Corporation of India was set up as the

controlling body with New India, United India, National and Oriental as its

subsidiaries. The process of opening up the insurance sector was initiated against

the background of Economic Reform process which commenced from 1991. For

this purpose Malhotra Committee was formed during this year who submitted their

report in 1994 and Insurance Regulatory Development Act (IRDA) was passed in

1999. Resultantly Indian Insurance was opened for private companies and Private

Insurance Company effectively started operations from 2001.

LITRATURE REVIEW Insurance Market- Present:

The insurance sector was opened up for private participation four years ago. For

years now, the private players are active in the liberalized environment. The

insurance market have witnessed dynamic changes which includes presence of a

fairly large number of insurers both life and non-life segment. Most of the private

insurance companies have formed joint venture partnering well recognized foreign

players across the globe.

There are now 29 insurance companies operating in the Indian market – 14 private

life insurers, nine private non-life insurers and six public sector companies. With

many more joint ventures in the offing, the insurance industry in India today stands

at a crossroads as competition intensifies and companies prepare survival strategies

in scenario.

There is pressure from both within the country and outside on the Government to

increase the Foreign Direct Investment (FDI) limit from the current 26% to 49%,

which would help JV partners to bring in funds for expansion.

There are opportunities in the pensions sector where regulations are being framed.

Less than 10 % of Indians above the age of 60 receive pensions. The IRDA has

issued the first license for a standalone health company in the country as many

more players wait to enter. The health insurance sector has tremendous growth

potential, and as it matures and new players enter, product innovation and

enhancement will increase. The deepening of the health database over time will

also allow players to develop and price products for larger segments of society. State Insurers Continue To Dominate There may be room for many more

players in a large underinsured market like India with a population of over one

billion. But the reality is that the intense competition in the last five years has made

it difficult for new entrants to keep pace with the leaders and thereby failing to

make any impact in the market.

Also as the private sector controls over 26.18% of the life insurance market and over 26.53% of the non-life market, the public sector companies still call the shots. The country’s largest life insurer, Life Insurance Corporation of India (LIC), had a share of 74.82% in new business premium income in November 2005.

Similarly, the four public-sector non-life insurers – New India Assurance, National

Insurance, Oriental Insurance and United India Insurance – had a combined market

share of 73.47% as of October 2005. ICICI Prudential Life Insurance Company

continues to lead the private sector with a 7.26% market share in terms of fresh

premium, whereas ICICI Lombard General Insurance Company is the leader

among the private non-life players with a 8.11% market share. ICICI Lombard has

focused on growing the market for general insurance products and increasing

penetration within existing customers through product innovation and distribution. Reaching Out To Customers No doubt, the customer profile in the insurance industry is changing with the introduction of large number of divergent intermediaries such as brokers, corporate agents, and bancassurance.

The industry now deals with customers who know what they want and when, and

are more demanding in terms of better service and speedier responses. With the

industry all set to move to a detariffed regime by 2007, there will be considerable

improvement in customer service levels, product innovation and newer standards

of underwriting. Intense Competition In a de-tariffed environment, competition will manifest itself

in prices, products, underwriting criteria, innovative sales methods and

creditworthiness. Insurance companies will vie with each other to capture market

share through better pricing and client segmentation. The battle has so far been fought in the big urban cities, but in the next few years, increased competition will drive insurers to rural and semi-urban markets.

Global Standards While the world is eyeing India for growth and expansion, Indian

companies are becoming increasingly world class. Take the case of LIC, which has

set its sight on becoming a major global player following a Rs280-crore investment

from the Indian government. The company now operates in Mauritius, Fiji, the

UK, Sri Lanka, and Nepal and will soon start operations in Saudi Arabia. It also

plans to venture into the African and Asia-Pacific regions in 2006. The year 2005 was a testing phase for the general insurance industry with a series of Catastrophes hitting the Indian sub-continent. However, with robust reinsurance programs in place, insurers have successfully Managed to tide over the crisis without any adverse impact on their balance sheets.

With life insurance premiums being just 2.5% of GDP and general insurance

premiums being 0.65% of GDP, the opportunities in the Indian market place is

immense. The next five years will be challenging but those that can build scale and

market share will survive and prosper.

SWOT ANALYSIS The SWOT analysis of Insurance sector is as follows:- 1. Strength-Very good policies of life coverage. 2. Weaknesses:-unable to convince the people about the products. There are not much advisors for the insurance companies 3. Opportunities:-Untapped rural sector and small towns 4. Threats:-growing competition from larger MNC's.

INDIAN COMPANIES WITH FOREIGN PARTNERSHIP

Indian Partner International PartnerAlpic Finance Allianz Holding, Germany Tata American Int. Group, US CK Birla Group Zurich Insurance, Switzerland ICICI Prudential, UK Sundaram Finance Winterthur Insurance, Switzerland Hindustan Times Commercial Union, UK Ranbaxy Cigna, US HDFC Standard Life, UK Bombay Dyeing General Accident,UKDCM Shriram Royal Sun Alliance, UK Dabur Group Allstate, US Kotak Mahindra Chubb, US Godrej J Rothschild, UK Sanmar Group Gio, Australia Cholamandalam Guardian Royal Exchange, UK SK Modi Group Legal & General, Australia 20th Century Finance Canada Life M A Chidambaram Met Life

Directors Report REVIEW OF OPERATIONS: The turnover of the company during the year is Rs.50.28.Lacs compared to 1423.33 Lacs. Showing decrease by Rs.1373.05 Lacs from the corresponding year ended 31st March, 2007 due to fall in marketing conditions.

FIXED DEPOSIT:

The company has not accepted any fixed deposits during the year.

AUDITORS:

Auditors of the company M/s. J. P. Saboo & Co. Chartered Accountants of Surat,

will retire at the conclusion of the ensuing 24th Annual Genera Meeting from the

office of the Auditors and being eligible offer themselves for re-appointment from

the end of the ensuing Annual General Meeting till the. conclusion of the next

Annual General Meetin at a remuneration payable as may be decided. As required

under the provisions of Section 224(lB),the Company has received certificate that

the. appointment, if made shall be within the limits as set down in said section.

DIRECTORS;

In accordance with Article 116 of the Articles of Association of the company, Shri

Jatin Gupta & Sbri Pawan Gupta retire by rotation and being eligible, offers

himself for-their re-appointment. The Board recommends their re-appointment Shri

Mohan Gupta, Shri Shyamsunder Gupta and Shri Sunil Kumar Gupta had resigned

as Directors of the Company w.cf. 15-12-2007,15- 12-2007 and 05-01-2008

respectively.

PARTICULARS OF EMPLOYEE :

None of the employee is in receipt of remuneration as prescribed under

Companies (Particulars of Employees) Rule, 1975 and hence information as

required under section 217{2AA) read with Companies (Particulars of Employees)

Rule, 1975 not provided herewith.

CONSERVATION OF ENRGY, TECHNOLOGY ABSORPTION, FOREIGN EARNING & OUTGO:

The particulars prescribed by the Companies (Disclosure of Particulars in the

Report of Board of Directors) Rules, 1988 as to conservation of energy; technology

absorption is Not Applicable since project is yet to start. There is no Foreign

Exchange earning and Outgo.

INSURANCE: The company has made necessary arrangements for adequately insuring interests in various properties.

DIRECTORS RESPONSIBILITY STATEMENT:

As required under section 217(2AA) of the Companies Act, 1956 your Directors

state:1. That in the preparation of the annual accounts, the applicable accounting standards have been followed.

2. That the accounting policies selected and applied are consistent and the

judgments and estimates made are reasonable and prudent so as to give a true and

fair view of the state of affairs of the company at the end of the financial year

ended 31st March, 2008 and of the profit or loss of the company for that period.

3. That proper and sufficient care has been taken for the maintenance of adequate

accounting records in accordance with the provisions of the Companies Act, 1956

for safeguarding the assets of the company and for preventing and detecting fraud

and other irregularities. 4. That the annual accounts have been prepared on a going concern basis.

CORPORATE GOVERNANCE REPORT:

Your company is committed to maintain the highest standards of corporate

governance. Your Directors adhere to the requirements set out by the Securities

and Exchange Board of India in respect of Corporate Governance Practices and

have implemented all

stipulations prescribed, Report on Corporate Governance as stipulated under clause

49 of the listing agreement with stock exchange is annexed which forms part of the

annual report. Certificate from Statutory Auditors, confirming compliance of

conditions of corporate governance as stipulated under aforesaid clause 49 is

annexed to this report.

COMPLIANCE CERTIFICATE :

The Company has availed Secretarial Compliance Certificate for the under review

form the Practicing Company Secretary pursuant to the proviso of section 383 A of

the Companies Act, 1956 and a copy of the same is attached with this report.

LISTING: The shares of your company are listed on Bombay Stock Exchange. The listing fees for the year 2008-09 have been paid to The Bombay Stock Exchange Limited.

DEPOSITORY SYSTEM:

Your company has established electronic connectivity with the both the

depositories, NSDL & CDSL. In view of numerous advantages offered by the

depository system, members of the company are requested to avail the facility of

dematerialization of the companys shares on NSDL SCDSL.

ACKOWLEDGEMENT;

The Directors place on record the appreciation and gratitude for the co-operations

and assistance extended by the Banks, Government etc. The company will make all

effort to meet the aspiration of its shareholders and wish to sincerely thank them

for their whole hearted co- operation and support at all times.

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Tax calculator See how the budget impacted your pocket. Going Concern

As a consequence of the Company’s considerable financial resources, the directors

believe that the Company is well placed to manage its business risks successfully

despite the current uncertain economic outlook.

After making enquiries, the directors have a reasonable expectation that the

Company has adequate resources to continue in operational existence for theForeseeable future. For this reason, they continue to adopt the going concern Basis in preparing the financial statements. The Company is expected to continue to generate positive cash flows on its own account for the foreseeable future. The Company participates in the Aviva Group’s centralized treasury arrangements and so shares banking arrangements with fellow subsidiaries. The directors, having assessed the responses of the directors of a fellow group

company, Aviva International Insurance Limited, which maintains the centralized

arrangement, have no reason to believe that a material uncertainty exists that may

cast doubt about the ability to continue with the current banking arrangements.Financial Position and Performance The financial position of the Company at 31 December 2009 is shown in the statement of financial position shown below Financial instruments

The business of the Company includes use of financial instruments. Details of the

Company's risk management objectives and policies and exposures to risk relating

to

financial instruments are set out in note 8 to the financial statements.Dividends

Interim ordinary dividends of £340 million were declared and paid during 2009

(2008: £475 million). The directors do not recommend a final ordinary dividend

for

the year (2008: £nil). The total cost of dividends paid during the year, including

preference dividends, amounted to £361million (2008: £567 million, including the2007 final dividend). Directors’ interests None of the directors who held office at 31 December 2009 held any interest in the Company’s shares. Authority to purchase own shares

At the Annual General Meeting held on 25 April 2006, shareholders renewed the

Company’s authority to make market purchases of up to 140 million 87/8 %

preference shares and up to 110 million 77/8 % preference shares. This authority

remains in place until 24 April 2011 but was not used in the year. Creditor payment policy and practice The Company has no trade creditors. Directors’ Liabilities Aviva plc, the Company’s parent, has granted an indemnity to the directors

against liability in respect of proceedings brought by third parties, subject to the

conditions set out in the Companies Act 1985. This indemnity was granted in 2004

and the provisions in the Company's Articles of Association constitute "qualifying

third party indemnities" for the purposes of sections 309A to 309C of the

Companies Act 1985. These qualifying third party indemnity provisions remain in

force as at the date of approving the Directors’ report by virtue of the transitional

provisions to the Companies Act 2006.

Disclosure of Information to the Auditor Each person who was a director of the Company on the date that this report was approved, confirms that so far as the director is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing his report, of which the auditor is unaware. Each directorhas taken all the steps that he ought to have taken as a director in order to makehimself aware of any relevant audit information and to establish that the auditor isaware of that information.

Auditor

A resolution is to be proposed at the Annual General Meeting for the

reappointment of Ernst & Young LLP as auditor of the Company. A resolution will

also be proposed authorizing the directors to determine the auditor’s remuneration.

The Combined Code on Corporate Governance The Company is a wholly-owned subsidiary of Aviva plc, a company listed on the London Stock Exchange. The Combined Code on Corporate Governancesets out standards of good practice in the form of principles and provisions on howcompanies should be directed and controlled to follow good governance practice.The Financial Services Authority requires companies listed in the UK to disclose, in relation to Section 1 of the Combined Code, how they have applied its principles and whether they have complied wit its provisions throughout the accounting year.Where the provisions have not been complied with companies must provide anexplanation for this.It is the Board’s view that Aviva plc has been fully compliant throughout the accounting period with the provisions set down in Section 1 of the CombinedCode, apart from a period during the year when the majority of the members of theNomination Committee was not independent non-executive directors. This was dueto the resignation of Nikesh Arora, a non-executive director, who resigned following his relocation to the United States. The Aviva plc Directors’ Report sets

out details of how the Aviva group has applied the principles and complied with

the provisions of the Combined Code during 2009. The Company has listed

preference shares and the payment of dividends to the preference shareholders is

reviewed by the Aviva plc Audit Committee and approved by the directors of the

Company. There are no other significant risks associated with the Company’s

assets and liabilities, and the Company seeks to maintain sufficient funds to meet

dividends payable on the preference shares as they fall due.

Statement of Directors’ Responsibilities

The directors are required to prepare financial statements for each accounting

period that comply with the relevant provisions of the Companies Act 1985, the

Companies Act 2006 and International Financial Reporting Standards (IFRS) as

adopted by the European Union (“EU”), and which present fairly the financial

position, financial performance and cash flows of the Company at the end of the

accounting period. A fair presentation of the financial statements in accordance

with IFRS requires the directors to:

select suitable accounting policies and verify they are applied consistently

in preparing the financial statements on a going concern basis unless it is

inappropriate to presume that the Company will continue in business;

Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

provide additional disclosures when compliance with the specific

requirements in IFRS is insufficient to enable users to understand the impact of

particular transactions, other events and conditions on the Company’s financial

position and financial performance; and

state that the Company has complied with applicable IFRS, subject

to any material departures disclosed and explained in the financial statements.

The directors are responsible for maintaining proper accounting records which are

intended to disclose with reasonable accuracy, at any time, the financial position of

the Company. They are also ultimately responsible for the systems of internal

control maintained for safeguarding the assets of the Company and for the

prevention and detection of fraud and other irregularities

Directors’ responsibility statement pursuant to the Disclosure and Transparency Rule 4 The directors confirm that, to the best of each person’s knowledge: a)

the Company financial statements in this report, which have been prepared

in accordance with IFRS as adopted by the EU, International Financial Reporting

Interpretations Committee’s interpretations and those parts of the Companies Act

2006 applicable to companies reporting under IFRS, give a true and fair view of

the assets, liabilities, financial position and results of the Company; and b)

the directors’ report contained in this report includes a fair review of the

development and performance of the business and the position of the Company,

together with a description of the principal risks and uncertainties that they face.

Independent auditor’s report to the members of General Accident plc

We have audited the financial statements of General Accident plc for the year

ended 31 December 2009 which comprise the Accounting Policies, the Income

Statement, the Statement of Comprehensive Income, and the Statement of Changes

in Equity, the Statement of Financial Position, the Statement of Cash Flows, and

the related notes 1 to 10. The financial reporting framework that has been applied

in their preparation is applicable law and International Financial Reporting

Standards (IFRSs) as adopted by the European Union.

This report is made solely to the company’s members, as a body, in accordance

with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been

undertaken so that we might state to the company’s members those matters we are

required to state to them in an auditor’s report and for no other purpose. To the

fullest extent permitted by law, we do not accept or assume responsibility to

anyone other than the company and the company’s members as a body, for our

audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors

As explained more fully in the Directors’ Responsibilities Statement (set out on

page 6), the directors are responsible for the preparation of the financial statements

and for being satisfied that they give a true and fair view. Our responsibility is to

audit the financial statements in accordance with applicable law and International

Standards on Auditing (UK and Ireland). Those standards require us to comply

with the Auditing Practices Board’s Ethical Standards for Auditors. Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the

financial statements sufficient to give reasonable assurance that the financial

statements are free from material misstatement, whether caused by fraud or error.

This includes an assessment of: whether the accounting policies are appropriate to

the company’s circumstances and have been consistently applied and adequately

disclosed; the reasonableness of significant accounting estimates made by the

directors; and the overall presentation of the financial statements.

Opinion on financial statements In our opinion the financial statements:

Give a true and fair view of the state of the company’s affairs as at 31 December 2009 and of its profit for the year then ended;

have been properly prepared in accordance with IFRSs as adopted by the European Union; and

have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matters prescribed by the Companies Act 2006

In our opinion, the information given in the Directors’ Report for the financial year

for which the financial statements are prepared is consistent with the financial

statements.

AUDITOR'S REPORT 1. We have audited the attached balance sheet of AVIVA INDUSTRIES

LIMITED, MUMBAI as at 31st March 2008, the profit and loss account and also

the (cash flow statement) for the year ended on that date annexed thereto. These

financial statements are the responsibility of the companys management. Our

responsibility is to express an opinion on these financial statements based on our

audit.

2. We conducted our audit in accordance with.the auditing standards generally

accepted in India. Those Standards require that we plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free of

material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosure in the financial statement. An audit also

includes assessing the accounting principal used and significant estimates made by

management, as well as evaluating the overall financial statement presentation: We

believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the

Central Government of India in term of sub - section (4A) of section 227 of the

Companies Act, 1956, we enclose in the Annexure a statement on the matters

specified in paragraphs 4 . and 5 of the said Order. 4. Further to our comments in the Annexure referred to above, we report that. (i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit. (ii) In our opinion, proper books of account, as required by law have been kept by the company so far as appears from our examination of those books. (iii) The balance sheet, profit and loss account and cash flow statement dealt with by

this report are in agreement with the books of account.

(iv) In pur opinion, the balance sheet, profit and loss account and cash flow

statement dealt with by this report comply with the accounting standards referred

to in sub ^section (3C) of section 211 of the Companies Act, 1956.

(v) On the basis of written representation received from the directors, as on 31st

March 2008 and taken on record by the Board of Directors, we report that none of

the directors Is disqualified as on 31st March 2008, from being appointed as a .

director in teiius of clause (g) of sub - section (1) of section 274 of the Companies

Act, 1956

(vi) In our opinion and to the best of our information and according to the

explanations given to us, the said accounts give the information required by the

Companies Act, 1956, in the manner so required and give a true and fair view in

conformity with the accounting principles generally accepted in India. (a) in the case of the balance sheet, of the state of affairs of the company as at 31st March 2008 . (b) in the case 67 the profit and loss account, of the Loss for the year ended on that date ; and (c) in the case of the cash flow statement, of the cash flows for the year ended on that date. Annexure referred to in paragraph 3 of our report of even date. (i) (a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets; (b) All the assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable

having regard to the size of the company and the nature of its assets. No material discrepancies were noticed to such verification

(c) Some part of old fixed assets has been disposed off during the period.

According to the information and explanations given to us, we are of the opinion

that the sale of the said part of fixed assets has not affected the going concern

status of the company.

(ii) (a) The inventory has been physically verified during the year by the management. In our opinion the frequency of verification is reasonable.

(b) The procedures of physical verification of inventories followed by the

management are reasonable and adequate in relation to the size of the company and

the nature of its business. (c) The company Is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the books records were not material. (iii) (a) The company has not granted/taken loans to/from companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us,

there are adequate internal control procedures commensurate with the size of the

company and the nature of its business with regard to purchases of inventory, fixed

assets and with regard to the sale of goods. During the course of our audit, we have notobserved any continuing failure to correct major weaknesses in internal controls.

(v) (a) According to the information and explanations given to us, we are of the

opinion that the transactions that need to be entered into the register maintained

under section 301 of the Companies Act, 1956 have been So entered. (b) In our opinion and according to the informations and explanations given to us, the

transactions made in pursuance of the contracts or arrangements entered in the

register maintained under section 301 of the Companies Act, 1956 and exceeding

the value of rupees five lacs In respect of any party during the year have

been.made at.prices which are reasonable having regard to prevailing. market

prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us,

the company has complied with the provisions of sections 58A arid 58AA of the

Companies Act;1956 and the Companies (acceptance of Deposits) Rules, 1975. vii) In our opinion, the company has an internal control system commensurate with the size and nature of its business. (viii) Since this is being Trading unit, hence sec 209 (1) (d) of the Companies Act, 1956 is not applicable.

(ix) (a) The company is regular in depositing with appropriate authorities

undisputed statutory dues including income tax, sales tax, custom duty, cess and

other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed

amounts payable in respect income tax, wealth tax, sales tax, custom duty, excise

duty and cess were in arrears, as at 31st March, 2008 for a period of more than six

months from the date they became payable, other than income tax for the

immediate previous year.

(c) According to the information and explanation given to us, there are no dues of

sale tax, customs duty, wealth tax, excise duty and cess, which have not been

deposited on account of any dispute. (x) The company has incurred cash losses during the financial year covered by our audit and immediately preceding financial year and also company has no accumulated losses.

(xi) In our opinion and according to the information and explanations given to us,

the company has not defaulted in repayment of dues to a financial institution, bank

or debenture holders. (xii) The company has not granted loans and advances on the basis of security by way of a pledge of share, debentures and other securities.

(xiil) The company is not a chit fund or a nidhi mutual benefit fund/society.

Therefore; the provisions of clause 4 (xiil) of the Companies (Authors Report)

Order, 2003 are not applicable to the company.

(xiv) The company is not dealing in or trading in shares, securities, debentures

and other investments except as an investment. Accordingly, the provisions of

clause 4 (xiv) of the Companies (Auditors Report) Order, 2003 are not appllcable

to the company. (xv) in our opinion and informed by the management, the company has not given guarantees for loans taken by others from banks or financial institutions. (xvi) In our opinion, the term loans have been applied for the purpose for which they were raised.?; (xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that the no funds raised on

short

- term basis have been used for long

- term investment. No long - term funds have been used to finance short

- term assets except permanent working capital.(xviii) According to the information and explanations given to us, the company has not made any allotment of preferential shares during the financial year.

(xix) The company has no issued and / or outstanding debentures at the end of the year. (xx) The company has not issued and raised money by public issues during the year.

(xxi) According to the information and explanations given to us, no fraud on or by

the Company has been noticed or reported during the course of our audit. Find

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ACCOUNTING POLICIES General Accident plc (“the Company”) is a public limited company incorporated

and domiciled in the United Kingdom (“UK”). The following accounting policies

have been applied consistently in dealing with items which are considered material

in relation to the Company’s financial statements.

1. GENERAL i) The Financial Statements have generally been prepared on the historical cost convention. ii) Accounting policies not specifically referred to otherwise are in consonance with generally accepted 2. BASIS OF ACCOUNTING The company follows the mercantile system of accounting generally except otherwise stated herein below. 3. FIXED ASSETS Fixed Assets are stated at cost less accumulated depreciation.

4. DEPRECIATION

a) Depreciation on fixed assets has been provided at the rates and in accordance

with the provisions of Schedule XIV of the Companies Act,1956 on SLM Method

on days prorata on basis of date put to use of the assests. However, no depreciation

has been charged on fixed assets during the year and profit of the company has

been affected adversely to that extent.

5. INVENTORIES The inventory has been valued at lower of cost or net relisable price, however there is no closing stock at the

6. REVENUE AND EXPENDITURE RECOGNITION

Revenue Is recognised and expendeiture is accounted for on their accrual except

claims in respect of goods purchased and sold & Insurance, which are accounted

for on cash basis.

7. INVESTMENT Investment are valued at Cost. No provision has been made for depreciation of the market value of the Investment.

(A )Basis of presentation

The financial statements of the Company have been prepared in accordance with

International Financial Reporting Standards (IFRS) issued by the International

Accounting Standards Board (IASB) and applicable at 31 December 2009, and

endorsed by the European Union. The date of transition to IFRS was 1 January

2004.

(B) Use of estimates

The preparation of financial statements requires the Company to make estimates

and assumptions that affect items reported in the statement of financial position

and income statement and the disclosure of contingent assets and liabilities at the

date of the financial statements. Although these estimates are based on

management’s best knowledge of current facts, circumstances and to, some extent,

future events and actions, actual results ultimately may differ from those estimates,

possibly significantly.

(C) Investment income Investment income consists of interest receivable for the year. Interest receivable is recognized as it accrues, taking into account the effective yield on the investment.

(D) Financial instruments

Loans to, or from other Aviva Group companies are recognized when cash is

advanced to, or received from these companies. These loans are subsequently

carried at amortized cost. The Company reviews the carrying value of loans on a

regular basis. If the carrying value of the loan is greater than the recoverable

amount, the carrying value is reduced through a charge to the income statement in

the period of impairment.

(E) Cash and cash equivalents Cash and cash equivalents consist of cash at banks and in hand. (F ) Income taxes

The current tax expense is based on the taxable result for the year, after any

adjustments in respect of prior years. Tax, including tax relief for losses if

applicable, is allocated over profits before taxation and amounts charged or

credited to reserves as appropriate.

Provision is made for deferred tax liabilities, or credit taken for deferred tax assets,

using the liability method, on all material temporary differences between the tax

bases of assets and liabilities and their carrying amounts in the financial

statements. Deferred tax assets are recognized to the extent that it is probable that

future taxable profit will be available against which the temporary differences can

be utilized.

(G) Share capital Equity instruments An equity instrument is a contract that evidences a residual interest in the assets of an entity after deducting all its liabilities. Accordingly, a financial instrument is treated as equity if: I.

There is no contractual obligation to deliver cash or other financial assets or to

exchange financial assets or liabilities on terms that may be unfavorable; and II.

The instrument is a non-derivative that contains no contractual obligation to

deliver a variable number of shares, or is a derivative that will be settled only by

the Company exchanging a fixed amount of cash or other assets for a fixed number

of the Company’s own equity instruments.

Dividends

Dividends on ordinary shares are recognized in equity in the period in which they

are paid and, for the final dividend, approved by shareholders. Dividends on

preference shares are recognized in the period in which they are declared and

appropriately approved.

RESEARCH METHODOLOGY

Market research is the process of systematic gathering, recording and analyzing of

data about customers, competitors and the market. Marketing research (also called

consumer research) is a form of business research. It is a form of applied sociology

which concentrates on understanding the behaviors, whims and preferences, of

consumers in a market-based economy. Market research can help create a business

plan, launch a new product or service, fine tune existing products and services,

expand into new markets etc. It can be used to determine which portion of the

population will purchase the product/service, based on variables like age, gender,

location and income level. It can be found out what market characteristics your

target market has. With market research companies can learn more about current

and potential customers.

The purpose of market research is to help companies make better business

decisions about the development and marketing of new products and in the case of

financial market research, it shows the company worthiness and position in front of

people. Market Research Process • Defining the Research Problem • Selecting and Establishing Research Design • Select the Research Design • Identify Information types and Sources • Determining and Design Research Instrument • Collecting and Analyzing Data • Formulate Findings

Method Adopting of Data Collection

There are two types of data collection technique. i.e. • Primary Data and • Secondary Data. In my research project there is no need to collect primary data. I want only secondary data that I have been collected by different sources. Internet- From the internet we have take the histories of companies for the introduction part. We search some data from the website of company and search engine like Google. Books- Books are also helpful us for the data research. We have taken help of books to calculate the ratios and analyzing the financial statements like Profit & Loss account and Balance sheet etc.

FINANCIAL STATEMENTProfit & loss Account, Balance Sheet and Key Ratio of Avivalife insurance

Profit & Loss account of Aviva life insurance

Mar06 Mar07 Mar08 Mar09

APPLICATION OF FUNDS

KEY FINANCIAL RATIOS

Their IFRS earnings per share for 2009 were 37.8 pence (2008: 36.8 pence loss).

This

mainly reflects the improvement in financial markets in 2009. Economic and

investment

return assumptions during the year were in line with our long-term expectations

with a positive variance of £77 million (2008: £2,544 million adverse).

As condition of insurance market was very bad in 2006 to 2008 mid after that it

improved a lot and from that graph we can understand that because of market

slowdown

it happened.

Debt equity ratio is also saying that it improved a lot from the year 2007 mid till 2008

but after that because of return the have faced the slowdown

Quick ratio shows also decline position it means that the ability to change current assetsinto money or liquidate power is declining because of market trends. The liquid assetsare very few and they are not utilizing properly. As market down in year 2005 so itsspeedily declined after year 2006 its slowly recovered but in the year 2008 and 2009 itwas stagnant

The difference of current assets and current liabilities shows that ratio. As it shows thatif working capital is high so liquidity of business is respectively high. By this

graph Ican understand the financial position of the company like in the year 2005 the ratioshows the good position but because of market slowdown it’s fluctuating and after 2008it become stable. That shows that company is recovering its financial position

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

The improvement in 2009 to 16.2% (2008: 11.0%) reflects the increase in the post-tax MCEV operating

result and the impact of lower opening equity shareholder's funds following falls in asset values in 2008.

Return on equity shareholders' funds is calculated as after-tax operating return, before adjusting items, on

opening equity shareholders' funds, including life profits on a market consistent embedded value (MCEV)

basis.

Conclusion As the project is to Analysis of Financial Position & Profitability of Aviva Life

Insurance and the main objective to understand the financial position or condition of

company. After completing the project I know that how ability of management can

perform work in difficult situation. Because during the recession they faced very bad

condition but as India condition will improve they will also improve. As company is

trying to reduce its expenses for earning good profit.

Finding By this project I found that company position is not that much good right now because of

slowdown in year 2005-06 and that impacted a lot on company’s ratio. The ratio like Current Ratio, Quick Ratio, Earning par share, Return on Capital Employed

or Shareholder Funds, Operating Profit, Net Profit Margin and Debt-Equity Ratio are in decline position.

These ratios show that company is not utilizing its fund properly and the working capital requirement is highly.

By this project I found that the operating expenses are very high due to recovery period from global slowdown.

I found that if company will focus on its liabilities so they can overcome from the negative growth.

The credit rating that the company got in year 2205 was very good. But after that recession it changed, here credit rating play very important role because almost 60% investors invest their money on the basis of goodwill or credit rating that a company hold in the market

Limitation

The data collection was little bit tough because latest data is not available on the internet.

Finding the data of Insurance sector is very difficult.

Problem occurred due to lack of time and facility of internet