Future Generali India Insurance Company · PDF file3 Future Generali India Insurance Company...

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Future Generali India Insurance Company Limited

Board of Directors Name of the Directors Designation

1 Mr. G N Bajpai Chairman

2 Mr. Sergio Balbinot Director

3 Mr. Kishore Biyani Director

4 Mr. Vijay Biyani Director

5 Mr. Krishan Kant Rathi Director

6 Mr. Roberto Gasso Director

7 Dr. Kim Chai Ooi Director

8 Dr. Devi Singh Additional Director

9 Dr. Rajan Saxena Additional Director

10 Mr. K.G. Krishnamoorthy Rao Managing Director & Chief Executive Officer

RegisteredOfficeAddress Auditors 001, Delta Plaza, Ground Floor, Singhi & Co 414, Veer Savarkar Marg , FRN 302049E Prabhadevi, Mumbai 400 025. Chartered Accountants 101, Turf Estate, Dr E. Moses Road, Mahalaxmi, Mumbai 400 011. Bankers G M Kapadia & Co HDFCBankLtd, FRN 104767W ICICIBankLtd, Chartered Accountants AXISBankLtd. 36 B, Tamarind House, Tamarind Lane, Fort Mumbai 400 001.

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Dear Shareholders,

It gives me great pleasure to present to you on behalf of the Board, the 5th Annual Report of our company – Future Generali India Insurance Company Limited (FGIICL).

The year 2010-11 has been an unusual year for the economy – globally, for India; and especially so for the non-life insurance industry. The uneven global economic recovery was besieged by continued high unemployment in the United States, a sovereign debt crisis in the Euro Zone and geo-political issues in the Middle East and North Africa. The rise in commodity and fuel prices unleashed inflationary waves across geographies. The Indian economy, in particular, was significantly impacted by the high headline inflation, compelling the monetary authorities to raise interest rates for the 10th time in quick succession. Yet, the inflationary pressures continue to haunt the economy and the common man.

There has been a decline in the rate of investment as also in industrial production. Eventually, the low 4th quarter growth dragged down the overall GDP growth of the country. The combined impact has been a slow down in the enhancement of capacities and the birth of new enterprises. The not so friendly economic environment was further aggravated by civil unrest, social uprising, armed conflicts, acts of terrorism, war and some of the most devastating natural catastrophes in recent human history. The General Insurance industry – a barometer of risk, across global physical, fiscal and mental arenas – obviously was and continues to be directly impacted by these factors, more than most other industries.

A growing economy, rising GDP per capita and significantly under-penetrated personal lines of businesses like health, travel, accident, liability and households offers immense potentials for growth of the non-life insurance industry. Even though the challenges of the motor segment with rising claims has been an area of concern, the annual sale of nearly 15 million new motorbikes, 4 million cars and 1.5 million commercial vehicles proffers a huge opportunity in this line of business. As of now, motor insurance accounts for roughly 50% of the industry. Hopefully, unhappy experiences of losses in the segment will see the end of the price war that plagued the industry till now; coupled with health insurance portability that is just around the corner, it proposes substantial higher possibilities for FGIICL to garner greater quantities of business by rendering consistently superior service. Looks like the company is standing at the threshold of rewriting history and toppling some of the current industry leaders.

In the backdrop of market challenges and an increasingly aggressive competitive scenario, FGIICL, in just third full year of its operations, achieved a Gross Written Premium (GWP) of Rs. 6606 Mn as against Rs.4181 Mn in FY 09-10 an impressive 58 % growth on a YoY basis. This is indeed commendable, and I congratulate the CEO, and every member of the FGIICL team who contributed to making this achievement a reality. This rapid growth in GWP, policies and market share has seen FGIICL becoming a player of significance, and both potential customers and competitors are watching the strides of the company with expectant eyes.

Going forward, there will be a need for FGIICL to experiment with innovative ways to tap the considerable mass of under-harnessed retail/B2C opportunity to grow and de-risk the current portfolio. Optimal leveraging of our wide network of 94 branches and 163 Future Group retail outlets across the country will go a long way in taking FGIICL a leap ahead of others.

In all its strategies, plans and activities for 2011-12, it will be imperative for the FGIICL team to balance the aggression required to meet its top line volume ambitions with the prudence of bottom line consciousness - of quantity and profitability; always remaining cognizant of the fact that we must optimally utilize the limited resources of time, effort, capital and management to succeed.

Finally, it is my belief that FGIICL, with its continued focus to introduce top notch products, managing processes, service levels, and the dedication of a very capable leadership team, will march nonchalantly on the path of profitability this year. I wish the team and shareholders a very successful and profitable 2011-12.

Warm regards,

Ghyanendra Nath Bajpai

Chairman Speak

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Dear Shareholders,

It gives me great pleasure to announce that Future Generali India Insurance Company Ltd (FGIICL), in its 3rd full year of operations, has written a business of Rs. 6606 Mn with 58% growth on the premium written in 2009-10. Coupled with the challenges faced by the economy, the non-life insurance market in India continued to compete on price which resulted in reduced profitability of many lines of business for the industry. The higher provisioning mandated by the regulator for the motor third party pool for the last three years also had an impact on the bottom-line for the insurers.

In spite of these challenges, FGIICL has been able to put up an impressive performance on the top line keeping, bottom-line parameters in focus. This was possible only due to the dedication and efforts of all our employees, support from our customers and intermediaries, guidance we received from the Regional Office, our Chairman and the Board of Directors. I take this opportunity to thank each one of them and look forward to their continued support through the coming year.

FGIICL continues its focus on profitable growth. It is growing its retail portfolio at a faster pace. For 2010-11, 65% of the business came from the retail segment. By increasing the retail distribution network in Agency, Mallassurance and Bancassurance, FGIICL plans to further increase the percentage of the retail portfolio. In 2010-11 it also focused on increasing the average premium per policy in order to better profitability.

While continuing to write profitable motor business, the focus had been to build non-motor business in the lines of Property, Engineering, Accident, Marine Cargo and Health. Future Generali Health became operational from November 2010 and has started servicing all health business written by the company from November 2010. This has resulted in better service delivery to our health insurance customers and will help us in increasing our retail health insurance portfolio. The company did continue its cost optimization initiatives. Learning and development for our employees as well as agents had been a key focus area in 2010-11 and this will continue to be so in the coming year as well.

We are committed to IRDA’s initiatives on better customer service and customer grievance handling. The company has already integrated its customer grievance handling module with that of the regulator. It has set tighter internal benchmarks on the turnaround time for policy servicing and claims settlement. We will give utmost priority in participating in the regulator’s efforts to better customer service.

I thank the Government authorities, IRDA and other regulators, our auditors and the employees of the Future Group and Generali; and our shareholders for all the support they extended to us. I am very sure that we will be able to present a better report next year.

May this year be filled with many good Shaguns for FGIICL.

Best Regards

K.G. Krishnamoorthy Rao

CEO Speak

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Directors’ Report

Dear Shareholders,

Your Directors have pleasure in presenting the Fifth Annual Report of Future Generali India Insurance Company Limited along with the audited statement of accounts for the year ended 31st March 2011.

Financial Highlights

The highlights of financial results of the Company for the financial years 2010-11 and 2009-10 are as under:

Particulars For the year ended

31st March 2011 (Amount Rs '000)

For the year ended31st March 2010(Amount Rs '000)

Gross written premium 6,119,571 3,859,291

Retrocession from Pool 486,372 321,437

Net written Premium 4,039,523 2,464,736

Net earned Premium 3,291,168 1,874,752

Net Incurred Claims 2,782,697 1,693,931

Net Commissions’ (133,281) (172,561)

Management Expenses 1,936,801 1,434,808

Underwriting Results (1,295,049) (1,081,426)

Income from Investment 399,850 184,386

Profit /Loss Before Tax (895,199) (897,041)

Profit /Loss After Tax (895,199) (897,041)

Number of Policies Issued 681,940 554,117

Number of employees 982 805

1. Operational review:

Your Company has completed its third full year of operations. During the year under review, your company achieved gross premium of Rs 6,120 Mn against Rs 3,859 Mn in the previous year, a growth of 58.57 % over the previous year. The Company’s market share among private sector insurance companies grew from 2.74 % to 3.48%. Within a short span the company has spread in the rural areas, especially in Punjab and Orissa where it successfully sold a large number of rural insurance policies, which has helped the Company to meet its rural obligations as well as lay the foundation to tap more rural business in a profitable manner.

1.1 IRDA Registration

The Certificate of Registration from the Insurance Regulatory and Development Authority has been renewed for the year 2011-12.

1.2 Products Overview:

In order to have a balanced portfolio mix, the company has filed and received approval for various products catering to both the Corporate and Retail segments. Noteworthy products which have been approved during the year are given below:

Future Cine Suraksha

Future Events Insurance

The company has also filed several other products to widen the products bouquet. Further the Company is working on various innovative product offerings keeping in mind the customers’ requirements and to target niche segments.

1.3 Regional and Branch office Network:

During the year under review, the Company sought approval from IRDA for opening thirty-two (32) new branch offices. The Company has opened four new branch offices out of these approved branch offices and is in the process of opening remaining branches. The Company had 94 branch offices at the end of the year. The Company is focused on expanding its geographical reach in order to increase its penetration in retail and rural business segments across the country and will continue to seek to expand its geographical reach in all lines of business.

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1.4 Training and Development

The Learning and Development team continued to develop the behavioral & functional skills of employees & intermediaries, to help provide high quality service to customers. Employees were also nominated for professional programs/ workshops conducted by Insurance Institute of India and other external agencies. Employees have been encouraged to further develop their professional skills by qualifying the Licentiate, Associate & Fellowship exams conducted by Insurance Institute of India.

1.5 Solvency Ratio

Your Company has been continuously monitoring its solvency margins in keeping with the requirements of IRDA (Assets, Liabilities, and Solvency Margin of Insurers) Regulations, 2000; and has ensured at all times the required solvency margin.

1.6 Share Capital

During the year under review, the Company has increased its Authorised Share Capital from Rs. 500 crore to Rs. 1000 crore. Further the Company has issued and allotted 195,000,000 (Nineteen Crore Fifty Lacs Only) equity shares of Rs. 10/- each to the Promoters. Consequent to above allotment of equity shares, the issued, subscribed and paid-up share capital has increased from Rs. 280 Crore to Rs. 475 crore as at the end of the financial year.

1.7 Human Capital

Human Capital is the most important asset of any service industry. Your Company has created a favorable work environment, which encourages innovation and meritocracy, while making it an interesting place to work for, eventually leading to employee retention. In this direction a Voice of Employee Survey – 'AWAAZ' was conducted with a view to gauge the level of satisfaction among the employees and also to collect inputs to raise the level of employee engagement. In the same direction,'Mauj' – an Employee Engagement initiative was launched across the Company, for creating an environment of fun at work. Also, a competency mapping exercise was undertaken across all critical job roles to identify competency gaps and plans have been worked to fill these gaps with specific developmental programs. Further, the Balance Score Card System has been implemented for employee’s performance appraisal linking individual goals across the functions with the Organisation Goals coupled with transparency.

1.8 Reinsurance

The reinsurance program of the Company is formulated in line with the guidelines laid down by Insurance Regulatory and Development Authority (IRDA), which aims at optimum retention of premium within the country with adequate risk coverage.

2. Directors

Mr. K.G. Krishnamoorthy Rao’s induction as a Director of the Company was confirmed by the shareholders of Company at the last Annual General Meeting of the Company held on 3rd August, 2010 at the registered office of the Company.

Dr. Devi Singh and Dr. Rajan Saxena were inducted as additional directors with effect from 15th November 2010 to hold office up to ensuing annual general meeting of the Company. Both the Directors were appointed as Non – Executive Independent Directors of the Company. The Company has received notices from members pursuant to Section 257 of the Companies Act, 1956, signifying their intention to propose the candidature of Dr. Devi Singh and Dr. Rajan Saxena for the office of director in the next Annual General Meeting.

Mr. Krishankant Rathi and Mr. Kishore Biyani are due to retire from the Board of Directors by rotation and being eligible offer themselves for re-appointment.

3. Management Report

Pursuant to the provisions of regulations 3 of the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors’ report of Insurance Companies) regulations 2000, the Management Report forms part of the financial statements.

4. Public Deposits

During the year under review, the Company has not accepted any deposit from the public.

5. Particulars Regarding Conservation Of Energy and Technology Absorption

Your company has made significant enhancements in the IT infrastructure: Storage consolidation for all critical applications across the enterprise with deployment of a Storage Area Network, Data replication across data centres (Primary and DR), which host the inter alia production environments and enhancements in perimeter security to control illegitimate traffic. Infrastructure software such as Active Directory, MS Exchange, Unified Communication platform of OCS, and automated patch monitoring and deployment tools have been implemented/upgraded to contemporary versions. Database Servers, Portal and Internet Information Services, and platforms for third party partners have been upgraded. Efforts such as these have provided 99.9% uptime to the company’s central system resources and network.

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The existing software applications have shown stable performance during the course of the year and have been progressively enhanced where ever necessary. Business Application functionality is being significantly enhanced with the implementation of the IBM/Lombardi BPM suite that has been kicked off. Online commerce has commenced during the course of the year for New Business as well as Renewals. The new Health Business is being addressed with a comprehensive solution including BPM. In-house Software Application Development capabilities have been supported with the implementation of the Microsoft Team Foundation server, which will lend solidity to the software development lifecycle and ongoing maintenance, with effective version control, centralized tracking and monitoring, audit control, document repository and customized workflow and event triggers.

The company does not carry out any manufacturing activity, therefore the Companies (Disclosure of Particulars in the report of the Board of Directors) Rules, 1988 are not applicable to the Company.

6. Foreign Exchange Earnings and Expenditure

Earnings in foreign currency - Rs. 7,768,637

Expenditure in foreign currency - Rs. 133,948,065

7. Dividend

Your Directors do not recommend any dividend for the financial year ended March 31, 2011.

8. Particulars of Employees

In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the name and other particulars of certain employees are required to be set out in the Annexure to the Directors’ Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Directors’ Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Members who are interested in obtaining such particulars may write to the Company at its Registered Office.

9. Rural and Social Business

Your Company has fulfilled the rural and social obligations for the financial year 2010-11.

10. Directors’ Responsibility Statement

In accordance with the requirements of sub-section 2AA of section 217 of Companies Act, 1956, the Board of Directors wishes to confirm the following:

i) That in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures (if any);

ii) That such accounting policies have been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give true & fair view of the state of affairs of the Company as on 31st March, 2011 and of the profit and loss of the Company for the year ended on that date;

iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of your company and for prevention and early detection of fraud and other irregularities;

iv) That the annual accounts have been prepared on a going concern basis.

11. Audit Committee

The Audit Committee of the Board of Directors constituted in accordance with the provisions of Section 292A of the Companies Act 1956, comprising of Mr. G.N Bajpai as Chairman of the committee, Mr. Krishan Kant Rathi, Mr. Roberto Gasso and Dr. Kim Chai Ooi as members. The Audit Committee met four times during the year on May 30, 2010, August 02, 2010, November 12, 2010 and February 18, 2011 and reviewed operations and accounts of the company.

12. Investment Committee

Your Company has also constituted an Investment Committee pursuant to the requirement of IRDA regulations. The Committee comprises of Mr. G.N Bajpai as Chairman and Director, Mr. Krishan Kant Rathi - Director, Mr. K.G. Krishnamoorthy Rao - Managing Director & CEO, Dr. Kim Chai Ooi – Director, Mr. S. Venkatesh - Chief Financial Officer, Mr. Milan P. Shirodkar – Head of Investments and Mr. Biresh Giri – Appointed Actuary as members.

The Investment Committee met four times during the year on May 30, 2010, August 02, 2010, November 12, 2010 and February 18, 2011 and reviewed Investment operations of the company.

13. Auditors

In accordance with the IRDA Regulations / Guidelines, the company appointed M/s G.M Kapadia & Co. and M/s Singhi & Co, Chartered Accountants as joint statutory auditors of the company in the last Annual General Meeting. They hold

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office up to the conclusion of Fifth Annual General Meeting of the Company. Since M/s. G.M Kapadia & Co. has completed four years as joint statutory auditors and pursuant to IRDA Circular no. 36/F&A/EMPL/74/July/05 dated 25th July 2005, new joint statutory auditor is to be appointed in place of M/s G.M Kapadia & Co.

The shareholders are requested to appoint the auditors for the period from the conclusion of ensuing Annual General Meeting to the conclusion of next Annual General Meeting and to fix their remuneration. The Board wishes to place on record its appreciation for the services rendered by M/s. G. M. Kapadia & Co, Chartered Accountants during their tenure as joint statutory auditors of the Company.

14. Corporate governance

The Corporate governance is about promoting Corporate fairness, transparency and accountability. Good “Corporate Governance" is to ensure commitment of the Board in managing the company in a transparent manner for maximizing long-term value of the company for its shareholders and all other partners. It is integral to the very existence of a company and strengthens investor's confidence by ensuring company's commitment to higher growth and profits.

A brief report of the Board of Directors of the company detailing the status of Company on the various provisions of the Corporate Governance Guidelines prescribed by Insurance Regulatory and Development Authority (IRDA) is given as Annexure.

15. Auditor’s Observation

The observations of the Auditors are in the nature of general disclosures, which read together with the accounting policies and the relevant notes to the accounts are self-explanatory.

16. Future Outlook

Your Company strives with an objective of profitable growth and risk based underwriting, with high level of customer service. Our new initiatives on simplifying motor claim settlement, setting up of Future Generali Health team, etc. should help us in improving our service levels to the customer. The company continues to focus on cost efficiency by improving employee productivity and adopting budgetary controls. The company also plans to build strong and robust processes in the coming years to quickly adapt itself to continuous changes in regulatory and market environment.

17. Appreciation and Acknowledgment

Your Directors wish to express their sincere appreciation for the co-operation and assistance received from the bankers, concerned regulatory authorities including the Insurance Regulatory and Development Authority, Reserve Bank of India, and other regulatory bodies and other business constituents during the year under review. Your Directors look forward to their continued support in the future.

Your Directors express their sincere appreciation for the commitment, co-operation, active involvement and dedication displayed by all the employees in the growth of the Company.

Your Directors thank you for your continued support, trust and confidence reposed in them.

OnbehalfoftheBoardofDirectors

FutureGeneraliIndiaInsuranceCompanyLimited

GNBajpai

Chairman

May 05,2011

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Annexure To Directors’ ReportReport On Corporate Governance

1. Introduction:

Corporate Governance is about commitment to values and ethical business conduct. It is also about how an organization is managed viz; its corporate and business structures, its culture, policies and the manner in which it deals with various stakeholders. Timely and accurate disclosure of information regarding the financial position of the company, its performance and ownership forms part of effective corporate governance.

2. Philosophy on Corporate Governance:

Good governance practices stem from the culture and mindset of the organization. It is therefore not merely about enacting regulations and procedures but also about establishing an environment of trust and confidence among various stakeholders. It is about demonstrating high level of integrity, transparency, accountability and disclosures across the company’s operations and in its interaction with its stakeholders, including shareholders, customers, employees, the government, lenders and the society.

The Corporate Governance philosophy of the Company is driven by the following fundamental principles:

1. Conduct the affairs of the Company in an ethical manner;

2. Ensure transparency in all dealings.

3. Ensure highest level of responsibility and accountability

4. Ensure compliance with all laws and regulations

5. Ensure timely dissemination of material information & matters of interest to stakeholders;

The Company, through effective dissemination of information to the Directors and active interaction of the Board Members with Senior Management ensures effective oversight of the Company’s businesses and activities.

Through the Governance mechanism in the Company, the Board along with its Committees, endeavour’s to strike the right balance with various stakeholders’ interests

3. Board Of Directors (“Board”)

The Board has been constituted in a manner, which results in an appropriate mix of executive and non-executive directors to ensure proper governance and management.

The Corporate Governance principles of the Company ensure that the Board remains informed, independent and involved in the Company and that there are ongoing efforts towards better Corporate Governance to mitigate “non business” risks.

The Directors of the Company possess the highest personal and professional ethics, integrity and values and are committed to representing the long-term interest of the stakeholders. The Company’s business is conducted by its employees under the direction of the Managing Director & Chief Executive Officer and the overall supervision of the Board.

The Company’s commitment to ethical and lawful business conduct is a fundamental shared value of the Board of Directors, the Senior Management and all other employees of the Company.

3.1 Composition of the Board

As at March 31, 2011, the Board of Directors of your Company consisted of Ten (10) Directors comprising of one (1) Executive Director, three (3) Non – Executive Independent Directors and six (6) Non – Executive Directors. The Directors are elected based on their qualification and experience in related fields of your Company’s business needs and/ or having expertise in marketing, management & finance etc.

INFORMATION ON DIRECTORS

1) Mr. G.N. Bajpai - Chairman

Mr. Ghyanendra Nath Bajpai is an Independent Director and Chairman of the Board of Directors of the Company. Mr. Bajpai is a distinguished leader in Indian business, and has been the Chairman of the Securities and Exchange Board of India (SEBI) and Chairman of the Life Insurance Corporation of India (LIC).

Mr. Bajpai is known for his visionary leadership and exemplary integrity. He has served as Non-Executive Chairman and a director on corporate boards in India and other countries. He has also received awards for contribution to business and authored several books. Mr. Bajpai has been the Chairman of the Corporate Governance Task Force of International Organization of Securities Commissions, Insurance Institute of India & served on the Governing Boards of Indian Institute of Management, Lucknow and National Insurance Academy.

He has delivered lectures at London School of Economics (LSE), Harvard University and MIT and also addressed Stanford University, OECD & IMF seminars. He has received among others the Outstanding Contribution to the Development of Finance award from Prime Minister Dr. Manmohan Singh.

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Mr. Bajpai holds a Degree in Law and Masters in Commerce. Mr. Bajpai was appointed as Director on March 16, 2007 and was further appointed as chairman of the company in the Board Meeting held on October 24, 2007.

2) Mr. Kishore Biyani - Director

Mr. Kishore Biyani is a Non-Executive Director on the Board of the Company. Mr. Kishore Biyani founded Pantaloons in 1997, followed by a number of popular retail formats including Big Bazaar, Central, Food Bazaar, Brand Factory and Home Town that now cater to almost the entire basket of a wide cross-section of Indian consumers. In the recent years, Mr. Kishore Biyani has led the group’s transformation into one of India’s leading business houses with presence in capital, consumer finance, insurance, brand development, retail real estate development and logistics.

A staunch believer in the group’s corporate credo, ‘Rewrite Rules, Retain Values,’ Mr. Kishore Biyani considers “Indianness” as the core value driving the group. He was recently awarded the Ernst & Young Entrepreneur of the Year 2006 in the Services Sector and the Lakshmipat Singhania - IIM Lucknow Young Business Leader Award by Prime Minister, Dr. Manmohan Singh in 2006. He was also awarded the CNBC First Generation Entrepreneur of the Year 2006.

Mr. Kishore Biyani holds Bachelor’s Degree in Commerce and Post Graduate Diploma in Marketing.

3) Mr. Vijay Biyani - Director

Mr. Vijay Biyani is a Non-Executive Director on the Board of the Company. Mr. Vijay Biyani has more than thirty years of experience in manufacturing, textiles and retail industry.

Mr. Vijay Biyani holds Bachelor’s Degree in Commerce.

4) Mr. Roberto Gasso - Director

Mr. Roberto Gasso is a Non-Executive Director on the Board of the Company. He is responsible for the control and co-ordination of the Asian operations from Generali Head office. Prior to this, he was the Deputy Chief Executive of the Asia and Hong Kong Branch.

Mr. Roberto Gasso holds a degree in Business Administration.

5) Mr. Sergio Balbinot - Director

Mr. Sergio Balbinot is a Non- Executive Director on the Board of the Company. Mr.Balbinot started his career with Assicurazioni Generali in 1983 in the insurance operations department. He later moved on to Assicurazioni Generali, Swizerland branch as a head of International Activity of Europe Assistance. In 1995 he was appointed as Area Manager of Assicurazioni Generali for German-speaking countries and France. In 1996, he was appointed as Assistant General Manager of Assicurazioni Generali and head of group-insurance operations. In 1998, he was appointed as General Manager of Assicurazioni Generali and later on in 2002 he became CEO of Assicurazioni Generali and Generali Group

Mr. Sergio Balbinot is a graduate in Economics and has done scholarship at the European Community in Brussels.

6) Mr. Krishan Kant Rathi - Director

Mr. Krishan Kant Rathi is a Non-Executive Director on the Board of the Company. He has approximately 25 years of professional experience in corporate finance, strategic business planning and investment advisory, Mr. Krishan Kant Rathi has worked in organizations such as KEC International, H&R Johnson and Motilal Oswal Private Equity Advisors. He has previously worked as Group CFO with Pantaloon Retail.

Mr. Krishan Kant Rathi is a Chartered Accountant and a Company Secretary.

7) Dr. Kim Chai Ooi - Director

Dr. Kim Chai Ooi is a Non-Executive Director on the Board of the Company. He has more than 20 years of rich leadership experience in the insurance space in various geographies namely Malaysia, Hong Kong, China and India. Prior to joining Generali Group in 2001, he has held various senior positions in AIA in Malaysia, Hong Kong and China. He was instrumental in setting up Generali China Joint Venture operations in 2001 and leading it towards achieving the status of Chinas No. 1 Foreign Insurer in year 2005.

He is a Post Doctorate Fellow of Research Centre for Insurance & Economic Development in Chinese Academy of Social Science. Dr. Kim Chai Ooi graduated with a Bachelor of Science in Civil Engineering in 1983 and Diploma in Business Studies in 1986. From 1999 to 2003, he continued to pursue his academic research and graduated with PhD in Economics from Wuhan University, Peoples Republic of China.

8) Dr. Devi Singh - Independent Director

Dr. Devi Singh is an Independent Director on the Board of the Company. He is currently serving as Director of the Indian Institute of Management, Lucknow (IIML) and is a well known Professor in the area of International Finance & Management. He was director of Management Development Institute (MDI) Gurgaon for four and half years before joining IIML. He was a visiting professor at the Faculty of Management, McGill University, Canada for five years. He has been a visiting faculty at

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the International Centre for Public Enterprises, Slovenia, ESCAP Europe and SKK Graduate School of Business, Seoul. He is an alumnus fellow of the Institute of World Affairs, Connecticut. He has published and presented research papers at various National/ International conferences. Dr. Devi Singh is an author of three books in Finance & Management. He has been a consultant to leading Public & Private Sector and multinational organizations in India.

He has received several awards including ISTE National Fellow 2007, UP Ratan 2008 and the Ishan National Award for Best Director of a Business School in 1999. He is a member of MHRD Task Force on Faculty Shortage and Design of Performance Appraisal System, UPSC Committee on Designing Civil Services Aptitude Test and founding Society for National Board of Accreditation.

Dr. Devi Singh holds Ph.D. in International Finance from Indian Institute of Management (Ahmedabad).

9) Dr. Rajan Saxena - Independent Director

Dr. Rajan Saxena is an Independent Director on the Board of the Company. Dr. Rajan Saxena was the Director of Indian Institute of Management, Indore, S. P. Jain Institute of Management & Research and Dean of Narsee Monjee Institute of Management Studies, Mumbai. He has been in management education since 1972 and has over 37 years of professional experience in management education, research, consulting and institution building. He is an alumnus of Shri Ram College of Commerce, Delhi. He was a Faculty Professor at XLRI- Jamshedpur, S.P. Jain Institute of Management & Research, Mumbai, IIM Calcutta and NMIMS and IIM Indore. He was also a visiting Faculty Professor in University of Calgary, Canada and has been a British Council visitor at the University of Sterling, U.K. where he also taught in the entrepreneurship program.

Dr. Rajan Saxena has been on the advisory and corporate board of several institutions & companies. He was the member of All India Board of Management Studies of AICTE (2000-2003) and was on the Executive Board of Association of Indian Management Schools and Association of Management Development Institutions in South Asia.

Dr. Rajan Saxena is a Fellow of the Indian Society for Training & Development and Institute of Management Consultants of India. He is a life member of ISTD. He also holds Masters degree in Commerce and a Ph.D.

10) Mr. K. G. Krishnamoorthy Rao – Managing Director and CEO

Mr. K. G. Krishnamoorthy Rao is the Managing Director & Chief Executive Officer of Future Generali India Insurance Company Limited. He has over 21 years of rich professional experience in Insurance and Risk Management. Prior to joining Future Generali, Mr. Rao worked with Bajaj Allianz General Insurance Company Limited, where he was heading the underwriting function across all lines and was instrumental in setting up the Underwriting and Operations team and contributed to the underwriting profit of the Company. He has also worked with Dabhol Power Company, Enron India as Risk Manager, TATA Risk Management Services, National Insurance Company Limited as Risk Engineer handling property and engineering underwriting and claims. He has also worked with Indian Space Research Organization as Scientist.

Mr. K. G. Krishnamoorthy Rao is a bachelor in Technology, Production Engineering from University of Calicut and is a Fellow member of the Insurance Institute of India.

4. Details Of The Sitting Fees Paid To The Independent Directors Of The Company:

Name of the Director Amount (in Rs.)

Mr. G.N. Bajpai Rs. 20,000/-

Dr. Rajan Saxena Rs. 20,000/-

5. Attendance Record Of The Directors:

During the Financial Year 2010-11, five meetings of the Board of Directors were held on 7th May, 2010, 31st May, 2010, 3rdAugust, 2010, 15th November, 2010, and 19th February, 2011. The maximum time gap between any two meetings during this period did not exceed four months at any point in time.

The details of the Board Meetings held and attended by the respective Directors are given below:

Name of Director Category

Attendance Particulars

Meetings held during tenure of Director

Board Meetings attended

Mr. G.N. Bajpai - Chairman Non-Executive Independent Director 5 5Mr. Kishore Biyani Non-Executive Director 5 4Mr. Sergio Balbinot* Non-Executive Director 5 5Mr. Vijay Biyani Non-Executive Director 5 1Mr. Krishan Kant Rathi Non-Executive Director 5 5Mr. Roberto Gasso Non-Executive Director 5 5Dr. Kim Chai Ooi Non-Executive Director 5 5Dr. Rajan Saxena Non-Executive Independent Director 1 1

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Name of Director Category

Attendance Particulars

Meetings held during tenure of Director

Board Meetings attended

Dr. Devi Singh Non-Executive Independent Director 1 0Mr. K.G. Krishnamoorthy Rao Managing Director & CEO 5 5

*Either personally or through alternate Director Mr. Sergio Di Caro.Note: 1) Dr. Rajan Saxena and Dr. Devi Singh were appointed as additional Non-Executive Independent Director by the Board of Directors in their meeting held on 15th November 2010

6. Audit Committee

The Audit Committee of the Board of Directors of the Company, inter-alia, provides assurance to the Board on the adequacy of the internal control systems and financial disclosures.

Apart from the requirements of Section 292A and/or other relevant provisions of the Companies Act, 1956 and any guideline, rule or regulation prescribed by the Insurance Regulatory & Development Authority of India or any other Statutory Body/ Authority, the Committee assist and provide advice to the Board of Directors in relation to the internal control & risk management system of the Company.

The terms of reference of the Audit Committee, inter-alia, includes the following:

1. Define the guidelines of the internal control & risk management system of the Company;

2. Assess the adequacy and effectiveness of the internal control & risk management system of the Company on a regular basis;

3. Assess the reliability of the financial statements and disclosures of the Company;

4. Oversee the independence, qualifications and performance of the appointed external auditor and the performance of the internal audit activity;

5. Oversee the identification and management of corporate risks faced by the Company; and

6. Make recommendations and proposals for the upgrading and further strengthening of the enterprise risk management, internal control and governance processes of the Company.

6.1 Composition and Attendance at Meetings:

The Audit Committee comprises of four (4) members, all of whom are Non-executive Directors with one (1) of them being Independent Director. All the members of the Committee have good experience and knowledge of finance, accounts and company law. Mr. G.N Bajpai is the Chairman of the Audit Committee, who is a Non-Executive Independent Director.

The details of the Composition, categories and attendance during the year are as under:

Name CategoryAudit Committee meeting held on

30.05.2010 02.08.2010 12.11.2010 18.02.2011Mr. G N Bajpai Chairman Present Present Present PresentDr. Kim Chai Ooi Member Present Present Present PresentMr. Krishan Kant Rathi Member Present Present Present PresentMr. Roberto Gasso Member Present Present Present Present

The statutory auditors, internal auditors and senior management are invited to attend the meetings of the Committee. The minutes of the Audit Committee meetings form part of the documents placed before the meetings of the Board of Directors. In addition, the Chairman of the Audit Committee appraises the Board members about the significant discussions at Audit Committee meetings.

7. Investment Committee

The Investment Committee has been constituted to assist the Board of Directors in discharging its duties with respect to investment matters. The primary responsibility of the Investment Committee is to provide general direction for the management of the investment funds and other related responsibilities as may be delegated by the Board of Directors.

The Investment Committee constituted by the Board of Directors is responsible for laying down an overall investment policy and operational framework for the investment operations of the Company. The decisions of the Investment Committee shall constitute recommendations to the Board of Directors and top management.

The terms of reference of the Investment Committee, inter-alia, includes the following:

1. The general direction for the management of the investment funds and investment strategies;

2. The overall investment policy, guidelines and operational framework for the portfolio and the investment operations of the Company;

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3. The internal control system supporting the investment policy of the Company, including but not limited to investment mandates, schedules of delegations to management, allowable investments, investment benchmarks, empanelment of brokers, appointment of the custodian and investment managers and risk control limits;

4. Policies and guidelines involving the use of derivatives and structured products;

5. Any large and/or non-standard investment transactions upon completion of the review and comments by the Risk Management Department and the Investment Department;

6. The degree of attention given to a prudential asset liability management (ALM) in the investment policy and the models used to steer efficiently in the direction pointed out by the Board;

7. The risks that the investment activity brings to the portfolios of the Company;

8. The performance of investments made by or on behalf of the Company or the policyholders and its impact on the Company’s products;

9. The evaluation of dynamic market conditions, including the future outlook and its impact on the investment policy of the Company;

10. The quality of investment-related assessments by the Investment Department and the advice of third parties supported by the findings of the due diligence process and the credit ratings provided by external agencies;

11. The quality and performance of the financial intermediaries and other financial service providers that the Company employs to carry out its investment operations; and

12. Effective standalone reporting systems (i.e. independent from any audit mechanisms, either internal or concurrent) to ensure compliance with the investment policy for a sustained and ongoing monitoring of investment operations.


The Investment Committee consists of Eight (8) members i.e. Chairman, two (2) Non-Executive Directors, Managing Director & CEO, Appointed Actuary, Chief Financial Officer and Head of Investments, which is in compliance with IRDA Investment Regulations and Corporate Governance Guidelines issued by Insurance Regulatory and Development Authority.

The details of the Composition, categories and attendance during the year are as under:

Name CategoryInvestment Committee meeting held on

30.05.2010 02.08.2010 12.11.2010 18.02.2011

Mr. G N Bajpai Chairman Present Present Present Present

Mr. Krishan Kant Rathi Director Present Present Present Present

Dr. Kim Chai Ooi Director Present Present Present Present

Mr. S. Venkatesh Chief Financial Officer Present Present Present Present

Mr. Milan P. Shirodkar Head - Investment Present Present Present Present

Mr. Biresh Giri Appointed Actuary Present Present Absent Present

Mr. K.G. Krishnamoorthy Rao Managing Director & CEO Present Present Present Present

The minutes of the meeting of all Investment Committee form part of the documents placed before the next meeting of the Board of Directors.

8. Policyholders Protection Committee

The Policyholders Protection Committee assists and provides advice to the Board of Directors in relation to the protection of the interests of policyholders. The Policyholder’s Protection Committee puts in place systems to ensure that policyholders have access to redressal mechanisms and establish policies and procedures to deal with customer complaints and resolve disputes expeditiously.

The Policyholder’s Protection Committee lays special emphasis on the protection of policyholder’s interests and on the adoption of sound and healthy market conduct practices.

The terms of reference of the Policyholder Protection Committee, inter-alia, includes the following:

1) Putting in place proper procedures and effective mechanism to address complaints and grievances of policyholders including misselling by intermediaries.

2) Ensure compliance with the statutory requirements as laid down in the regulatory framework.

3) Review of the mechanism at periodic intervals.

15


4) Ensure adequacy of disclosure of “material information” to the policyholders. These disclosures shall, for the present, comply with the requirements laid down by the Authority both at the point of sale and at periodic intervals.

5) Review the status of complaints at periodic intervals to the policyholders.

6) Provide the details of grievances at periodic intervals in such formats as may be prescribed by the Authority.

7) Provide details of insurance ombudsmen to the policyholders.

8.1 Composition and Attendance at Meetings

The Policyholders Protection Committee consists of four (4) members. It consists of the Chairman and three (3) Non- Executive Directors.

The details of the Composition, Categories and Attendance during the year are as under:

Name CategoryPolicyholders Protection Committee meeting held on

30.05.2010 02.08.2010 12.11.2010 18.02.2011


Dr. Kim Chai Ooi Member Present Present Present Present

Mr. Krishan Kant Rathi Member Present Present Present Present

Mr. Roberto Gasso Member Present Present Present Present

9. Ethics And Compliance Committee

The Ethics & Compliance Committee assist and advice the Board of Directors in relation to ethical and compliance matters and monitors the risk profile of the Company related with compliance of external laws and regulations and internal policies, The ultimate responsibility for ethics and compliance matters rests with the Board of Directors and top management.

The terms of reference of the Ethics & Compliance Committee, inter-alia, includes the following:

1) Review and recommend to the Board of Directors for approval the codes and standards of conduct that apply to the directors, officers and employees of the Company;

2) Review the procedures established by the Board of Directors to resolve conflicts of interest and handle related party transactions, including techniques for the identification of potential conflict situations and for restricting the use of confidential information;

3) Periodically (at least annually) assess the adequacy and effectiveness of the Compliance Function of the Company and its compliance risk management system;

4) Review and recommend the appointment, removal, evaluation and compensation of the Principal Compliance Officer to the approval of the Board of Directors.

5) Review the Annual Compliance Activity Plan prepared and proposed by the Compliance Function, before it is submitted to the Board of Directors for final approval;

6) Review and recommend for approval by the Board of Directors the compliance programs of the Company which are intended to foster compliance with applicable laws and regulations, review their effectiveness on a regular basis and sign off on any material compliance issues or matters;

7) Receive and review periodic reports from the Compliance Function in respect of compliance with external laws and regulations and internal policies and on compliance risks, identified weaknesses, lapses, breaches or violations and the corrective controls and other measures which have been put in place to help detect and address the same;

The Ethics & Compliance Committee shall also undertake and carry out any additional duties and responsibilities as the Board of Directors may from time to time prescribe.

9.1 Composition and Attendance at Meetings

The Ethics & Compliance Committee consists of four (4) members. It consists of the Chairman and three (3) Non-Executive Directors

16



Name CategoryEthics & Compliance Committee meeting held on

30.05.2010 02.08.2010 12.11.2010 18.02.2011





10. Risk Management Committee

The Risk Management Committee assists and provides advice to the Board of Directors in relation to the risk management system of the Company. The ultimate responsibility for enacting and implementing an adequate and effective risk management and asset liability management system rests with the Board of Directors.

The terms of reference of the Risk Management Committee are as follows:

1) To assist the Board in effective operation of the risk managemnt system by performimg specialised analysis and quality reviews;

2) To maintain a group wide and aggregated view on the risk profile of the Company in addition to the solo and individual risk profile;

3) To report to the Board details on the risk exposures and the actions taken to mange the exposures:

4) To advise the Board with regard to risk management decisions in relation to strategic and operational matters such as corporate strategy, mergers and acquisitions and related matters.

The Risk Management Committee also discusses reviews and makes recommendations on:

1) The existing risk profile of the Company with special regard to solvency, capital allocation, asset allocation, insurance risks, operational risks and products;

2) The enterprise risk management policies, guidelines and limits of the Company;

3) The risk taking criteria to be adopted by Management within the Company; and

4) Any proposal to alter the risk reward profile of the Company.


The Risk Management Committee consists of four (4) members. It consists of the Chairman and three (3) Non-Executive Directors The details of the Composition, Categories and Attendance during the year are as under:

Name CategoryEthics & Compliance Committee meeting held on

30.05.2010 02.08.2010 12.11.2010 18.02.2011





11. Banking Affairs Committee

The Banking Affairs Committee was constituted to exercise oversight of the operations and processes of the Company’s banking and finance relationships and also consider approval of opening\closure\operations of bank accounts and change in authorized signatories etc.

The terms of reference of the Committee are as follows:

(a) Exercise oversight of the operations and processes of the Company’s banking and finance relationships; and

(b) Approve the proposals presented by the Management for opening\closure\operations of bank accounts and change in authorized signatories, and

(c) Recommend and set authority limits for operations of the Company’s Bank Accounts and modify them, from time to time.

17



The Banking Affairs Committee consists of three (3) members; Managing Director & CEO and two (2) Non-Executive Directors.


Name of the Member CategoryBanking Affairs Committee

Meeting held on 04.01.2011

Mr. Krishan Kant Rathi Chairman Present

Dr. Kim Chai Ooi Member Present

Mr. K.G. Krishnamoorthy Rao Member Present

12. Share Transfer And Allotment Committee

The Share Transfer and Allotment Committee was constituted with the Board members of the Company to oversee and approve the allotment, transfer and issuance of duplicate certificates of the Company .


(a) Approve issuance of duplicate certificates of securities of the Company;

(b) Approve transfer, transmission of the securities of the Company;

(c) Approve allotment of the securities of the Company;


The Share Transfer and Allotment Committee consist of four members. It consists of one (1) Chairman and three (3) other Non-Executive Directors.


Name of the Member CategoryShare Transfer & Allotment Committee Meeting held on

22.04.2010 03.08.2010 05.10.2010 04.01.2011 15.03.2011

Mr. G.N. Bajpai Chairman Present Present Present Present Present

Mr. Krishankant Rathi Member Present Present Present Present Present

Dr. Kim Chai Ooi MemberLeave of

absencePresent

Leave of

absencePresent

Leave of absence

Mr. K.G. Krishnamoorthy Rao

Member Present Present Present Present Present

13. Remuneration Committee

The Remuneration Committee of the Company was constituted with the Board Members of the Company to review and fix the remuneration of the Executive Directors of the Company in pursuant to the provisions of Schedule XIII of the Companies Act 1956.


1. Review and recommend for approval by the Board of Directors the Company’s remuneration and compensation policy for the Chief Executive Officer, Key Management Personnel and the Executive Directors of the Company.

2. Ensure that the remuneration packages are closely connected with the performance objectives laid down for the senior management; and

3. Verify that the Directors of the Company meet the “fit and proper” criteria, in line with international and domestic norms.

Subject, to due compliance of the provisions of the Companies Act, 1956 and the Insurance Act, 1938 and the Rules and Regulations framed thereunder.


The Remuneration Committee consist of three members; all being non executive directors and the Chairman of the committee being an Independent Director.

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Name of the Member CategoryRemuneration Committee meeting held on03.08.2010 15.11.2010

Mr. G.N. Bajpai Chairman Present Present

Mr. Kishore Biyani Member Present Present

Mr. Sergio Balbinot Member Present Present

14. General Body Meetings:

The details of the Annual General Meetings held since incorporation is as follows:

Year No. of AGM Date and Time of AGM Venue

2007-08 1st23rd day of November 2007 at 01.00 pm

Board Room, 001, Trade Plaza, 414, Veer Savarkar Marg, Prabhadevi, Dadar (W), Mumbai 400025.

2008-09 2nd1st day of August 2008 at 05.00 pm


2009-10 3rd17th day of July 2009 at 01:00 p.m.


2010-11 4th 3rd day of August 2010 at 05.00 p.m.


14.1 Extraordinary General Meeting

During the year under review, an Extra-Ordinary General Meeting of the members of the Company was held on May 21, 2010, September 09, 2010, January 07, 2011 and March 18, 2011.

15. Disclosures:

i) Related Party Transactions

As per the Corporate Governance Guidelines issued by the Insurance Regulatory and Development Authority, the Company is required to put in place adequate systems, policies and procedures to address actual and/or potential conflicts of interest with Related Parties, including Board level review of key transactions and disclosures of any conflicts of interest to manage and control such issues.

All the Related Party Transactions have been disclosed and forms part of the Financial Statement.

ii) No Penalty or strictures

There has been no instance of non-compliance by the Company on any matter relating to the Insurance Regulatory and Development Authority and accordingly no penalties or strictures have been levied by the Insurance Regulatory and Development Authority.

iii) Disclosure of accounting treatment

In the preparation of the financial statements, the Company has followed the Accounting Standards issued by the Institute of Chartered Accountants of India to the extent applicable.

iv) Disclosures on Risk Management

The Company has implemented the Internal Control and Risk management Framework, which is periodically reviewed by the Risk Management Committee and the Board of Directors.

vi) Code of Conduct

The Company adopted the ethical code of conduct for the Directors, Senior Management and all the staff members. The code has been put on the Company’s website www.futuregenerali.in.

vii) Appointment / Re-appointment of Directors

The details in respect of the Director proposed to be re-appointed are provided is part of the Notice convening the forthcoming Annual General Meeting

viii) Actual solvency margin details vis-à-vis the required margin as on March 31, 2011

Particulars Amount (Rs. lacs)

Available Assets 66,996

Liabilities 45,984

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Particulars Amount (Rs. lacs)

Available Solvency Margin (ASM) 21,012

Required Solvency Margin (RSM) 10,215

Solvency Ratio 2.06

ix) Financial performance including growth rate and current financial position of the Company.

The Company has written gross premium of Rs. 6,120 Mn against Rs. 3,859 Mn in the previous year, registering a growth of 58.57% over the previous year.

During the year under review, the Company has issued and allotted 195,000,000 (Nineteen Crore Fifty Lacs Only) equity shares of Rs. 10/- each to the Promoters. Consequent to above allotment of equity shares, the issued, subscribed and paid-up share capital has increased from Rs. 280 crore to Rs. 475 crore as at the end of the financial year.

x) Description of the Risk Management Architecture is as follows:

The Company has adopted Internal Control and Risk Management Framework and has established an Enterprise Risk Management (ERM) department headed by the Chief Risk Officer to steer the ERM system of the Company and guide the department on risk mapping, risk governance, risk management and risk reporting of the Company.

The Company in accordance with its ICRM Framework has established Risk Governance Structure to set roles and responsibilities into three tiers of defence with clear definition of accountability within the organization.

They are as follows:-

First Line of Defence:

This involves day-to-day risk and internal control management at operational level. In this level, Top Management and Business Units have direct responsibility for the implementation of internal controls and the identification, management and control of risks.

Second Line of Defence:

Risk oversight, development of risk policies, methodologies and tools; training of staff on risk matters; and provision of advice and guidance to Management on risk and internal control matters come under the purview of Second Line of Defence. ERM department coordinates, facilitates and oversees the effectiveness and integrity of the ICRM Framework. The ultimate responsibility for this level lies with the Risk Management Committee of the Board.

Third Line of Defence:

This provides independent assurance on the adequacy, effectiveness and soundness of the internal control and enterprise risk management system of the Company. Internal and External Auditor have the responsibility for this level along with the Audit Committee and Risk Management Committee of the Company.

xi) Details of number of claims intimated, disposed of and pending:

Particulars Total no of Claims

Outstanding at the beginning of year 6,085

Reported during the year 93,963

Settled during the year 88,375

Outstanding at the end of the year 11,869

xii) Details of all pecuniary relationships or transactions of the Non-Executive Directors vis-à-vis your Company.

During the year under review, there has been no pecuniary relationship or transactions of the Non-Executive Directors vis- à-vis the Company except the payment of sitting fees to Non-Executive Independent Directors

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Certification for compliance of the Corporate Governance Guidelines

I, Manish Pahwa, hereby certify that the Company has complied with the Corporate Governance guidelines for Insur-ance Companies as amended from time to time for the Financial Year 2010-11 and that nothing has been concealed or suppressed.

Date: May 05, 2011 For Future Generali India Insurance Company Limited

Place: Mumbai

Sd/-

Manish Pahwa Company Secretary & Principal Compliance Officer

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Singhi & Co. G M Kapadia & Co. Chartered Accountants Chartered Accountants 101, Turf Estate, 36B, Tamarind House,Dr.E.Moses Road, Tamarind Lane, Fort, Mahalaxmi, Mumbai 400 001.Mumbai 400 011.

Auditors’ ReportToTheMembersOfFutureGeneraliIndiaInsuranceCompanyLimited

1. We have audited the attached balance sheet of FUTURE GENERALI INDIA INSURANCE COMPANY LIMITED (‘the Company’) as at March 31, 2011 and also the revenue accounts, profit and loss account, and receipts and payments account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the financial 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 includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

3. The balance sheet, revenue accounts and profit and loss account have been drawn up in conformity with the Insurance Act, 1938 and Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor’s Report of Insurance Companies) Regulations, 2002 (‘the Regulations’) read with Section 211 (3C) of the Companies Act, 1956 (‘the Act’).

4. As required by Regulations, we set out in the Annexure a statement certifying the matters specified in paragraph 4 of schedule C to the Regulations.

5. Further to our comments in the Annexure referred to above, we report that:

(a) 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 and have found them to be satisfactory;

(b) In our opinion, proper books of account as required by law have been maintained by the Company so far as appears from our examination of those books;

(c) The financial accounting systems of the Company are centralised and therefore accounting returns are not required to be submitted by branches and other offices;

(d) The balance sheet, revenue accounts, profit and loss account and receipts and payments account referred to in this report are in agreement with the books of account;

(e) The estimate of claims Incurred But Not Reported (IBNR) and claims Incurred But Not Enough Reported (IBNER) has been duly certified by the Company’s Appointed Actuary. The Appointed Actuary has certified to the Company that the assumptions used for such valuation are in accordance with the requirements of the Insurance Regulatory and Development Authority (‘IRDA’) and Actuarial Society of India in concurrence with the IRDA. We have relied on the Actuary’s certificate in this regard; and

(f) On the basis of the written representations received from the directors, as on March 31, 2011, and taken on record by the board of directors, none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act.

6. In our opinion and to the best of our information and according to the information and explanations given to us:

(a) The accounting policies selected by the Company are appropriate and in compliance with the applicable accounting standards referred to in Section 211(3C) of the Act, to the extent applicable and the accounting principles prescribed in the Regulations and orders or directions issued by IRDA in this behalf. The balance sheet, revenue accounts, profit and loss account and receipts and payments account referred to in this report are in compliance with the accounting standards referred to in Section 211(3C) of the Act, to the extent applicable;

(b) Investments of the Company have been valued in accordance with the provisions of the Insurance Act and the Regulations;

(c) The said financial statements are prepared in accordance with the requirements of the Insurance Act, 1938, the Insurance Regulatory and Development Authority Act, 1999, the Regulations and the Act, to the extent applicable and in the manner so required, and give a true and fair view in conformity with the accounting principles generally accepted

22


in India, as applicable to insurance companies:

i. in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2011;

ii. in the case of the revenue accounts, of the deficit, for the year ended March 31, 2011;

iii. in the case of the profit and loss account, of the loss for the year ended March 31, 2011; and

iv. in the case of the receipts and payments account, of the receipts and payments of the Company for the year ended March 31, 2011.

7. Further, on the basis of our examination of books and records of the Company and according to the information and explanations given to us and to the best of our knowledge and belief, we certify that:

(a) We have reviewed the management report attached to the financial statements for the year ended March 31, 2011 and there is no apparent mistake or material inconsistency with the financial statements; and

(b) Based on our audit procedures, we certify that the Company has complied with the terms and conditions of registration as per subsection 4 of section 3 of the Insurance Act, 1938.

For Singhi & Co. For G. M. Kapadia & Co.

FirmRegd.No:302049E Firmregd.No.104767W

Chartered Accountants Chartered Accountants

S. Chandrasekhar Rajen Ashar

Place : Mumbai Partner Partner

Dated : May 05, 2011 Membership Number: 7592 Membership Number: 48243

23


AnenexuretoAuditors'Report (Referred to in the Auditors’ report to the members of FUTURE GENERALI INDIA INSURANCE COMPANY LIMITED (‘the Company’) on the financial statement for the year ended March 31, 2011)

Based on the information and explanation given to us and to the best of our knowledge and belief and based on our examination of books of accounts and other records maintained by the company, we certify that:

a) We have verified the cash balances, to the extent considered necessary, and securities relating to the Company’s investments by actual inspection or on the basis of certificates/confirmations received from custodian and/or Depository Participants appointed by the Company, as the case may be;

b) The Company is not a trustee of any trust;

c) No part of the assets of the policyholders’ funds has been directly or indirectly applied in contravention of the provisions of the Insurance Act, 1938 relating to the application and investments of the policyholders’ funds.

For Singhi & Co. For G. M. Kapadia & Co.

FirmRegd.No:302049E Firmregd.No.104767W

Chartered Accountants Chartered Accountants

S. Chandrasekhar Rajen Ashar

Place : Mumbai Partner Partner

Dated : May 05, 2011 Membership Number: 7592 Membership Number: 48243

24


Management ReportWith respect to the operations of the Future Generali India Insurance Company Ltd. for the year ended 31 March, 2011 and results thereof, the Management of the Company confirms and declares that:

1. The registration certificate granted by Insurance Regulatory and Development Authority (IRDA) is valid and the same has been renewed for the year 2011 - 2012.

2. We certify that all dues payable to the statutory authorities have been generally paid to the extent they have fallen due.

3. The shareholding pattern is in accordance with the statutory and regulatory requirements as required under the Insurance Act, 1938 and the IRDA (Registration of Indian Insurance Companies) Regulations, and there was no transfer of shares during the year.

4. The Management has not invested directly or indirectly outside India any funds of its policy holders in India.

5. The required solvency margins under the Insurance Act, 1938 have been maintained.

6. We certify that the values of all the assets have been reviewed on the date of Balance Sheet and in Management’s belief, the assets set forth in the Balance Sheet are shown in the aggregate at amounts not exceeding their realizable or market value under the headings – “Loans”, “Investments”, “Agents balances”, “Outstanding Premiums”, “Interest, Dividends and Rents outstanding”, “Interest, Dividends and Rents accruing but not due”, “Amounts due from other persons or bodies carrying on insurance business”, “Sundry Debtors”, “Bills Receivable”, “Cash” and the several items specified under “Other Accounts”.

7. The Company is exposed to a variety of risks associated with its insurance business and the investment portfolio. The Company strives to maintain a diversified portfolio of insurance products across various lines of business and between personal and commercial lines of business. The Company is also adequately covered by Reinsurance including a “Catastrophe Excess of Loss Insurance”. The limits of the reinsurance treaty are set based on estimated accumulations of risk. The reinsurance treaties have been filed with IRDA. The investment portfolio is diversified and has been made as per the limits set under the IRDA regulations.

The Company has adopted an integrated approach to risks management and has constituted Risk Management Committee with the members of the Board of Directors with an objective to outline the risk profile of the Company and develop a strong risk management system and sound mitigation strategies. The Risk Management Committee assists the Board of Directors to formulate, monitor and revise strategies related to assets and liabilities to achieve the financial objectives of the Company, given its risk appetite, risk tolerances and business profile.

8. The Company does not have insurance operations in any other country with any exposure risk or country risk.

9. In the Financial Year 2010-11 a total of 93,963 claims were reported of which 88,375 were settled resulting in an overall settlement ratio of 90%. The average claims settlement time during the preceding four years i.e after the date of commencement of operations are given in the Annexure 1 and the ageing analysis of claims registered and not settled during the same period is given in Annexure 2

10.We certify that the values, as shown in the Balance Sheet, of the investments which consists of fixed income securities , equities and mutual fund units that have been valued as per accounting policies prescribed by IRDA. Fixed income securities are valued at historical cost subject to adjustment of amortisation. The investments in equities listed and actively traded are valued at the lower of the last quoted closing prices on the two national stock exchanges. The investments in the Mutual Funds are valued at the Net Asset Values (NAV) of the Mutual funds as on the Balance Sheet date.

11.The Company follows the Investment philosophy of ‘Safety,Liquidity and sustainable Returns’. Accordingly the portfolio is composed of high quality assets i.e Government securities, high quality corporate bonds with a minimum rating of AA, Bank Deposits, liquid Mutual Funds and Equity (less than 1%).

12.The portfolio is monitored on a dynamic basis to optimize returns while keeping the risk at the minimum. None of the fixed income investments have had any delays in servicing of interest or principal amounts. Based on the past track record, the Management is confident of the quality and performance of the investments

13.The Management of Future Generali India Insurance Company Limited certifies that:

a. The financial statements of Future Generali India Insurance Co. Ltd. have been prepared in accordance with the applicable accounting standards and principles and policies with no material departures;

b. The Management has adopted accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at the end of the financial year and of the operating loss and of the loss of the Company for the year;

c. The Management has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the applicable provisions of the Insurance Act, 1938 (4 of 1938) and Companies Act, 1956 (1 of 1956), for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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d. The financial statements have been prepared on a going concern basis;

e. The Management has set up an internal audit system commensurate with the size and nature of the business and the same is operating effectively.

14.The schedule of payments, which have been made to individuals, firms, companies and organizations in which the Directors of the insurer are interested is given in Annexure 3.

For and on behalf of Board of Directors

G.N Bajpai K.K Rathi K.G. Krishnamoorthy Rao

Chairman Director Managing Director & CEO

S.Venkatesh Manish Pahwa

Chief Financial Officer Company Secretary

Place : Mumbai

Date : May 05, 2011

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Annexure 1AverageClaimsSettlementTimeduringprecedingfouryears

Line of Business

2010-2011 2009-2010 2008-2009 2007-2008

No of Claims

Average Settlement Time (days)

No of Claims


No of Claims


No of Claims


Marine Cargo 2,388 62 1,004 45 221 36 7 3

Engineering 502 82 326 74 82 49 - -

Fire 719 68 346 72 61 48 2 2

Health 23,436 34 25,371 38 8,530 28 134 8

Liabilities 50 75 27 60 6 6 - -

Motor-Owned Damage 54,520 36 38,576 35 9,099 21 17 7

Motor-Third Party 1,271 227 215 173 3 19 - -

Personal Accident 1,303 78 992 41 205 19 6 16

Overseas Medical 444 98 168 64 27 21 - -

Workman Compensation

138 97 61 102 9 59 - -

Others 3,604 67 2,246 51 715 26 - -

Grand Total 88,375 42 69,332 38 18,958 27 166 4 Annexure 2

AgeinganalysisofClaimsregisteredandnotsettledfortheprecedingfouryears

As on March 31, 2011 (Rs in lacs)

Line of Business

Marine Cargo Engineering Fire Health

PeriodNo of

ClaimsAmount of

ClaimsNo of

ClaimsAmount

of ClaimsNo of

ClaimsAmount

of ClaimsNo of

ClaimsAmount of

Claims

0-30 113 74.87 37 89.69 32 722.67 1,169 433.02

31-180 152 6,46.64 74 89.99 55 1,287.52 1113 325.48

181-365 34 338.47 47 84.00 21 584.98 1035 239.23

366-1825 8 19.13 9 20.75 10 194.32 422 95.15

Grand Total 307 1,079.11 167 284.43 118 2,789.49 3,739 1,092.88As on March 31, 2011 (Rs in lacs)

Line of Business

Liabilities Motor-Owned Damage Motor-Third Party Personal Accident

Period No of

Claims Amount of

ClaimsNo of

Claims Amount of

ClaimsNo of

Claims Amount of

ClaimsNo of Claims

Amount of Claims

0-30 17 23.08 1,881 898.15 328 560.61 81 138.92 31-180 7 5.21 1,487 1,657.87 1,160 2,525.17 115 91.11

181-365 2 2.34 323 680.73 885 2,383.47 13 31.41 366-1825 - - 141 277.32 674 1,835.38 - -

Grand Total 26 30.63 3,832 3,514.07 3,047 7,304.63 209 261.44


Line of Business

Overseas Medical Workman Compensation Others Total No of

ClaimsTotal Amount

of ClaimsPeriod

No of Claims

Amount of Claims

No of Claims

Amount of Claims

No of Claims

Amount of Claims

0-30 24 5.18 13 8.96 127 138.35 3,822 3,093.50 31-180 40 25.51 36 42.44 86 403.23 4,325 7,100.17

181-365 25 18.26 16 38.03 20 38.10 2,421 4,439.02 366-1825 23 8.96 9 24.55 5 15.34 1,301 2,490.90

Grand Total 112 57.91 74 113.98 238 595.02 11,869 17,123.59

27


As on March 31, 2010 (Rs in lacs)Line of

BusinessMarine Cargo Engineering Fire Health

Period No of

Claims Amount of

ClaimsNo of

Claims Amount of

ClaimsNo of

Claims Amount of

ClaimsNo of

Claims Amount of

Claims0-30 75 106.87 19 62.92 13 224.84 930 285.10

31-180 70 218.22 21 46.84 20 419.92 378 117.70 181-365 13 36.72 8 18.72 13 942.47 88 28.77

366-1825 3 4.11 0 0 3 12.05 11 0.06 Grand Total 161 365.92 48 128.48 49 1,599.28 1407 431.63


Line of Business


Period No of

Claims Amount of

ClaimsNo of

Claims Amount of

ClaimsNo of

Claims Amount of

ClaimsNo of

Claims Amount of

Claims0-30 - - 1,437 757.76 224 435.83 61 62.90

31-180 2 6.25 906 1,213.86 738 1,471.94 46 76.03 181-365 - - 200 314.41 271 656.14 2 1.59

366-1825 - - 50 92.49 48 201.15 - -Grand Total 2 6.25 2,593 2,378.52 1,281 2,765.06 109 140.52


Line of Business

Overseas Medical Workman Compensation Others Total No of

Claims

Total Amount of

ClaimsPeriod No of

Claims Amount of

ClaimsNo of

Claims Amount of

ClaimsNo of

Claims Amount of

Claims

0-30 29 4.86 9 1.72 126 115.91 2,923 2,058.71

31-180 85 21.30 21 33.71 95 249.28 2,382 3,875.06

181-365 27 6.79 11 14.35 19 15.10 652 2,035.05

366-1825 - - 2 5.71 11 33.35 128 348.91

Grand Total 141 32.95 43 55.49 251 413.64 6,085 8,317.73


Line of Business


Period No of Claims

Amount of Claims

No of Claims

Amount of Claims

No of Claims

Amount of Claims

No of Claims

Amount of Claims

0-30 10 8.38 18 21.37 12 79.91 679 195.69

31-180 13 52.54 8 10.49 13 678.08 104 39.52

181-365 2 4.60 1 15.45 2 0.59 41 0.92

366-1825 - - - - - - - -

Grand Total 25 65.52 27 47.31 27 758.58 824 236.13


Line of Business


Period No of Claims

Amount of Claims

No of Claims

Amount of Claims

No of Claims

Amount of Claims

No of Claims

Amount of Claims

0-30 6 5.10 798 277.82 11 20.52 13 6.34

31-180 2 8.71 484 309.06 79 251.68 12 35.65

181-365 1 1.10 31 55.23 2 3.11 1 0.15

366-1825 - - - - - - - -

Grand Total 9 14.91 1,313 642.11 92 275.31 26 42.14

28



Line of Business

Overseas Medical Others Total No of

Claims Total Amount of

Claims Period

No of Claims

Amount of Claims

No of Claims

Amount of Claims

0-30 6 1.82 72 66.65 1,625 683.60

31-180 5 0.74 87 109.25 807 1,495.71

181-365 - - - - 81 81.15

366-1825 - - - - - -

Grand Total 11 2.56 159 175.90 2,513 2,260.46


Line of Business


Period No of Claims

Amount of Claims

No of Claims

Amount of Claims

No of Claims

Amount of Claims

No of Claims

Amount of Claims

0-30 1 0.10 3 80.20 - - 26 6.78

31-180 - - - - - - - -

181-365 - - - - - - 27 8.36

366-1825 - - - - - - - -

Grand Total 1 0.10 3 80.20 - - 53 15.14


Line ofBusiness


Period No of Claims

Amount of Claims

No of Claims

Amount of Claims

No of Claims

Amount of Claims

No of Claims

Amount of Claims

0-30 - - 2 1.10 - - 1 0.04

31-180 - - - - - - - -

181-365 - - - - - - - -

366-1825 - - - - - - - -

Grand Total - - 2 1.10 - - 1 0.04


Line of Business

Overseas Medical Others Total No of

Claims Total Amount

of Claims Period

No ofClaims

Amount of Claims

No ofClaims

Amount of Claims

0-30 - - - - 33 88.22

31-180 - - - - - -

181-365 - - - - 27 8.36

366-1825 - - - - - -

Grand Total - - - - 60 96.58

29


Annexure3

Schedule of payments, made to individuals, firms, companies and organizations in which the Directors of the Company are interested.

Sr. No Entity in which Director is

interested Name of the Director Interested as Payment during the Year

1

Future Generali India Life Insurance Company Limited

(Enterprise Owned by Major Shareholders)

G.N Bajpai

Kishore Biyani

Vijay Biyani

K.K Rathi

Sergio Balbinot

Sergio DiCaro

Dr Kim Chai Ooi

Roberto Gasso

Dr Rajan Saxena

Dr Devi Singh

Director

Claims Paid : Rs 13,164,129

Insurance Premium paid : Rs. 1,258,673

Other transaction: Rs. 47,249,656

2

Pantaloon Retail(India) Ltd

(Joint Venture Promoter Company)

Kishore Biyani Vijay Biyani

Director

Rent & Maintenance: Rs. 8,466,495

Claims Paid: Rs. 1,080,238

Other transaction: Rs. 909,628

3

Generali Assicurazioni Generali SPA

(Promoter Group Company)Sergio Balbinot Director

Reinsurance Premium Paid : Rs 89,001,998

4 Dr Rajan Saxena Dr Rajan Saxena Director Sitting Fees Paid : Rs 20,000

5 G.N Bajpai G.N Bajpai Director Sitting Fees Paid : Rs 20,000

30


Particulars ScheduleFor the year

ended 31st March 2011

For the year ended

31st March 2010

1. Premiums earned (Net) 1 96,656 30,008

2. Profit/Loss on sale/redemption of Investments 2,094 924

3. Others 94 62

4. Interest, Dividend & Rent - Gross 23,940 7,343

Total (A) 122,784 38,337

1. Claims Incurred (Net) 2 83,788 54,863

2. Commission 3 (61,665) (60,722)

3. Operating Expenses related to Insurance Business 4 209,975 145,192

4. Premium deficiency (7,538) 5,002

Total (B) 224,560 144,333

Operating Profit / (Loss) from Fire (101,776) (105,997)

Appropriations

Transfer to Shareholders' Funds (101,776) (105,997)

Transfer to Catastrophe Reserve - -

Transfer to Other Reserves - -

Total (C) (101,776) (105,997)

Significant Accounting Policies and Notes to Financial Statement 16

The Schedules referred to above form an integral part of Revenue Accounts

For and on behalf of For and on behalf of For and on behalf of Board of Directors

Singhi & Co. G M Kapadia & Co

FRN 302049E FRN 104767W G N Bajpai K K Rathi K G Krishnamoorthy Rao

Chartered Accountants Chartered Accountants Chairman Director Managing Director & CEO

S Chandrasekhar Rajen Ashar S Venkatesh Manish Pahwa

Partner Partner Chief Financial Officer Company Secretary Membership No. 7592 Membership No 48243

Place : Mumbai Dated : May 05, 2011

FORMB-RA

IRDA Registration No. 132. dated 4th September, 2007. RevenueAccountfortheyearended31stMarch2011FireInsuranceBusiness (Rs. ‘000)

31


Particulars ScheduleFor the year ended 31st March 2011

For the year ended31st March 2010

1. Premiums earned (Net) 1 52,495 25,087

2. Profit/Loss on sale/redemption of Investments 894 327

3. Others 40 22

4. Interest, Dividend & Rent - Gross 10,219 2,596

Total (A) 63,648 28,032

1. Claims Incurred (Net) 2 52,023 30,074

2. Commission 3 (19,872) (9,378)

3. Operating Expenses related to Insurance Business 4 92,484 53,141

4. Premium deficiency - -

Total (B) 124,635 73,837

Operating Profit / (Loss) from Marine (60,987) (45,805)

Appropriations




Total (C) (60,987) (45,805)

Significant Accounting Policies and Notes to

Financial Statement 16

The Schedules referred to above form an integral part of Revenue Account








FORMB-RAIRDA Registration No. 132. dated 4th September, 2007. RevenueAccountFortheYearEnded31stMarch2011MarineInsuranceBusiness (Rs. ‘000)

32



For the year ended 31st March 2010

1. Premiums earned (Net) 1 3,142,017 1,819,657

2. Profit/Loss on sale/redemption of Investments 16,221 7,564

3. Others 725 503

4. Interest , Dividend & Rent - Gross 185,474 60,077

Total (A) 3,344,437 1,887,801

1. Claims Incurred (Net) 2 2,654,424 1,606,589

2. Contribution to Solatium Fund 3,193 2,098

3. Commission 3 (51,744) (102,460)

4. Operating Expenses related to Insurance Business 4 1,630,058 1,229,018

5. Premium deficiency - (2,596)

Total (B) 4,235,931 2,732,648

Operating Profit / (Loss) from Miscellaneous (891,494) (844,847)

Appropriations




Total (C) (891,494) (844,847)

Significant Accounting Policies and Notes to

Financial Statement 16

The Schedules referred to above form an integral part of Revenue Account








FORMB-RAIRDA Registration No. 132. dated 4th September, 2007. RevenueAccountFortheYearEnded31stMarch2011MiscellaneousInsuranceBusiness (Rs. ‘000)

33



For the year ended31st March 2010

1. Operating Profit / (Loss) (a) Fire Insurance (101,776) (105,997) (b) Marine Insurance (60,987) (45,805) (c) Miscellaneous Insurance (891,494) (844,847)2. Income from investments (a) Interest, Dividend & Rent - Gross 145,897 95,763

Add: Amortisation write up on Securities 4,257 1,047 Less: Amortisation write down on Securities (2,095) (3,580)

(b) Profit on sale of investments 12,949 11,738 Less : Loss on sale of investments - - 3. Other Income - -

Total (A) (893,249) (891,680)4. Provisions (Other than taxation ) (a) For diminution in the value of investments - - (b) For Doubtful Debts - - (c) Others - - 5. Other Expenses (a) Expenses other than those related to Insurance Business

1,950 1,150

(b) Bad Debts written off - - (c) Others - 4,211

Total (B) 1,950 5,361 Profit before Tax (A-B) (895,199) (897,041) Provision for Taxation - - Fringe Benefit Tax - - Deferred Tax - - Profit / (Loss) after tax (895,199) (897,041) Appropriations (a) Interim dividends paid during the year - - (b) Proposed final dividend - - (c) Dividend distribution tax - - (d) Transfer to any Reserves or Other Accounts - - Balance of profit / loss brought forward from last year (1,943,646) (1,046,605) Balance carried forward to Balance Sheet (2,838,845) (1,943,646)


Earning per Share: Basic (2.42) (3.73)

Earning per Share: Diluted (2.42) (3.73)

(Refer Note no 21 of Schedule 16)

The Schedules referred to above form an integral part of Profit & Loss Account








FORMB-PLIRDA Registration No. 132. dated 4th September, 2007. ProfitandLossAccountFortheYearEnded31stMarch2011

(Rs. ‘000)

34


Particulars ScheduleAs at

31st March 2011As at

31st March 2010

Source of Funds

Share Capital 5 4,750,000 2,800,000

Share Application Money 225,000 150,000

Reserves and Surplus 6 - -

Fair Value Change Account (210) 270

Borrowings 7 - -

Total 4,974,790 2,950,270

Application of Funds

Investments 8 5,857,803 2,599,414

Loans 9 - -

Fixed Assets 10

Gross Block 510,929 486,317

Less: Accumulated Depreciation 303,045 186,963

Net Block 207,884 299,354

Capital Work in Process 7,301 -

215,185 299,354

Deferred Tax Assets - -

Current Assets

(i) Cash and Bank balances 11 204,819 95,281

(ii) Advances and Other Assets 12 2,040,078 1,308,714

Total (A) 2,244,897 1,403,995

Current Liabilities 13 4,022,079 1,953,127

Provisions 14 2,159,861 1,343,012

Total (B) 6,181,940 3,296,139

Net Current Assets (A - B) (3,937,043) (1,892,144)

Miscellaneous Expenditure 15 - -

(to the extent not written off or adjusted)

Debit balance in Profit and Loss Account 2,838,845 1,943,646

Total 4,974,790 2,950,270


The Schedules referred to above form an integral part of Balance Sheet








FORMB-BSIRDA Registration No. 132. dated 4th September, 2007. BalanceSheetasat31stMarch2011

(Rs. ‘000)

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SCHEDULE-2(A)ClaimsIncurred(Net)fortheyearended31stMarch2011

(Rs.

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)

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(Rs.

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)SCHEDULE-3(A)CommissionExpensesfortheyearended31stMarch2011

40


Particulars

Fire Marine Miscellaneous* Total

For the year ended 31st March




2011 2010 2011 2010 2011 2010 2011 2010

1Employees' Remuneration & Welfare Benefits

72,428 42,915 30,918 15,175 561,142 351,120 664,488 409,210

2Travel , Conveyance and Vehicle Running Expenses

4,410 3,173 1,883 1,122 34,172 25,961 40,465 30,256

3Training & Conferences Expenses

826 1,347 353 476 6,406 11,019 7,585 12,842

4 Rents, Rates, and Taxes 16,591 15,852 7,082 5,606 128,534 129,699 152,207 151,157

5 Repairs 7,234 5,723 3,088 2,024 56,035 46,826 66,357 54,573

6 Printing & Stationery 391 170 1,803 662 19,239 14,247 21,433 15,079

7 Communication 3,703 3,351 1,581 1,185 28,695 27,412 33,979 31,947

8Legal & Professional Charges

6,260 5,265 2,672 1,862 48,500 43,077 57,432 50,203

9Auditors' Fees, Expenses etc.

(a) As Auditor 174 115 74 40 1,352 944 1,600 1,100

(b) As Adviser or in any other capacity, in respect of

- - - - - - - -

(i) Taxation matters 11 10 5 4 84 86 100 100

(ii) Insurance Matters - - - - - - - -

(iii) Management services; and

42 30 18 11 318 248 378 289

(c) in any other capacity - - - - - - - -

10Advertisement and Publicity

756 698 3,454 2,709 36,894 58,327 41,104 61,734

11 Outsourcing Expenses 4,735 3,043 2,021 1,076 36,679 24,897 43,435 29,016

12 Business Support 73,065 45,278 31,191 16,011 566,090 370,452 670,346 431,740

13 Interest & Bank Charges 89 81 412 314 5,725 6,771 6,226 7,166

14 Others (270) (113) (116) (40) (2,101) (925) (2,487) (1,078)

15 Depreciation 12,781 12,148 5,455 4,296 99,008 99,393 117,244 115,836

16 Entertainment 160 147 68 52 1,239 1,204 1,467 1,403

17(Gain)/Loss on Foreign Exchange

17 23 7 8 131 191 155 222

18 Subscription/Membership 290 136 123 48 2,241 1,115 2,654 1,299

19 Insurance 76 103 32 36 589 841 697 980

20 Pool Expenses 5,364 4,384 - - (7,439) 5,376 (2,075) 9,760

21 Service Tax Expenses 842 1,312 360 464 6,525 10,736 7,727 12,512

Total 209,975 145,192 92,484 53,141 1,630,058 1,229,018 1,932,517 1,427,350

Note: Refer Note no 2.5 and 2.11 of Schedule 16 * Refer Schedule 4(A)

Schedules to and forming part of the Revenue Accounts and Profit and Loss account for the year ended on and to Balance Sheet as at 31st March 2011SCHEDULE-4OperatingExpensesrelatedtoInsuranceBusinessfortheyearended31stMarch2011 (Rs. ‘000)

41

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SCHEDULE-4(A)OperatingExpensesrelatedtoInsuranceBusinessfortheyearended31stMarch2011

42

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nce

She

et

as

at

31st

Ma

rch

201

1

SCHEDULE-4(A)OperatingExpensesrelatedtoInsuranceBusinessfortheyearended31stMarch2011

Parti

cul

ars

Ac

cid

ent

&

He

alth

E

ngin

ee

ring

L

iab

ility

M

oto

r

Wo

rkm

en

Co

mp

ens

a-

tion

Oth

ers

Mis

ce

llane

ous

-To

tal

For t

he y

ea

r e

nde

d

31st

Ma

rch

For t

he y

ea

r e

nde

d

31st

Ma

rch

For t

he y

ea

r e

nde

d

31st

Ma

rch

For t

he y

ea

r end

ed

31

st M

arc

h 20

11Fo

r the

ye

ar e

nde

d

31st

Ma

rch

2010

For t

he y

ea

r e

nde

d

31st

Ma

rch

For t

he y

ea

r e

nde

d

31st

Ma

rch

For t

he y

ea

r end

ed

31

st M

arc

h

2011

2010

2011

2010

2011

2010

Mo

tor

(OD

)M

oto

r (T

P)To

tal

Mo

tor

(OD

)M

oto

r (T

P)To

tal

2011

2010

2011

2010

2011

2010

(

iii) M

ana

ge

me

nt

s

erv

ice

s; a

nd 7

6 5

7 1

4 1

1 4

4

1

32

77

209

1

04

62

166

3

2

1

2 8

3

18

248

(c)

in a

ny o

the

r ca

-p

ac

ity -

- -

- -

- -

- -

- -

- -

- -

- -

-

10A

dve

rtise

me

nt a

nd

Pub

licity

6,5

71

6,6

08

235

2

33

289

3

51

17,

677

10,

214

27,

891

28,

702

17,

090

45,

793

231

2

51

1,6

77

5,0

93

36,

894

58,

327

11O

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Exp

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es

8,7

65

5,7

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1,5

91

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507

3

98

8,1

20

15,

907

24,

027

10,

441

6,2

17

16,

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396

2

22

1,3

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821

3

6,67

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4,89

7

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ss S

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ort

135

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5,00

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1

6,15

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125

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245

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3

70,8

13

155,

354

92,

502

247,

856

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1,49

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5

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3

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1

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5

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2

7 2

9 2

00

591

5

,725

6

,771

14O

the

rs (5

02)

(212

) (9

1) (4

0) (2

9) (1

5) (8

72)

(504

) (1

,376

) (3

88)

(231

) (6

19)

(23)

(8)

(80)

(30)

(2,1

01)

(925

)

15D

ep

rec

iatio

n 2

3,66

0 2

2,80

6 4

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4

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1

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1

,589

4

1,10

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3,75

2 6

4,85

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1,68

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4,81

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76

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296

2

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54

53

17

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515

2

97

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5

05

301

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13

11

47

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ain

)/Lo

ss o

n Fo

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n Ex

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44

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8

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31

86

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48

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bsc

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hip

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2

56

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49

31

18

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1,4

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4 1

0 8

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19In

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141

1

93

26

37

8

13

245

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41

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- -

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) -

4,4

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4,4

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- -

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(7,4

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5,3

76

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e T

ax

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1,5

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4

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7

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0 9

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48

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6

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0,73

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46 6

9,75

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392

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90 4

4,64

6 1,

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058

1,2

29,0

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(Rs.

‘000

)

43


ParticularsAs at


31st March 2010

1 Authorised Capital 10,000,000 5,000,000

1,000,000,000 (Previous year 500,000,000) Equity Shares of Rs. 10 Each

2 Issued Capital 4,750,000 2,800,000

475,000,000 (Previous year 280,000,000) Equity Shares of Rs. 10 Each

3 Subscribed Capital 4,750,000 2,800,000


4 Called Up Capital 4,750,000 2,800,000


Less : Calls Unpaid - -

Add : Equity Shares Forfeited ( Amount originally paid up) - -

Less : Par value of Equity Shares bought back - -

Less : Preliminary Expenses - -

Expenses Including commission or brokerage on - -

Underwriting or subscription of shares

Total 4,750,000 2,800,000

Schedules to and forming part of the Revenue Accounts and Profit and Loss account for the year ended on and to Balance Sheet as at 31st March 2011 SCHEDULE-5ShareCapital

Name of parties No. of Shares

Pantaloon Retail (I) Ltd 49,725,000

Participatie Maatschappij Graafschap Holland N.V. 49,725,000

Shendra Advisory Services Pvt. Ltd. 95,550,000

Total 195,000,000

TotalnumberofSharesissuedduringtheyeararestatedbelow

ShareholderAs at 31st March 2011 As at 31st March 2010

Number of Shares % of Holdings Number of Shares % of Holdings

Promoters

Indian 353,875,000 74.5 208,600,000 74.5

Foreign 121,125,000 25.5 71,400,000 25.5

Others - - - -

Total 475,000,000 100 280,000,000 100

SCHEDULE-5AShareCapitalPatternofShareholding( As certified by the Management)

(Rs. ‘000)

44


ParticularsAs at


31st March 2010

1 Capital Reserves - -

2 Capital Redemption Reserves - -

3 Share Premium - -

4 General Reserves - -

Less : Debit balance in Profit and Loss Account - -

Less : Amount utilized for Buy - Back - -

5 Catastrophe Reserves - -

6 Other Reserves - -

7 Balance of Profit in Profit & Loss Account - -

Total - -

Schedules to and forming part of the Revenue Accounts and Profit and Loss account for the year ended on and to Balance Sheet as at 31st March 2011SCHEDULE-6ReservesandSurplus

SCHEDULE-7Borrowings

ParticularsAs at


31st March 2010

1 Debenture / Bonds - -

2 Banks - -

3 Financial Institutions - -

4 Others - -

Total - -

(Rs. ‘000)

(Rs. ‘000)

45


ParticularsAs at


31st March 2010

Long Term Investments

1. Government Securities and Government guaranteed bonds including Treasury Bills 1,846,759 833,864

2. Other Approved Securities - -

3. Other Investments - -

(a) Shares

(aa) Equity - -

(bb) Preference - -

(b) Mutual Funds - -

(c) Derivative Instruments - -

(d) Debentures / Bonds 1,699,106 817,760

(e) Other Securities - -

(f) Subsidiaries - -

(g) Investment properties - Real Estate - -

4. Investments in Infrastructure & Social Sector 1,425,339 763,827

5. Other than Approved Investments - -

Short Term Investments

1. Government Securities and Government guaranteed bonds including Treasury Bills

99,871 51,787

2. Other Approved Securities - -

3. Other Investments - -

(a) Shares

(aa) Equity 5,498 1,392

(bb) Preference - -

(b) Mutual Funds 83,727 50,913

(c) Derivative Instruments - -

(d) Debentures / Bonds - -

(e) Other Securities 602,702 -

(f) Subsidiaries - -

(g) Investment properties - Real Estate - -

4. Investments in Infrastructure & Social Sector 49,743 -

5. Other than Approved Investments 45,058 79,871

Total 5,857,803 2,599,414

SchedulestoandformingpartoftheRevenueAccountsandProfitandLossaccountfortheyearendedonandtoBalanceSheetasat31stMarch2011SCHEDULE-8Investments

NOTES:

1) All the Investments are free of any Encumberances other than investments under Section 7 of the Insurance Act.

2) All the above investments are performing assets.

3) Investments maturing within next 12 months are Rs. 886,599 thousand (Previous year Rs.183,863 thousand)

4) Government of India Bonds aggregating Rs. 100,678 thousand (Previous year Rs. 100,535 thousand ) have been deposited with The Reserve Bank of India under section 7 of the Insurance Act, 1938. (Shown as deposit under Schedule 12 ) 5) Investment other than Equities and Derivative instruments '- Aggregate value of Investments in Mutual funds as at March 31, 2011 Rs 126,050 thousand (Previous year Rs. 130,414 thousand) 'Market value as at March 31, 2011 Rs 126,665 thousand (Previous year Rs 130,783)

6) Investment property Rs Nil (Previous year Rs Nil)

7) Value of contracts in relation to investments where deliveries are pending Rs NIL (Previous year Rs Nil) and in respect of sale of investments where payments are overdue Rs Nil (Previous year Rs Nil).

(Rs. ‘000)

46


ParticularsAs at


31st March 2010

1. Security - Wise Classification

Secured - -

(a) On Mortgage of Property

(aa) In India - -

(bb) Outside India - -

(b) On Shares, Bonds, Government Securities - -

(c) Others - -

Unsecured - -

Total - -

2. Borrower - Wise Classification

(a) Central and State Governments - -

(b) Banks and Financial Institutions - -

(c) Subsidiaries - -

(d) Industrial Undertakings - -

(e) Others - -

Total - -

3. Performance - Wise Classification

(a) Loans classified as standard

(aa) In India - -


(b) Non - Performing Loans less Provisions

(aa) In India - -


Total - -

4. Maturity - Wise Classification

(a) Short - Term - -

(b) Long - Term - -

Total - -

Schedules to and forming part of the Revenue Accounts and Profit and Loss account for the year ended on and to Balance Sheet as at 31st March 2011 SCHEDULE-9Loans

(Rs. ‘000)

47

Futu

re G

ene

rali

Ind

ia In

sura

nce

Co

mp

any

Lim

ited

Parti

cul

ars

Co

st /

Gro

ss B

loc

k D

ep

rec

iatio

n N

et B

loc

k

As

at

31s

t Ma

rch

2010

Ad

diti

ons

D

ed

uctio

ns

As

at

31s

t Ma

rch

2011

As

at

31s

t Ma

rch

2010

Fo

r The

Y

ea

r O

n Sa

les

/ A

dju

stm

ent

s

As

at

31s

t Ma

rch

2011

As

at

31s

t Ma

rch

2011

As

at

31s

t Ma

rch

2010

Go

od

will

- -

- -

- -

- -

- -

Inta

ngib

les

--

--

--

--

--

Co

mp

ute

r So

ftwa

res

143

,596

1

4,86

8 -

158

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7

4,27

2 3

8,67

8 -

112

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4

5,51

4 6

9,32

4

Land

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ld -

- -

- -

- -

- -

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s 1

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1,2

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ing

s -

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-

Furn

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& F

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gs

41,

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237

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42,

188

20,

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0,68

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2,71

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8,06

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7,42

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ers

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- -

- -

- -

- -

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86,3

17

28,

189

3,5

77

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1

86,9

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07,8

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299

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rk in

pro

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ss -

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nd T

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299

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us Y

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r 2

26,0

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115,

836

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86,9

63

299

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2

18,6

84

SchedulestoandformingpartoftheRevenueAccountsandProfitandLossaccountfortheyearendedonandtoBalanceSheetasat31stMarch2011

SCHEDULE10-FixedAssets

(Rs.

‘000

)

48


ParticularsAs at


31st March 20101. Cash (including cheques, drafts and stamps) 4,361 5,358 2. Bank Balances (a) Deposit Accounts (aa) Short - Term - 60,000 (due within 12 months) (bb) Others 60,000 - (b) Current Accounts 140,458 29,923 (c) Others - - 3. Money at Call and Short Notice (a) With Banks - - (b) With Other Institutions - - 4. Others - - Total 204,819 95,281 Balances with non-scheduled banks included in 2 or 3 above - -

Cash and Bank BalancesIn India 204,819 95,281 Outside India - -

SchedulestoandformingpartoftheRevenueAccountsandProfitandLossaccountfortheyearendedonandtoBalanceSheetasat31stMarch2011SCHEDULE11-CashandBankBalances

SCHEDULE-12AdvancesandOtherAssets

Note : Outstanding premium contains amount receivable against Bank Guarantee

ParticularsAs at


31st March 2010

Advances

1. Reserve Deposits with ceding Companies - -

2. Application Money for Investments - -

3. Prepayments 6,663 7,399

4. Advances to Directors/Officers - -

5. Advance Tax Paid and Taxes Deducted at Source (Net of provision for taxation)

1,500 1,500

6. Others - -

7. Other Deposits 90,350 91,097

8. Advances to Employees 230 2,149

9. Advances recoverable in cash or kind 24,009 37,121

10. Unutilised Service Tax (net) 56,338 23,989

Total (A) 179,090 163,255

Other Assets

1. Income accrued on Investments 176,759 68,682

2. Outstanding Premiums 2,000 3,153

3. Agents' Balances - -

4. Foreign Agencies' Balances - -

5. Due from other entities carrying on insurance business 1,581,551 973,088

6. Due from Subsidiaries / Holding Company - -

7. Deposit With Reserve Bank Of India 100,678 100,535

[Pursuant to section 7 of Insurance Act, 1938]

8. Others - -

Total (B) 1,860,988 1,145,458

Total (A+B) 2,040,078 1,308,714

(Rs. ‘000)

(Rs. ‘000)

49


SchedulestoandformingpartoftheRevenueAccountsandProfitandLossaccountfortheyearendedonandtoBalanceSheetasat31stMarch2011SCHEDULE13-CurrentLiabilities

SCHEDULE-14Provisions

SCHEDULE-15MiscellaneousExpenditure(totheextentnotwrittenofforadjusted)

ParticularsAs at


31st March 2010

1. Agents Balances 50,811 110,399

2. Balances due to other Insurance Companies 548,259 166,923

3. Deposits held on Reinsurance ceded - -

4. Premiums received in advance 19,842 17,701

5. Unallocated Premium 193,586 96,576

6. Sundry Creditors 152,495 117,284

7. Due to Subsidiaries / Holding Company - -

8. Claims Outstanding 3,010,590 1,426,972

9. Provision for Solatium fund 3,193 2,098

9. Due to Officers / Directors - -

10. Unclaimed amount of Policyholders 12,045 4,632

11. Statutory Dues 31,258 10,542

Total 4,022,079 1,953,127

ParticularsAs at


31st March 2010

1. Reserve for Unexpired risk 2,075,965 1,335,148

2. For Taxation - -

(less advance tax paid and taxes deducted at source) -

3. Deferred Tax - -

4. For Proposed Dividends - -

5. For Dividend Distribution Tax - -

6. Others - -

a. Provision - Bonus & Employees benefits 83,896 7,864

Total 2,159,861 1,343,012

ParticularsAs at


31st March 2010

1. Discount Allowed in issue of shares / Debentures - -

2. Others - -

Total - -

(Rs. ‘000)

(Rs. ‘000)

(Rs. ‘000)

50


SCHEDULE–16Significant accounting policies & notes to accounts forming part of the financial statements for the year ended 31st March 2011

1 Background:

Future Generali India Insurance Company Limited (‘the Company’) is a Joint Venture between India’s leading retailer, Future Group and Italian insurance major, Generali Group. The two promoters of this Joint Venture have come together to access their respective strengths by entering the insurance business market in India for carrying on the general insurance business.

The Company was incorporated on 30th October 2006 as a Company under the Companies Act 1956 (the Act) to undertake and carry on the business of general insurance. The Company obtained regulatory approval to undertake General Insurance business on September 4, 2007 from the Insurance Regulatory and Development Authority (‘IRDA’) and has obtained the first product approval in November 2007. Accordingly, the Company has commenced business with effect from that month. The financial year 2010-11 was the third full financial year operations of the Company. The IRDA renewed the Company’s certificate of registration to sell general insurance policies in India for the year 2011-12 vide it’s certificate of renewal of registration dated 28th February 2011. The renewal certificate is with effect from 1st April 2011 and valid up to 31st March 2012.

2 Significant accounting policies

2.1 Basis of preparation of financial statements

The financial statements are prepared and presented in accordance with the Generally Accepted Accounting Practices followed in India under the historical cost convention and accrual basis of accounting and in accordance with the statutory requirements of the Insurance Act, 1938, the Insurance Regulatory and Development Authority (IRDA) (Preparation of Financial Statements and Auditor’s Report of Insurance Companies) Regulations, 2002 (‘The Regulations’), and orders and directions issued by the IRDA in this behalf, the Companies Act, 1956 to the extent applicable and comply with the accounting standards notified under the Companies Accounting Standard Rules 2006, to the extent applicable and current practices prevailing in the Insurance industry.

2.2 Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent liabilities. The estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying financial statements. Any revision to accounting estimates is recognized in accordance with the requirements of the respective Accounting Standards.

2.3 Revenue recognition

Premium

Premium is recognised as income over the contract period or the period of risk whichever is appropriate on gross basis net of service tax. Premium is recorded for the policy period at the time of issuance of policy and for installment cases, it is recorded on installment due and received dates. Any subsequent revision to premium is recognised over the remaining period of risk or contract period. Adjustments to premium income arising on cancellation of policies are recognised in the year in which the cancellation is effected.

Interest / dividend income

Interest income is recognized on accrual basis. Dividend is recognized when right to receive dividend is established.

Amortization of Premium / discount on purchase of investments

Premium or discount on acquisition, as the case may be, in respect of fixed income securities, is amortized/accreted on 'internal rate of return' as adopted from the previous year, over the period of maturity/holding.

Profit / loss on sale of securities

Profit or loss on sale/redemption of securities will be recognized on trade date basis and shall include effects of accumulated fair value changes, previously recognised, for specific investments sold/redeemed during the year.

Commission on Reinsurance Ceded

Commission received on reinsurance ceded is recognized as income in the period in which reinsurance premium is ceded.

51


Profit Commission under re-insurance treaties, wherever applicable, will be recognized in the year of final determination of the profits and as intimated by the reinsurer.

2.4 Reinsurance ceded

Reinsurance cost, in respect of proportional reinsurance, is accrued at policy inception. Non-proportional reinsurance cost is recognized when incurred and due. Any subsequent revision to, refunds or cancellations of premiums are recognised in

the year in which they occur.

2.5 Acquisition costs

Acquisition costs, defined as costs that vary with, and are primarily related to, the acquisition of new and renewal insurance contracts viz., commission, policy issue expenses etc., are expensed in the year in which they are incurred.

2.6 Premium received in advance

Premium received in advance represents premium received in respect of policies issued during the year, where the risk commences subsequent to the Balance Sheet date.

2.7 Reserve for unexpired risk

Represents that part of the net premium (i.e., premium, net of reinsurance ceded) in respect of each line of business which is attributable to, and set aside for subsequent risks to be borne by the Company under contractual obligations on contract period basis or risk period basis, whichever is appropriate, subject to a minimum of 100% in case of Marine Hull business and 50% in case of other business based on net written premium for the year as required by Section 64V(1)(ii)(b) of the Insurance Act, 1938.

2.8 Premium Deficiency

Premium deficiency is recognised if the ultimate amount of expected net claim costs, related expenses and maintenance costs exceeds the sum of related premium carried forward to the subsequent accounting period as the reserve for unexpired risk. Premium deficiency is calculated by line of business. The Company considers maintenance costs as relevant costs incurred for ensuring claim handling operations.

2.9 Claims incurred

Claims are recognized as and when reported. Claims paid (net of recoveries including salvage) are charged to the respective revenue account when approved for payment. Recoveries from sale of salvage are recognised at the time of sale. Amounts received/receivable from the re-insurers, under the terms of the reinsurance arrangement, are recognized together with the recognition of the claim.

Amounts received/receivable/paid/payable from/to the coinsurers, under the terms of the coinsurance arrangements, are also recognized together with the recognition of the claim.

2.10 IBNR and IBNER (Claims Incurred but not reported and claims incurred but not enough reported):

IBNR represents that amount of claims that may have been incurred prior to the end of the current accounting period but have not been reported. The IBNR provision also includes provision, if any, required for claims incurred but not enough reported (IBNER). The said liability has been determined on actuarial principles and confirmed by the Appointed Actuary. The methodology and assumptions on the basis of which the liability has been determined has also been certified by the actuary to be appropriate, in accordance with guidelines and norms issued by the Actuarial Society of India in concurrence with the IRDA and accordingly liability determined and certified as adequate.

Apportionment of Income and Expenses

2.11 Operating expenses related to the insurance business:

Operating expenses related to the insurance business are allocated to specific business segments on the basis of:

a) Expenses which are directly identifiable to the business segments are allocated on actual basis;

b) Other expenses, which are not directly identifiable, are apportioned on either of the following basis, as may be appropriate:

• Number of policies; and

• Gross written premium;

c) Depreciation is apportioned on the basis of Gross Written Premium;

The method of apportionment is decided by the management, based on the nature of the expenses and their logical correlation with various business segments, wherever possible.

52


2.12 Income from investments and other income

Income earned from investments and deposits and other incomes not related to Insurance business is allocated to the revenue accounts and the profit and loss account on the basis of funds available from insurance operations and shareholders funds and are further allocated to the lines of business in proportion of their respective Gross written Premium. Other incomes related to Insurance Business are taken to Revenue accounts and allocated on Gross written Premium basis.

2.13 Fixed assets and depreciation/amortisation

Fixed assets are stated at cost (including incidental expenses relating to acquisition and installation) less accumulated depreciation.

Depreciation is provided on Straight Line Method (SLM) with reference to the management’s assessment of the estimated useful life of the assets or the rates and in the manner specified by the Schedule XIV of The Companies Act, 1956 whichever is higher.

Depreciation/Amortisation are provided at the following rates:

Assets Current year

Information technology equipment 33.33%

Computer software (Intangibles) 33.33%

Vehicles 20.00%

Office Equipment 20.00%

Furniture & fixtures 20.00%

Building 2.00%

Air Conditioner (part of office equipments) 20.00%

Mobile Phones (part of office equipments) 50.00%

Electrical fittings (part of furniture & fixtures) 20.00%

Leasehold Improvements 5 years or lease period whichever is less

The Company provides pro rata depreciation from/to the month in which the asset is acquired or put to use/disposed, as appropriate.

During the year company has changed the policy of providing of depreciation on mobile phone from 20% to 50% with retrospective effect and this has resulted in depreciation charged being higher by Rs 135 thousand (previous year Nil).

Intangibles

Intangible assets comprising computer software are stated at cost less amortisation. Computer software including improvements are amortised over a period of 3 years, being the management’s estimate of the useful life of such intangibles.

All assets including intangibles individually costing up to Rs. 5,000 are fully depreciated/amortised in the year in which acquired.

2.14 Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit which the asset belongs to, is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the profit and loss account and revenue account. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

2.15 Investments

Investments are made in accordance with the Insurance Act, 1938, the Insurance Regulatory and Development Authority (Investment) Regulations, 2000, the Insurance Regulatory and Development Authority (Investment) (Amendment) Regulations, 2001 and various other circulars / notifications issued by IRDA in this context from time to time.

Investments are recorded on trade date at cost. Cost includes brokerage, transaction taxes as applicable, etc. and excludes pre-acquisition interest, if any

53


Classification:

Investments maturing within twelve months from balance sheet date and investments made with the specific intention to dispose off within twelve months from balance sheet date are classified as short-term investments. Investments other than short term investments are classified as long-term investments.

Valuation:

Debt Securities

All debt securities are considered as ‘held to maturity’ and accordingly stated at historical cost adjusted for amortisation of premium or accretion of discount on ’internal rate of return’ basis in the revenue accounts and profit & loss account over the period held to maturity /holding.

The realised gain or loss on the securities is the difference between the sale consideration and the amortized cost in the books of the Company as on the date of sale determined on ‘weighted average cost’ basis.

Equities (Listed & Actively Traded)

Listed and actively traded securities shall be stated at the lower of the last quoted closing prices on the National Stock Exchange of India Limited or Bombay Stock Exchange Limited. Unrealised gains or losses shall be credited / debited to the Fair Value Change account.

The realised gain or loss on the listed & actively traded equities is the difference between the sale consideration and the cost as on the date of sale determined on ‘weighted average cost’ and include the accumulated changes in the fair value previously recognised in the Fair Value Change account in respect of the particular security which is to be transferred to the Profit and Loss account on the trade date.

Mutual Fund Units

Mutual Funds Units are stated at their Net Asset Value (NAV) at the balance sheet date. Unrealised gains or losses are credited / debited to the Fair Value Change account.

The realised gain or loss on Mutual Funds Units is the difference between the sale consideration and the cost as on the date of sale determined on weighted average cost basis and include the accumulated changes in the fair value previously recognized in the Fair Value Change account in respect of the particular security which is transferred to the Profit and Loss account on the trade date.

Fair Value Change account represents unrealised gains or losses in respect of investments outstanding at the close of the year. The balance in the account is considered as component of shareholders’ funds though not available for distribution as dividend.

2.16 Employee benefits recognised in Revenue Accounts

(i) Long term benefits

The Company has both defined-contribution and defined-benefit plans, of which some have assets in Special funds or similar securities. The plans are financed by the Company, and in the case of some defined contribution plans by the Company along with its employees.

(i-a) Defined-contribution plans

These are plans in which the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. These comprise of contributions to the employees’ provident fund and employees’ pension fund. The Company’s payments to the defined contribution plans are reported as expenses during the period in which the employees perform the services that the payment covers.

(i-b) Defined-benefit plans

Expenses for defined-benefit gratuity plans are calculated as at the balance sheet date by independent actuaries using Projected Unit Credit method. The commitments are valued at the present value of expected future payments, with consideration for calculated future salary increases, utilising a discount rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on government bonds with a term based on the expected average remaining working lives of employees..

(ii) Short term benefits

Short term employee benefits are recognised at the undiscounted amount expected to be paid as an expense over the period of services rendered to the Company.

54


The cost of compensated absences is accounted as under:-

• In the case of accumulating compensated absences, when employees render service that increase their entitlement of future compensated absences; and

• In case of non-accumulating compensated absence when the absences occur.

(iii) Leave Encashment

Provision for leave encashment is accrued and provided for on the basis of an actuarial valuation made at the end of each financial year.

2.17 Foreign Currency Transactions

Transactions denominated in foreign currencies, are recorded at the exchange rate prevailing on the date of the transaction/remittance. Assets and Liabilities in foreign currency, as at the Balance Sheet date are converted at the exchange rates prevailing at that date.

Exchange difference is recognised in the Revenue Accounts or Profit and Loss Account, as applicable.

2.18 Preliminary Expenses

Preliminary expenses incurred had been written off to the Profit and Loss account.

2.19 Contributions to Terrorism Pool

In accordance with the requirements of IRDA, the Company, together with other insurance companies, participates in the Terrorism Pool. This pool is managed by the General Insurance Corporation of India (‘GIC’). Amounts collected as terrorism premium in accordance with the requirements of the Tariff Advisory Committee (‘TAC’) are ceded at 100% to the Terrorism Pool.

In accordance with the terms of the agreement, GIC retrocedes, to the Company, terrorism premium to the extent of the Company’s share in the risk, which is recorded as reinsurance accepted. Such reinsurance accepted is recorded based on quarterly confirmation received from GIC. Entire amount of reinsurance accepted for the year on this account, net of claims and expenses, up to the above date, is carried forward to the subsequent accounting period as ‘Unexpired Risk Reserve’ for subsequent risks, if any, to be borne by the Company.

2.20 Contributions to Motor Third Party Pool

In accordance with the directions of IRDA, the Company, together with other registered direct general insurance companies, participates in the Indian Motor Third Party Insurance Pool (IMTPIP). The IMTPIP is a multilateral reinsurance arrangement, in which all member companies are compulsorily required to participate. The IMTPIP is administered by the General Insurance Corporation of India (‘GIC’). The IMTPIP covers reinsurance of third party risks of specified motor vehicles (“specified risks”). Amounts collected as premium in respect of specified risks are ceded at 100% of such premium, 100% of claims incurred against risks ceded being recoverable from the pool.

As per the directions of the IRDA and the terms of the agreement between participant companies:

a) The General Insurance Corporation of India (GIC) participates in the Pooled business at such percentage of the motor business that is ceded to it by all insurers as statutory reinsurance cessions under Sec 101A of the Insurance Act. For the financial year ended 31st March 2011, the share of GIC was fixed at 10%.

b) The business remaining after such cession to GIC is shared among all the registered general insurers writing motor insurance business in the proportion that their gross direct general insurance premium in India from all classes of general insurance underwritten by them in that financial year bears to the aggregate gross direct general insurance premium from all classes of general insurance business written by all participant companies.

The Company’s share of premiums, claims, reinsurance commissions and expenses of the pool is recorded as inward reinsurance business, based on the returns submitted by GIC, under the respective heads of income or expense as the case may be and included within the Motor Third Party sub-segment of the Miscellaneous Revenue Account. Accordingly, such share has been recorded by the Company, only up to 28th February 2011, the date up to which the return is submitted by GIC. Unexpired risks reserve is provided for at 50% of net premiums of such inward reinsurance business, being the minimum rate specified in Section 64V(1)(ii)(b) of the Insurance Act, 1938. Pursuant to IRDA order dated 12th March 2011, IBNR provision for IMTPIP as at 28th February 2011 has been estimated considering 153% ultimate loss ratio on the cumulative earned premium.

2.21 Contributions to other funds

The Company provides for contribution to Solatium and Environment Relief funds as per requirement of regulations/ circulars.

55


Solatium Fund

The Company is required to contribute at the rate of 0.10% of the gross written premium from the Motor Business towards the Solatium Fund established by the Government of India in accordance with the circular dated 18 March 2003 and the recommendations of the General Insurance Council in its meeting in May 2005.

Environment Fund

The Company is required to contribute the amount of premium collected towards Environment Fund from public liability policies and invest the same in accordance with the Regulations.

2.22 Provision for taxation

Tax expenses comprises of current tax and deferred tax.

Current tax

The Company provides for income tax on the basis of estimated taxable income for the current accounting period in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax

Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences between the accounting income as per the Company’s financial statements and the taxable income for the year.

Deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future, however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets.

Deferred tax assets are reviewed as at each balance sheet date and appropriately adjusted to reflect the amount that is reasonably/virtually certain to be realised.

2.23 Share Issue expenses

Share issue expenses are debited to the Profit and Loss account.

2.24 Accounting of operating lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the lease term are classified as Operating Leases. Operating lease rentals are recognized as an expense over the lease period.

2.25 Accounting for provisions and contingent liabilities

The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

2.26 Service tax

Service tax collected is considered liability against which service tax paid/payable for eligible services is adjusted and the net liability is remitted to the appropriate authority as stipulated. Unutilized credits, are carried forward under “Advances and Other Assets” for adjustments in subsequent periods.

2.27 Earnings per share

Earnings per share is calculated by dividing the Profit after Tax in the Profit and Loss account by the weighted average number of equity shares outstanding during the year.

Notestoaccounts

3 Contingent Liabilities

Contingent liabilities not provided for in respect of claims against the Company not acknowledged as debts other than insurance matters –

Particulars As on 31st March 2011

As on 31st March 2010

Partly paid up Investments - -

56


Particulars As on 31st March 2011

As on 31st March 2010

Underwriting commitments outstanding - -

Claims other than those under policies not acknowledged as debts - -

Guarantees given by or on behalf of the Company - -

Statutory demands/liabilities in dispute, not provided for, in respect of

• Service Tax

• Income Tax

-

-

-

-

Reinsurance obligations to the extent not provided for in accounts - -

4 Encumbrances On Assets

All assets of the Company are free from any encumbrances. No Assets of the Company are subject to restructuring.

5 Commitments

There are no commitments made and outstanding for investments and loans.

Commitments made and outstanding for acquisition of Fixed Assets amount to Rs.15,219 thousand (previous year Rs.13,336 thousand).

6 IBNR & IBNER

The appointed actuary has certified to the Company that actuarial estimates for IBNR (including IBNER) are in compliance with the guidelines prescribed by the Actuarial Society of India and in conformity with the IRDA regulations. The provision for IBNR (Incurred but not reported claims) and IBNER (Incurred but not enough reported claims) have been made as per the estimates provided by the Appointed Actuary. The Appointed Actuary, in his report has certified that:

We have tried to apply four different methods of IBNR calculation and selected the one which is giving appropriate results. The methods are:

1. Claims Delay Pattern Method

2. Paid Claims Chain Ladder Method

3. Incurred Claims Chain Ladder Method

4. Bornheutter Fergusson Method

The methods used are common methods in actuarial literature.

The IBNR analysis has been done segment-wise for large Line of Business like Motor Own Damage and Health.

Line of Business, for which ample amount of claims data is available with the company, have been assigned the IBNR using either Incurred Claims Triangle method or Paid Claims Triangle Method, whichever is giving more appropriate results. This method has been used for all lines of business, except Motor Third Party (Private Vehicle and Two-wheeler).

For Motor Third Party (Private Vehicle and Two-wheeler), we have taken the IBNR value given by the Claims Delay Pattern method. The IBNER values were calculated separately on the basis of development pattern of reported claims.

Large claims have been removed from some Line of Business as these claims may potentially distort the claim development patterns.

7 Claims

All claims, net of reinsurance are incurred and paid in India except for Marine Insurance (where consignments are exported from India) and Overseas Travel Insurance total amount Rs 10,283 thousand (previous year Rs 5,491 thousand).

There are no claims that have been settled and remaining unpaid for a period of more than six months as at the end of the year.

Claims outstanding for more than six month are Rs 428,914 thousand (previous year Rs 238,496 thousand) out of total outstanding of Rs 1,712,359 thousand (previous year Rs 1,427,531 thousand).

8 Premium Deficiency

In accordance with Circular No.F&A / Cir / 017 / May-04 dated May 18, 2004, there is no premium deficiency at a segment level in each of the fire, marine and miscellaneous segments. Within the miscellaneous segment, however, there is a premium deficiency of Rs. 146,964 thousands (previous year Rs. Nil) in respect of the third party sub-segment in motor line of business.

57


(Rs. ‘000)

(Rs. ‘000)

9 Managerial Remuneration

The managerial remuneration is in accordance with section 34A of the Insurance Act, 1938 and as approved by the IRDA.

Computation of Managerial Remuneration

ParticularsFor the year ended

31st March 2011For the year ended

31st March 2010

Salary and bonus (including contribution to fund ) 13,366 13,916

Other allowances and perquisites - 1,692

Total 13,366 15,608

Note: Expenses towards gratuity and leave encashment are determined actuarially on an overall company basis annually and have not been considered accordingly.

10 Sector Wise Business (Based On Gross Written Premium) (GWP)

Percentage of business sector – wise (Based on Gross Written Premium):

For the year ended 31st March 2011 For the year ended 31st March 2010

Business Sector

GWP(Rs.’000) No. of Lives % of GWP GWP(Rs.’000) No. of Lives % of GWP

Rural 452,505 - 7.39 314,246 - 7.52

Social 606 125,367 0.01 4,331 811,726 0.10

Urban 5,668,550 - 92.60 3,861,145 - 92.38

Total 6,121,661 125,367 100.00 4,179,722 811,726 100.00

11 Extent Of Risks Retained And Reinsured

Extent of risk written and reinsured based on premium (excluding Excess of Loss and Catastrophe reinsurance written off).

PaticularsFor the year ended

31st March 2011(% age of business written)

For the year ended 31st March 2010

(% age of business written)

Risk retained 61 59

Risk Reinsured 39 41

Total 100 100

12 Statement showing the age-wise analysis of the Unclaimed amount of the policyholders as on 31st March 2011 (with reference to IRDA circular no IRDA/F&I/CIR/CMP/174/11/2010);

Particulars Total AGE-WISE ANALYSIS (months)

1-6 7-12 13-18 19-24 25 - 30 31 - 36 > 36

Claims settled but not paid to the policyholders / insureds due to any reasons except under litigation from the insured / policyholders

- - - - - - - -

Sum due to the insured / policyholders on maturity or otherwise

- - - - - - - -

Any excess collection of the premium / tax or any other charges which is refundable to the policyholders either as terms of conditions of the policy or as per law or as may be directed by the Authority but not refunded so far

4,098 1,508 700 424 479 653 323 11

Cheques issued but not encashed by the policyholder/ insured

29,778 21,831* 4,560 1,300 1,759 208 120 -

*Note: Rs 21,831 thousand does not form part of Unclaimed amount of Policyholders under Schedule 13.

58


13 Employee Benefit Plans

The Company has classified the various benefits provided to employees as under:-

Defined Benefit Plan – Gratuity

In accordance with Accounting Standard 15 (Revised 2005), actuarial valuation was done in respect of the aforesaid defined benefit plan of gratuity based on the following assumptions:-

ParticularsYear Ended

31st March 2011Year Ended

31st March 2010

Discount Rate (per annum) 8.00% 8.00%

Rate of increase in Compensation levels 6.00% 6.00%

Rate of Return on Plan Assets 8.50% 8.50%

Expected Average remaining working lives of employees (years) 26.57 27.05

A) Changes in the Present Value of ObligationYear Ended


31st March 2010

Present Value of Obligation at the beginning of the year 7,083 3,579

Interest Cost 567 286

Current Service Cost 5,273 3,541

Benefits Paid - -

Actuarial (gain) / loss on obligations (190) (323)

Present Value of Obligation as at March 31 12,733 7,083

B) Changes in the Fair Value of Plan AssetsYear Ended


31st March 2010

Present Value of Plan Assets at the beginning of the year 6,678 3,653

Difference in opening balance (142) 182

Expected Return on Plan Assets 556 427

Actuarial Gains and (Loss) on Plan Assets 33 41

Contributions 2,000 2,375

Benefits Paid - -

Fair Value of Plan Assets at March 31 9,124 6,678

C)Reconciliation of Present Value of Defined Benefit Obligation and the Fair Value of Assets

Year Ended 31st March 2011

Year Ended 31st March 2010

Present Value of funded Obligation as at March 31 12,733 7,083

Fair Value of Plan Assets as at March 31 9,124 6,678

Funded Status (3,609) (405)

Present Value of unfunded Obligation as at March 31 (3,609) (405)

Unrecognised Actuarial (gain) /losses - -

Unfunded Net Asset / (Liability) Recognised in Balance Sheet (3,609) (405)

Included in other provisions (Refer Schedule 14)

D) Amount recognised in the Balance SheetYear Ended


31st March 2010

Present Value of Obligation as at March 31 (12,733) (7,083)

Fair Value of Plan Assets as at March 31 9,124 6,678

Liability recognised in the Balance Sheet (3,609) (405)

Included in other provisions (Refer Schedule 14)

(Rs. ‘000)

(Rs. ‘000)

(Rs. ‘000)

(Rs. ‘000)

59


(Rs. ‘000)

E) Expenses recognised in the Profit and Loss AccountYear Ended


31st March 2010

Current Service Cost 5,273 3,541

Past Service Cost - -

Interest Cost 567 286

Expected Return on Plan Assets (556) (427)

Curtailment Cost / (Credit) - -

Settlement Cost / (Credit) - -

Net actuarial (gain) / loss recognized in the Year (190) (323)

Total Expenses recognised in the Profit and Loss Account 5,095 3,077

(Included in Employees remuneration and welfare benefits in Schedule 4)

Leave Encashment

Based on actuarial valuation at the end of the year, leave encashment has been provided at Rs.11,577 thousand (previous year Rs.6,990 thousand).

14 Deposit under Section 7 of the Insurance Act, 1938 are maintained at the specified percentage of the highest total gross premium written in any financial year subject to accumulated deposit being maximum of Rs. 100,000 thousand. The book value of the deposit maintained by the Company under Sec.7 as on 31st March 2011 is Rs.100,678 thousand (previous year Rs.100,535 thousand).

15 Segment Reporting

The Company’s primary reportable segments are business segments, which have been identified in accordance with the Regulations. The operating expenses and investment and other income attributable to the business segments are allocated as mentioned in paragraph 2.11 and 2.12 respectively. Segment revenue and results have been disclosed in the financial statements. Segment assets and liabilities have been identified to the extent possible in the statement annexed hereto. There are no reportable geographical segments since the Company provides services to customers in the Indian market only / Indian interests overseas and does not distinguish any reportable regions within India.

16 Related Party Disclosure

Related party disclosures have been set out in a separate statement annexed to this schedule. The related parties, as defined in Accounting Standard 18 ‘Related Party Disclosures’ issued by the Institute of Chartered Accountants of India(‘ICAI’), in respect of which the disclosures have been made, have been identified on the basis of disclosures made by the key managerial persons and taken on record by the Board.

17 Leases

Operating lease commitments:

The Company’s significant leasing arrangements include agreements for office and residential premises. These lease agreements are cancelable after a period of six months to three years at the option of the Company. The future minimum lease payments relating to these leases are disclosed below:

Particulars As at 31st March 2011 As at 31st March 2010

Payable not later than one year 50,604 148,855

Payable later than one year but not later than five years 12,767 128,471

Payable later than five years - -

• Amount charged to revenue accounts for lease is Rs. 145,694 thousand (previous year Rs.146,265 thousand).

• There are no transactions in the nature of sub leases.

• The period of agreement is as per the understanding between the licensor and the licensee.

• The total lease payment to be made in future towards lease agreements including non-cancelable is Rs. 718,022 thousand (previous year Rs.845,110 thousand).

(Rs. ‘000)

60


18 Contribution To Terrorism Pool

The company is a participant in and has received the Terrorism Pool retrocession of premium in the current financial year. Accordingly, as per the statement received from the Pool managers, the Company has recognised the pool retrocessions for the quarters ended 31st December 2009, 31st March 2010, 30th June 2010 and 30th September 2010, the accounts of which were received till the end of the financial year.

19 Contribution To Environment Fund

This year we have issued policies of Public Liability EF amount to Rs. 988 thousand. (previous year Rs. 722 thousand). Accordingly, as required under the scheme of Environment Fund a contribution of Rs. 988 thousand (previous year Rs. 722 thousand) has been provided towards the same and balance after adjusting payment of Rs. 988 thousand (previous year Rs. 760 thousand) included under Sundry Creditors.

20 Solatium Fund

This year Company has provided Rs 3,193 thousand (previous year Rs. 2,098 thousand) towards Solatium fund and disclosed under Current Liabilities.

21 Earning Per Share (‘EPS’)

The following table reconciles the numerator and denominator used to calculate basic/diluted EPS:

Particulars 31st March 2011 31st March 2010

Profit after Tax

Basic earnings before extra-ordinary items [A] (895,199) (897,041)

Basic earnings after extra-ordinary items [B] (895,199) (897,041)

Weighted average no. of equity shares (par value of Rs. 10 each) [C]

370,657,534 240,280,137

Basic earnings per share (Rs.) [A/C] (2.42) (3.73)

Diluted earnings per share (Rs.) [A/C] (2.42) (3.73)

22 Taxation

The Company carries on General Insurance business and hence the provision of sec 44 and First Schedule of Income Tax Act, 1961 are applicable for computation of Profits and Gains of its business. No provision for taxation has been made in the accounts since the Company does not have any taxable income in the current accounting year. Further as a matter of prudence, the company deems it proper not to recognize deferred tax assets.

23 Share Application

As at the close of the year, the Company had received share application money of Rs.225,000 thousand (previous year Rs.150,000 thousand) towards preferential issue of equity.

24 According to information available with the management, on the basis of information received from the suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) Act, the company has amounts due to Micro, Small and Medium Enterprises under the said Act as at 31st March 2011 as follows:

Sr. No

ParticularsYear Ended

31st March 2011 Year Ended

31st March 2010

a) i) Principal amount remaining unpaid to supplier under the MSMED ACT 2006.

242 -

(ii) Interest on a) (i) above - -b) i) Amount of Principal paid beyond the appointed date - -

ii) Amount of Interest Paid Beyond the Appointed date ( As per Sec 16 of the said Act)

- -

c) Amount of Interest due and payable for the period of delay in making payment, but without adding the interest specified under section 16 of the said Act

- -

d) Amount of Interest accrued and due - -e) Amount of further interest remaining due and payable even in

Succeeding years- -

(Rs. ‘000)

(Rs. ‘000)

61


25 Penalties Levied By Various Government Authorities During Financial Year 2010-11

Sr. No

AuthorityNon-

Compliance/ Violation

Amount in Rs.

Penalty Awarded

Penalty Paid

Penalty Waived/ Reduced

1 Insurance Regulatory and Development Authority - - - -

2 Service Tax Authorities - - - -

3 Income Tax Authorities - - - -

4 Any other Tax Authorities - - - -

5Enforcement Directorate/ Adjudicating Authority/ Tribunal or any Authority under FEMA

- - - -

6Registrar of Companies/ NCLT/CLB/ Department of Corporate Affairs or any Authority under Companies Act, 1956

- - - -

7Penalty awarded by any Court/ Tribunal for any matter including claim settlement but excluding compensation

- - - -

8 Securities and Exchange Board of India - - - -

9 Competition Commission of India - - - -

10Any other Central/State/Local Government / Statutory Authority

- - - -

26 During the year foreign exchange loss incurred by the Company is Rs.155 thousand (previous year Rs.222 thousand).

27 The summary of the financial statements for the current year and the ratios required to be furnished have been set out in the statement annexed hereto.

28 Previous year figures have been regrouped where possible and wherever necessary to make them comparable with those of the current year.

(i) In schedule 4 & 4(A) (Operating Expenses related to Insurance Business) - (a) a new category of Outsourcing Expenses has been created with Rs. 29,016 thousand as previous year expense (b) similarly Business Support is being shown separately with Rs.431,740 thousand as previous year expense (c) consequently Rs. 460,756 thousand has been reduced from Legal & Professional Charges.

(ii) In schedule 13 (Current Liabilities) – Unclaimed amount of Policyholders has been shown separately as per IRDA circular no IRDA/F&I/CIR/CMP/174/11/2010, amounting to Rs 4,632 thousand for previous year. Consequently Rs.1,890 thousand has been reduced from Unallocated Premium and Rs.2,742 thousand has been reduced from Sundry Creditors.

As per our report on even date








62


Particulars Motor FireMarine

Misc TotalCargo Others

Premium Received in Advance 15,823 - - - 4,019 19,842 17,701 - - - - 17,701

Net Claims Outstanding 1,608,766 61,749 30,231 - 217,316 1,918,062

742,832 39,139 15,857 - 104,662 902,490

Reserve for Unexpired Risk 1,412,705 61,854 36,458 - 564,948 2,075,965

967,955 44,666 16,036 - 306,491 1,335,148

Solatium Fund 3,193 - - - - 3,193 2,098 - - - - 2,098

Particulars March - 2011 March - 2010 March - 2009

Operating Results

Gross Written Premium 6,605,943 4,180,728 2,091,132

Net Premium Income (net of Reinsurance) 3,291,168 1,874,753 568,151

Income from Investments (net of losses) 238,842 78,831 27,697

Miscellaneous Income 859 587 168

Total Income 3,530,869 1,954,171 596,016

Commissions (133,281) (172,561) (73,685)

Operating Expenses 1,935,710 1,429,447 988,797

Claims, PDR and other outgoes 2,782,697 1,693,931 605,410

Operating Profit/Loss (1,054,257) (996,647) (924,505)

Non Operating Results - - -

Total income under Shareholder's Account 159,058 99,607 74,922

Profit before Tax (895,199) (897,041) (849,584)

Prov for Tax ( Fringe Benefit Tax) - - 3,734

Profit after Tax (895,199) (897,041) (853,318)

Miscellaneous

Policyholder's Account

Total Funds - - -

Total Investments - - -

Yield on Investments - - -

Shareholder's Account

Total Funds 2,135,945 1,006,623 934,085

Total Investments 5,857,803 2,599,414 1,351,445

Yield on Investments 8.75% 8.81% 8.48%

Paid up Equity Capital 4,750,000 2,800,000 1,902,500

Net Worth 2,135,945 1,006,623 934,085

Total Assets (Gross of current liabilities and provisions) 8,317,885 4,302,763 2,506,394

Yield on Total Investments 8.75% 8.81% 8.48%

Earning Per Share (2.42) (3.73) (5.68)

Book Value Per Share 4.50 3.60 4.91

Total Dividend - - -

Dividend per share - - -

AnnexuretoSchedule16-Notestoaccountsandformingpartofthefinancialstatementsfortheyearended31stMarch2011(ReferNoteno.15)SegmentalBreakupoftheBalanceSheetitemasat31stMarch2011

Segment revenues and segment results have been incorporated in the financial statements. However segment asset and liabilities, given the nature of the business, have been allocated amongst various segments to the extent possible.

Figures in bold represents Current year figures ( 31st March 11)

SummaryofFinancialStatementsfortheyearended31stMarch2011

(Rs ‘000)

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AnnexuretoSchedule16NotestoAccountsnoteno.16andformingpartofFinancialStatementsfortheyearended31stMarch2011

RelatedPartyDisclosuresunderAS18ofICAI(Fortheyearended31stMarch2011)

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AnnexuretoSchedule16NotestoAccountsnoteno.16andformingpartofFinancialStatementsfortheyearended31stMarch2011

RelatedPartyDisclosuresunderAS18ofICAI(Fortheyearended31stMarch2011)

65


ParticularsFor the year

ended31st March 2011

For the year ended

31st March 2010Cash Flow from Operating ActivitiesPremium received from Policyholders,including advance receipts and service tax 7,244,151 4,485,876 Other receipts - - Payment to Reinsurers, net of commissions and claims (737,786) (598,996)Payment to Coinsurers, net of claims recovery 5,644 4 Payment of Claims (3,121,251) (1,678,144)Payment of Commission and Brokerage (132,023) (44,734)Payment of other Operating Expenses net of Misc Income (1,527,028) (1,563,925)Preliminary and pre-operative expenses - - Income tax paid (Net) (195,051) (181,814)Service Tax Paid (411,612) (270,867)Fringe Benfit Tax paid - (2,368)Other Payments (32,539) (59,565)Security deposits paid (2,708) (7,934)Cash Flow before Extraordinary items 1,089,797 77,535 Cash Flow from Extraordinary operations - - Net Cash Flow From Operating Activities 1,089,797 77,535 Cash Flow from Investment ActivtiesPurchase of Fixed Assets (37,767) (106,105)Proceeds from Sale of Fixed Assets 39 1,654 Purchase of Investments (4,569,470) (2,360,261)Loan Disbursed - - Sale of Investments 1,999,692 1,129,901 Repayments received - - Rent/Interests/Dividends Received 274,826 93,306 Deposit under Section 7 of the Insurance Act, 1938 - (27,318)Investment in money market instruments and in liquid mutual fund (Net)* (672,162) 100,343 Expenses related to investments (417) (164)Net Cash Flow from Investment Activties (3,005,259) (1,168,645)Cash Flow from Financing ActivtiesProceeds from Issuance of Share Capital 1,800,000 821,638 Proceeds from Share Application money 225,000 150,000 Proceeds from Borrowing - - Repayments of Borrowing - - Interest/Dividends paid - - Net Cash Flow from Financing Activities 2,025,000 971,638 Effect of foreign exchange rates on cash and cash equivalents, net - - Net Increase/(Decrease) in Cash and Cash Equivalents during the year 109,538 (119,472)Cash and Cash Equivalent at the year beginning of the year 95,281 214,754 Cash and Cash Equivalent at the year end of the year 204,819 95,281

*Investment in mutual fund where these are used as parking vehicles pending investment are to be indicated (net). The form referred to above forms an integral part of Financial Statements








Receiptsandpaymentsfortheyearended31stMarch2011 (Rs ‘000)

66


I. Registration No. U66030MH2006PLC165287

State code 11

Balance Sheet Date 31st March 2011

II. Capital raised during the year Rs in '000s

Public issue -

Private issue 1,950,000

Bonus Issue -

Private placement -

III. Position of mobilisation and deployment of funds Rs in '000s

Total Liabilities (Sources of funds) 4,974,790

Total Assets (Application of funds) 4,974,790

IV. Source of funds Rs in '000s

Paid up capital 4,750,000

Share Application Money 225,000

Reserves and surplus -

Fair Value Change (210)

Secured loans -

Unsecured loans -

V. Application of funds Rs in '000s

Net Fixed assets 215,185

Investments 5,857,803

Net Current Assets (3,937,043)

Miscellaneous expenditure -

Accumulated loss 2,838,845

VI. Performance of the company Rs in '000s

Turnover 6,605,943

Total expenditure 7,501,142

Profit / (Loss) before tax (895,199)

Profit / (Loss) after tax (895,199)

Accumulated profits (2,838,845)

Earnings per share (2.42)

Dividend rate% -

VII. Generic names of principal products / services of the company

Item code number (ITC code) 819

Product Description General Insurance

YearEnded31stMarch2011BalanceSheetAbstractandCompany’sgeneralbusinessprofile

Note: The Company being an insurance Company, the accounts of the company are not required to be made in accordance with Schedule VI. Further the Insurance Act,1938 requires the financial statement of the Company to be split in Revenue Accounts and Profit and Loss Account. In view of this it is not possible to give all the information as required by part IV of this Schedule

For and on behalf of Board of Directors

G N Bajpai K K Rathi K G Krishnamoorthy Rao Chairman Director Managing Director & CEO

S Venkatesh Manish PahwaChief Financial Officer Company Secretary


67


Particulars 2011 2010

1 Portfolio(Business) Mix Ratio

Fire 11% 10%

Marine 5% 4%

Miscelleneous 84% 86%

2 Gross Premium to Share Capital Ratio 133% 142%

3 Net Retention Ratio

Fire 17% 10%

Marine 24% 21%


4 Net Commission Ratio

Fire -51% -138%

Marine -27% -29%

Miscelleneous -1% -4%

5 Net Claim Ratio

Fire 70% 125%

Marine 71% 94%


6 Expenses of Management to Gross Premium Ratio 29% 34%

7 Combined Ratio 139% 157%

8 Operating Profit / (Loss) Ratio -16% -24%

9 Liquid Assets to Liabilities Ratio 3% 3%

10 Return on Share Capital -18% -30%

11 Reinsurance Ratio 39% 41%

Ratiosfortheyearended31stMarch

Registered Delta

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