Rohan Harsh 2012173 Proposal Summer Internship Bajaj Allianz

7/27/2019 Rohan Harsh 2012173 Proposal Summer Internship Bajaj Allianz

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SUMMER INTERNSHIP PROPOSAL

Rohan Harsh GIM PGDM I

2012173

BAJAJ ALLIANZ (Investments Department)

Background of the company and sector :

“Insurance is an agreement between two parties under which one party undertakes specified

future risk of another party and compensates the loss from that risk on payment of some

consideration known as premium payable by the later”. (Patterson)

The insurance sector in India has come a full circle from being an open competitive market to

nationalization and back to a liberalized market again. Presently there are 12 general

insurance companies with 4 public sector companies and 8 private insurers. Although the

public sector companies still dominate the general insurance business, the private players are

slowly gaining a foothold.Overall 24 insurance companies as per IRDA (insurance regulatory

development authority regulator for the insurance sector). The insurance sector in India has

grown at a fast rate post-liberalization in 1999. In the last decade, total premium grew at a

CAGR of 25% and reached a total of $67 billion in 2010. Indian Life insurance industry

(which contributes 88% of total Life and General insurance premium in India) has emerged

as the 9th largest life insurance market in the world. Yet, Insurance penetration (measured as

ratio of premium underwritten to GDP) was only at 5.2 % in 2010 .With low insurance

penetration levels, growth potential remains promising. (Data from Deloitte report 2012)

Life Insurers transact life insurance business; the rest is transacted by General Insurers. No

composites are permitted as per law.

Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Finserv

Limited (recently demerged from Bajaj Auto Limited) and Allianz SE. Both enjoy a

reputation of expertise, stability and strength.



Bajaj Allianz General Insurance received the Insurance Regulatory and Development

Authority (IRDA) certificate of Registration on 2nd May, 2001 to conduct General Insurance

business (including Health Insurance business) in India. The Company has an authorized and

paid up capital of Rs 110 crores. Bajaj Finserv Limited holds 74% and the remaining 26% is

held by Allianz, SE.

As on 31st March 2010, Bajaj Allianz General Insurance maintained its premier position in

the industry by achieving growth as well as profitability. Bajaj Allianz has made a profit

before tax of Rs. 180 crores and has become the only private insurer to cross the Rs.100 crore

mark in profit before tax in the last four years. The profit after tax was Rs. 121 crores, 27%

higher than the previous year. (Latest data from company website)

Allianz Group is one of the world's leading insurers and financial services providers. At the

top of the international group is the holding company, Allianz AG, with its head office in

Munich.

Plans offered

Term plans, ULIPS, Traditional plans, Life & Health Insurance plans, Pension plans, Women

Insurance plans, and additional rider benefits.

Role of the Investment department:

The investment department looks into two categories of investment

(a) Debt Funds (Bonds etc.)

(b) Equity. (Shares)

My Project

The project given to me covers the functions performed by an equity analyst in the investment

department of the company which mainly functions to cater the requirements for ULIPS. My role

would be limited to analyzing the equities in midcap infrastructure firms assigned by the training

guide.

ULIPS

A unit linked insurance plan acts just like a savings vehicle, but also has the benefits of an

insurance contract. When an investor purchases units in a ULIP, he or she is purchasing units

along with a larger number of investors, just like an investor would purchase units in a

mutual fund.



ULIPs are essentially competitors to investment in mutual funds, although with a small life

insurance component thrown in. Because of this life insurance component, the policyholders

may enjoy some additional tax benefits on their premium payments and maturity benefits

through ULIPs. ULIPs offer a lot more flexibility to the policy holder in premiums, sum

assured and investment choice amongst various styles of unit funds- equity, balanced, incomefunds etc. In return, the policyholder bears most of the investment risks.

ULIPS offered

(a) Regular Premium: Regular premiums give the insurers an income stream in return for

covering the risk. Bajaj Allianz offers iGainIII, Life assurance plan, Max Advantage

Insurance plan, Money secure insecure plan, assured protection insurance plan, Smart

insurance plan III.

(b) Single Premium: An insurance plan in which a lump sum of cash is paid up front to

guarantee payment to beneficiaries. Bajaj Allianz offers Wealth Insurance, Shield

insurance, Flexi Advantage insurance plan.

Need

Information is the keyword for financial markets. Investors with better information and

forecasting ability will have an edge in the market place and get an enhanced return on their

investments. The need for equity research is of utmost importance for today’s buoyant

financial markets.

Significance

1) Enhanced visibility: Positions the company to make right investments and proper

decision making in a buoyant environment.

2) Ease management’s bandwidth: Since investment is a multi-pronged diverse business the

fundamental analysis and research would help the management to make more diverse

decisions in the infrastructure sector. This will create more healthy investments with

better returns and in turn will ease the access to liquidity thus improving the liquidity

position.

Objectives

1) To study the equity research process: This is a significant part of investment strategy

of Investment department at Bajaj Allianz Life Insurance.

2) To study the process of investing in mid cap infrastructure companies operating

particularly in EPC Engineering-Procurement-Construction) and PPP (Public Private

Partnership) mode. The aim is to get an idea of the business model and list down all

parameters that are relevant for financial fore-casting and judging the quality of

business and management.

Scope



Mid Cap Infrastructure companies operating in EPC (Engineering-Procurement-

Construction), PPP (Public Private Partnership) mode like construction of highways, roads

and infrastructure related to public utilities.

Methodology

Equity research reports, corporate filings, market perceptions, Government regulation -

understand the issues that will affect valuations, Company’s position in the industry

(Technology, brand, size, efficiency, management, location).

Academic Scope

Management Techniques and methodologies

Fundamentals of Business Finance, Analysis and Investment like Financial Decisions, Capital

Structure, Cash and Credit Management, Valuation (Discount cash Flow Valuation Model,

Dividend Discount Models, Gordon Growth Model, Gordon Growth Model, Sum of partsvaluation). Company Analysis (Capital Asset Pricing Model (CAPM), Financial Statement

Analysis).

Economic Analysis (Inter-relationship between Stock Markets and Macro economy, Index

and Indicators, Interest Rates, Fiscal and Monitory Policy).

Industry Analysis (Porter’s Five Force Analysis and Generic Strategies, Tools and Policies in

Industrial Analysis, Competitive Business Strategies, Industrial Forces) .

Functional AreasFinancial management basics.

Marketing management basics.

Work Plan

Week 1 to Week 4

Module 1

Introduction to Insurance sector with particular reference to ULIPS.

Functioning of stock markets.

Infrastructure companies in India.

Role of Infrastructure companies in national development e.g. Railways, Roads, Ports,

Airports, Electricity, Urban infra (metro, Buildings), Water & Waste.

Role of equity research in investment.

Analyzing different models PPP, BOT, BOOT, BOM, and cash contracts.



Understand macro economic factors affecting the sector.

Understand Government regulations affecting the sector and its implications.

Understand financial model, annual report analysis, ratio analysis, forecasting of profit &

loss, valuation of projects.

Understanding cash flow analysis, DCF analysis and SOTP analysis for the assigned

companies.

Week 4 to Week 8

Module 2

Analyzing four mid cap infrastructure companies by making financial models, attending

conference calls, tracking day to day development of these companies in media.

Do proper segment analysis (Buildings, Bridges, Roads, Water/Sewage, Railways, and

Power).

Understand business policies of the companies and their managements.

Understanding portfolio requirements like risk return objective, constraints like liquidity,

regulatory, Time Horizon.

Prepare detailed reports related to investments for the assigned companies which will cover

Industry Analysis, Company Background, Company’s Analysis, Investment Rationale, and

Financial Modelling for all the companies.

Recommending the preferred stock to the company.

Training Guide: Mr. Sourabh Arya (Equity Analyst, Investments, Bajaj Allianz)

Comments: I am fine with the proposal presented by Rohan.

Approved.

Sourabh Arya

Faculty Guide: Mr. Rakesh Shrivastava (Professor, Goa Institute of Management)

Comments:

Rohan Harsh 2012173 Proposal Summer Internship Bajaj Allianz

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