DECLARATION

I the undersigned here by declare that the project entitled

PORTFOLIO ANALYSIS &MANAGEMENT is my original work based
On my own findings during practical training done in BIRLA SUN LIFE
& INSURANCE.
I further declare that to the best of my knowledge the project
report has not been submitted in any degree or diploma in Vikram University.

If the declaration found false at any stage I shall be held

responsible for it that case I shall abide by the Universitys rules and
regulations.

Date :
Place :
Signature of the
Student
Name
Class
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ACKOWLEDGEMENT
It is my great pleasure and privilege to acknowledge the valuable guidance and
support; I received in the preparation of this project report.
I wish to express my sincere gratitude and thankfulness to Mr.VIJAY SINGH,
Branch Manager, Birla Sun Life Insurance Company Ltd. Who obliged me a
chance to complete my training at this esteemed Organization.
I am extremely thankful to the officers and staff of Birla Sun Life Insurance
Company Ltd. For their Kind Cooperation and immense help, without their support
and valuable guidance my project would have never seen the light of the day.
This note of thanks would be incomplete if I do not thank my co-trainees with
whom I have worked in groups during the project and advisors of Birla Sunlife
Insurance with whom I have worked during last stage of the project & has learned
valuable things from them and Academic Development Cell (ADC) & faculty
members, who always encourage us to do challenging tasks.
I am deeply indebted to my parents and friends for providing me all necessary help
in completing my project.

INDEX
SR.
NO
1.
2.

DESCRIPTION
ABOUT BIRLA SUNLIFE INSURANCE
INTRODUCTION TO INDIAN INSURANCE
INDUSTRY

PAGE
NO.
4-5
6-15

HISTORY
PLAYERS IN THE INDIAN INSURANCE SECTOR
ROLE OF IRDA
TYPE OF INSURANCE POLICIES
INTRODUCTION TO ULIPS

3.
4.
5.

EXECUTIVE SUMMARY
RESEARCH METHODOLOGY
PORTFOLIO ANALYSIS & MANAGEMENT

16
17-19

WHAT IS PORTFOLIO MANAGEMENT

MAGNIFIER FUND
MAXIMISER FUND

SECURITY ANALYSIS

24-27

COMPETITOR ANALYSIS (ULIPs

COMPARISION)

28-39

6.
7.

INTRODUCTION TO BSIL CLASSIC LIFE PLAN

COMPARISION WITH COMPETITION
INTRODUCTION TO BSIL PLATINUM ADVANTAGE
PLAN
COMPARISION WITH COMPETITION

8.

ULIPs Vs MUTUAL FUNDS

40-41

INTRODUCTION TO BSIL FORESIGHT PLAN

RETURNS COMPARISION OF FORESIGHT Vs.
MUTUAL FUND

9.

SUMMARY & CONCLUSIONS

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42-43

10.
11.

RECOMMENDATIONS
REFERENCES & BIBILOGRAPHY

44-45
46

ABOUT BIRLA SUNLIFE INSURANCE

Established in 2000, Birla Sun Life Insurance Company Limited (BSLI) is a

joint venture between the Aditya Birla Group, A US $30 billion corporation,
anchored by an extraordinary force of 130,000 employees, belonging
to 40 different nationalities operating in 27 countries across six continents and
Sun Life Financial Inc, leading international financial services organization
from Canada.
The local knowledge of the Aditya Birla Group combined with the domain
expertise of Sun Life Financial Inc., offers a formidable protection for its
customers' future. With an experience of over 10 years, BSLI has contributed
significantly to the growth and development of the life insurance industry in
India and currently ranks amongst the top 6 private life insurance companies in
the country.
Known for its innovation and creating industry benchmarks, BSLI has several
firsts to its credit. It was the first Indian Insurance Company to introduce "Free
Look Period" and the same was made mandatory by IRDA for all other life
insurance companies. Additionally, BSLI pioneered the launch of Unit Linked
Life Insurance plans amongst the private players in India. To establish
credibility and further transparency, BSLI also enjoys the prestige to be the
originator of practice to disclose portfolio on monthly basis. BSLI offer the
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complete bouquet of insurance products viz. pure term plan, life stage products,
health plan, retirement plan & Unit Linked Insurance Plans (ULIPs) etc.
Add to this, the extensive reach through its network of 600 branches and 1,
47,900 empanelled advisors. This impressive combination of domain expertise,
product range, reach and ears on ground, helped BSLI cover more than 2.4
million lives since it commenced operations and establish a customer base
spread across more than 1500 towns and cities in India. BSLI has ensured that it
has lowest outstanding claims ratio of 0.00% for FY 2010-11.. Such services are
well supported by sound financials that the Company has. The AUM of BSLI
stood at 19725 crs as on April 30, 2011, while the company has a robust capital
base of Rs. 2450 crs.

INTRODUCTION TO INDIAN INSURANCE

INDUSTRY
~

HISTORY
Insurance in India has its history dating back till 1818, when Oriental Life
Insurance Company was started by Europeans in Kolkata to cater to the needs
of European community. Pre-independent era in India saw discrimination
among the life of foreigners and Indians with higher premiums being charged
for the latter. It was only in the year 1870, Bombay Mutual Life Assurance
Society, the first Indian insurance company covered Indian lives at normal rates.
At the dawn of the twentieth century, insurance companies started
mushrooming up. In the year 1912, the Life Insurance Companies Act, and the
Provident Fund Act were passed to regulate the insurance business. The Life
Insurance Companies Act, 1912 made it necessary that the premium rate tables
and periodical valuations of companies should be certified by an actuary.
However, discrimination still existed between Indian and foreign companies.
The oldest existing insurance company in India is National Insurance Company
Ltd, which was founded in 1906 and is doing business even today. The
Insurance industry earlier consisted of only two state insurers: Life Insurers
i.e. Life Insurance Corporation of India and General Insurers i.e. General
Insurance Corporation of India.
This millennium has seen insurance come a full circle in a journey extending to
nearly 200 years. The process of re-opening of the sector had begun in the early
1990s and the last decade and more has seen it been opened up substantially. In
1993, the Government set up a committee under the chairmanship of RN
Malhotra, former Governor of RBI, to propose recommendations for reforms in
the insurance sector. The objective was to complement the reforms initiated in
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the financial sector. They stated that foreign companies be allowed to enter by
floating Indian companies, preferably a joint venture with Indian partners.
Following the recommendations of the Malhotra Committee report, in 1999, the
Insurance Regulatory and Development Authority (IRDA) was constituted as an
autonomous body to regulate and develop the insurance industry. The IRDA
was incorporated as a statutory body in April, 2000. The key objectives of the
IRDA include promotion of competition so as to enhance customer satisfaction
through increased consumer choice and lower premiums, while ensuring the
financial security of the insurance market.
The IRDA opened up the market in August 2000 with the invitation for
application for registrations. Foreign companies were allowed ownership of up
to 26%. The Authority has the power to frame regulations under Section 114A
of the Insurance Act, 1938 and has from 2000 onwards framed various
regulations ranging from registration of companies for carrying on insurance
business to protection of policyholders interests. In December, 2000, the
subsidiaries of the General Insurance Corporation of India were restructured as
independent companies and at the same time GIC was converted into a national
re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in
July, 2002.
The insurance sector is a colossal one and is growing at a speedy rate of 1520%. Together with banking services, insurance services add about 7% to the
countrys GDP. A well-developed and evolved insurance sector is a boon for
economic development as it provides long- term funds for infrastructure
development at the same time strengthening the risk taking ability of the
country.
~

PLAYERS IN THE INDIAN INSURANCE SECTOR

Today there are 24 general insurance companies including the ECGC and
Agriculture Insurance Corporation of India and 23 life insurance companies
operating in the country.
1. Bajaj Allianz Life Insurance Company Limited
2. Birla Sun Life Insurance Co. Ltd
3. HDFC Standard Life Insurance Co. Ltd
4. ICICI Prudential Life Insurance Co. Ltd
5. ING Vysya Life Insurance Company Ltd.
6. Life Insurance Corporation of India
7. Max New York Life Insurance Co. Ltd
8. Met Life India Insurance Company Ltd.
9. Kotak Mahindra Old Mutual Life Insurance Limited
10.SBI Life Insurance Co. Ltd
11.Tata AIG Life Insurance Company Limited
12.Reliance Life Insurance Company Limited.
13.Aviva Life Insurance Company India Limited

ROLE OF IRDA
The Insurance Regulatory and Development Authority Act of 1999 brought
about several crucial policy changes in the insurance sector of India. It led to

the formation of the Insurance Regulatory and Development Authority (IRDA)

in 2000.
The goals of the IRDA are to safeguard the interests of insurance policyholders,
as well as to initiate different policy measures to help sustain growth in the
Indian insurance sector.
IRDA has notified Protection of Policyholders Interest Regulations 2001 to
provide for: policy proposal documents in easily understandable language;
claims procedure in both life and non-life; setting up of grievance redressal
machinery; speedy settlement of claims; and policyholders' servicing. The
Regulation also provides for payment of interest by insurers for the delay in
settlement of claim.
The insurers are required to maintain solvency margins so that they are in a
position to meet their obligations towards policyholders with regard to payment
of claims. It is obligatory on the part of the insurance companies to disclose
clearly the benefits, terms and conditions under the policy. The advertisements
issued by the insurers should not mislead the insuring public. All insurers are
required to set up proper grievance redress machinery in their head office and at
their other offices. The Authority takes up with the insurers any complaint
received from the policyholders in connection with services provided by them
under the insurance contract.

TYPES OF INSURANCE POLICIES

Taking out a life insurance policy covers the risk of dying early, by providing
for your family in the event of your death. It also manages the risk of retirement
providing an income for you in non-earning years. Choosing the right policy
type with the coverage that is right for you therefore becomes critical.
There are a variety of policies available in the market, ranging from Term
Endowment and Whole Life Insurance, to Money Back Policies, ULIPs, and
Pension plans. Let's see what each of these is about, so that you can consider
the one that best suits you.

Term Insurance
Term Insurance, as the name implies, is for a specific period, and has the lowest
possible premium among all insurance plans. You can select the length of the
term for which you would like coverage, up to 35 years.
Payments are fixed and do not increase during your term period. In case of an
untimely death, your dependents will receive the benefit amount specified in the
term life insurance agreement. You can customize Term life insurance with the
addition of riders, such as Child, Waiver of Premium, or Accidental Death.
Endowment Insurance
Endowment Insurance is ideal if you have a short career path, and hope to enjoy
the benefits of the plan (the original sum and the accumulated bonus) in your
life time.
Endowment plans are especially useful when you retire; by buying an annuity
policy with the sum received, it generates a monthly pension for the rest of your
life.

Whole Life Insurance

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10

Whole Life Policies have no fixed end date for the policy; only the death
benefit exists and is paid to the named beneficiary. The policy holder is not
entitled to any money during his or her own lifetime, i.e., there is no survival
benefit. This plan is ideal in the case of leaving behind an estate.
Primary advantages of Whole Life Insurance are guaranteed death benefits,
guaranteed cash values, and fixed and known annual premiums.

Money-Back Plan
In a Money-Back plan, you regularly receive a percentage of the sum assured
during the lifetime of the policy. Money-Back plans are ideal for those who are
looking for a product that provides both - insurance cover and savings.
It creates a long-term savings opportunity with a reasonable rate of return,
especially since the payout is considered exempt from tax except under
specified situations.

ULIP
Unit-linked Insurance Plans (ULIPs), introduced by the private players, are
hugely popular, because they combine the benefits of life insurance policies
with mutual funds. A certain part of the premium is invested in listed
equities/debt funds/bonds, and the balance is used to provide for life insurance
and fund management expenses.

Pension Plan

11

Insurance companies offer two kinds of pension plans - endowment and unit
linked. Endowment plans invest in fixed income products, so the rates of return
are very low.
Unit-linked plans are more flexible. You can stop contributing after 10 years
and the fund will keep compounding your corpus till the vesting date. You can
opt for higher exposure in the stock market for your plan if your risk appetite
allows it. Lower risk options like balanced funds are also offered.

Riders: Comprehensive coverage

In addition to the insurance plan of your choice, you might want to consider
additional risk covers, in which case you can you can opt for riders: additional
benefits that can be purchased with an insurance policy.
Examples of riders include the Term rider, the Accidental Death Benefit rider,
and the Critical Illness rider. Choosing the right set of riders ensures a
comprehensive insurance cover.

INTRODUCTION TO ULIPS (UNIT LINKED INSURANCE

PLANS)

12

The introduction of Unit Linked Insurance Plans has possibly been the single
largest innovation in the field of life insurance .It has addressed and overcome
many difficulties and concerns that customers had about life insurance
liquidity, flexibility, and transparency. These benefits are possible because
ULIPs are differently structured products and leave many choices to the
policyholder. They are structured such that the protection (insurance) element
and the savings element (investment) can be distinguish and hence managed
according to ones specific needs, offering flexibility and transparency. Thus we
can say it is such a product that takes care of multiple needs. ULIPs are also
called as Bundled Policies.
There were some factors which gave entry for ULIPs in the insurance market: Firstly was the arrival of private of private players, and ULIPs were the most
significant innovation done by them, and secondly was the decline of assured
returns in endowment plans. Early the market of ULIPs was taken up Birla Sun
Life as they were the first to introduce such product in the market. These are the
insurance plans which are attached to Units. The premium amount received in
this policy, some part is used in investment of funds and remaining is used for
insurance cover.
ULIPs are remarkably similar to, mutual fund in terms of structure and
functioning: premium payments are converted into units and net asset value
(NAV) is declared regularly. Investors have an option of choosing their fund
according to their risk taking ability. They disclose all the material facts most
frequent and consistent (often quarterly or half-yearly) .Also investor has a
fairly good idea about expenses. The expenses which are considered are as
follows:-

13

1) Mortality Rate: - These are charged by the life insurance company to cover
the risk of an eventuality to the individual.
2) Administration, sales/marketing Charges: - All life insurance companies
incur certain expenses on regular basis. Agents commission, sales &
marketing expenses and overhead costs incurred to run the day to day basis
are some examples.
3) Fund Management Charges: - These charges are levied by the insurance
company to cover the expenses incurred by them on managing Ulip monies.
4) Ulip-fund Switch Charges: - These charges are borne by the individuals
when they decide to switch their, money from one type of fund to another.
5) Top-up Charges: A certain percentage is deducted from the top-up amount to
recover the expenses incurred on managing the same.

ULIPs are very different from the traditional policies because they are based on
some fundamentals of Mutual funds as different types of funds which are
created wherein the premiums which are received on the policy these are
invested in these funds basically these funds are of following types:a) Equity (Aggressive/Growth) Funds:-Such funds invest a major portion in
equity markets. They are therefore considered to be high on risk parameter.
b) Debt Funds: - These types of funds invest the premium money in debt
instruments like g-secs, bonds and AAA rated securities. Such funds are low
risk in nature.
c) Balanced Funds: - This fund is combination of growth & debt fund. This
means its portfolio consists of both equities and debt instruments. The risk
for this fund is moderate.

14

d) Money Market/Liquid Funds:- Such a fund invests the premium money

in short term liquid instruments like bank deposits and money market
instruments.

The features of ULIPs are as follows:a) Flexibility: - Flexibility in choosing your own funds how you would like
to invest your own money.
b) Transparency: - It discloses all your material facts, i.e. you know where
your money is been invested.
c) Liquidity: - Here you can withdraw certain amount from your Units which
have been collected.
d) Tax Benefits: - tax benefits are available under Section 80C subject to a
maximum limit of Rs 100,000.
The other features of ULIPs are like, life protection which can be adjustable,
many investment options, benefits like disability, critical illness, surgeries,
and also financial planning etc.

2 EXECUTIVE SUMMARY
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15

The project on Portfolio Management and analysis was carried out with BSLI. The
objective of this project was to primarily understand the various funds of Birla
Sunlife & analyzing the performance of various scrip involved in the portfolio & to
suggest whether the company is missing out on any performing company as an
investment option. The project also helped us in understanding the past
performance of the companies & the impact companies had during recession. After
going through the balance sheet we also tried to analyze whether the company is
able to survive any recession in near future & what will be the impact on them.
In the second part of the project dealt with ULIP comparison of various players.
For this product brochures of different life insurance companies were referred.
Also the company website was used to find out the performance of the various
funds. Fund comparison was done to find out why a particular fund has performed
better than the other.. In this part we also compared highest NAV products of major
competitors & tried to analyze the NAV pattern of all the mutual funds as well as
insurance funds. Highest NAV products performance was evaluated as compared to
mutual funds. IRR calculation & analysis of each product based on IRR was done.
In the third part of the project we analyzed the different investment options
available and to compare them with the mutual fund investments. For the purpose
of analyzing the investment pattern and selecting effective and beneficial schemes
of mutual funds different available schemes were thoroughly analyze & insurance
can be used as an investment option was prove

3 RESEARCH METHODOLOGY
4.1 Research Brief:
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16

The first stage involved initial discussion between the various team members and
the company in order to identify the research objectives (Rationale of the research),
which is the most difficult step in the research process.

4.2 Research Design:

Research design is the arrangement of condition for collection and analysis of data
in a manner that aims to combine relevance to the research purpose with the
economy in procedure. It is the blueprints for collection, measurement and analysis
of data.

4.2.1 Type of Research: Analytical Research

Under the analytical research, the researcher has to use facts or information already
available and analyze the facts and information to make a critical evaluation of the
material. The research is designed to study the performance of insurance
companies in the post-liberalization era.
Under this type the researcher has to use the facts and information already
available and analyze them to make evaluation of the market. In analytical research
the researcher has to use the facts already available, and analyse these to make the
critical evaluation data of the material.

The methodology followed for research is as following:

1. Survey of concerned literature
2. Collecting data:
Quantitative
Qualitative
~

17

3. After the collection of data the raw data is processed through editing, loading,
classification and tabulation to make analysis of the data of information
After the analysis the finding are drawn and recommendations/conclusion are
made.
The research design which help to answer the following questions:
Why the study is being made?
From where the data needed can be collected?

4.2.2 Data Collection:

1. Primary Data:
These include the survey or questionnaire method, telephonic interview as well as
the personal interview methods of data collection
2. Secondary Data:
The secondary data as it has always been important for the completion of any
report provides a reliable, suitable, adequate and specific knowledge.
Secondary data is a data, which is collected from various sources. Secondary data
is not a fresh data so it has its own limitations like: Time Constraints, Accuracy and
Applicability.
The sample size for measuring the performance for life insurance companies is as
follows:
This study is based on analysis the performance of different life insurance
company in India, LIC is the major player in the market, there are 23 other life
insurance companies operating in the country. Thus the size of the universe is 24.
~

18

Out of these 16 companies, 4 companies are selected; in these one is Public

Company and other Three are Private Companies:

Birla Sunlife insurance

Life Insurance Corporation of India
Bajaj Allianz life insurance
ING Vysya life insurance

Analysis pattern
After the data is collected and editing, the next job of the researcher is to present it
systematically. The collected data is so large, complex and unarranged that it cant
be processed without arranging it according to same characteristics.
The following statistical and analytical tools have been used:
Graph:

Various plans offered by the companies.

Net Asset Value of Companies major Plans.
Market Share of the companies.
Data has been collected from the Fact sheet of the various insurance funds &
mutual fund schemes & used those data s for the research. In fact sheet past
returns were given of different funds.

PORTFOLIO ANALYSIS & MANAGEMENT

What is Portfolio Management?
An investor considering in securities is faced with the problem of choosing
from among a large number of securities. His choice depends upon the risk
return characteristics of individual securities. He would attempt to choose the
most desirable securities and like to allocate his funds over this group of
~

19

securities. Again he is faced with problem of deciding which securities to hold

and how much to invest in each. The investor faces an infinite number of
possible portfolios or groups of securities. The risk and return characteristics of
portfolios differ from those of individual securities combining to form a
portfolio.
The investor tries to choose the optimal portfolio taking into consideration the
risk return characteristics of all possible portfolios
The first phase of the project involved analyzing the existing fund portfolios
underlying different insurance products offered by Birla Sun life Insurance.
The analysis involved analyzing the performance of the funds (portfolios)
considering parameters such as asset size, asset allocation, returns generated
over specific time periods w.r.t. Benchmark Index etc.

Phases of Portfolio Management

1. Security Analysis
2. Portfolio Analysis
3. Portfolio Selection
4. Portfolio Revision
5. Portfolio Evaluation

1. Security Analysis
(a) Fundamental analysis: This analysis concentrates on the fundamental
factors affecting the company such as EPS (Earning per share) of the company,
the dividend payout ratio, competition faced by the company, market share,
quality of management etc.
(b) Technical analysis: The past movement in the prices of shares is studied to
identify trends and patterns and then tries to predict the future price movement.
Current market price is compared with the future predicted price to determine
~

20

the mispricing. Technical analysis concentrates on price movements and ignores

the fundamentals of the shares.
(c) Efficient market hypothesis: This is comparatively more recent approach.
This approach holds that market prices instantaneously and fully reflect all
relevant available information. It means that the market prices will always be
equal to the intrinsic value.

2. Portfolio Analysis
A portfolio is a group of securities held together as investment. It is an attempt
to spread the risk all over. The return & risk of each portfolio has to be
calculated mathematically and expressed quantitatively. Portfolio analysis phase
of portfolio management consists of identifying the range of possible portfolios
that can be constituted from a given set of securities and calculating their risk
for further analysis.

3. Portfolio Selection
The goal of portfolio construction is to generate a portfolio that provides the
highest returns at a given level of risk. Harry Markowitzh portfolio theory
provides both the conceptual framework and the analytical tools for
determining the optimal portfolio in a disciplined and objective way.

4. Portfolio Revision
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21

The investor/portfolio manager has to constantly monitor the portfolio to ensure

that it continues to be optimal. As the economy and financial markets are highly
volatile dynamic changes take place almost daily. As time passes securities
which were once attractive may cease to be so. New securities with anticipation
of high returns and low risk may emerge.

5. Portfolio Evaluation
Portfolio evaluation is the process, which is concerned with assessing the
performance of the portfolio over a selected period of time in terms of return &
risk. The evaluation provides the necessary feedback for better designing of
portfolio the next time around.

6. Measurement of risk
Risk refers to the possibility that the actual outcome of an investment will differ
from the expected outcome. In other words we can say that risk refers to
variability or dispersion. Whenever we calculate the mean returns of an
investment we also need to calculate the variability in the returns.
The first phase of the project involved analyzing the existing fund portfolios
underlying different insurance products offered by Birla Sun life Insurance. The
analysis involved analyzing the performance of the funds (portfolios)
considering parameters such as asset size, asset allocation, returns generated
over specific time periods w.r.t. Benchmark Index etc.

Analysis:
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22

 The Maximiser fund is similar to Magnifier fund in that it is also

predominantly equity oriented fund & has more than 85% exposure into
equity.
It is an old fund compared to Magnifier & has higher assets under
management (AUM) which is positive because it gives it more ability to take
risks & has more holding capacity & it can also diversify more.
The fund has outperformed its benchmark in recent years but looking at
higher 2 years returns & low returns since inception indicates that during the
recession of 2008, it has underperformed by a wider margin but has
recovered quickly in the past 2 years.
Its CAGR return since launch is lower than Magnifier & but has given
higher returns compared to Magnifier in the past two years indicating that
the fund is more volatile compared to Magnifier.

SECURITY ANALYSIS
After analyzing the fund portfolios 2 sectors & scrip in that sector which was
(or could be) the part of the existing portfolios were analyzed in details to
review the performance of the sector & scrip over past 3 years.
The basic concept of analyzing the company & understanding was to get these
following details:
What factors affected the company which resulted in increase or decrease in

its stock price?

Which sectors were impacted during recession?
In which companies we should increase the exposure & why?
Performance of the company & growth of stock price in three years
Find the recovery period of companies after recession
Finding the stock fluctuation in past three years
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23

 Balance sheet analysis of the company

Which companies can survive another recession if double dip occurs in near
future

The following data was collected & analyzed in detail.

The everyday Open, High, Low & Close price, Volume traded of the
scrip from 1st April 2008 to 31st March 2011 recorded on the stock
exchanges was collected.
The Weekly, Fortnightly, Monthly, Quarterly, Semi-Annually, Annually
averages were then calculated in the excel sheet.
The data was also plotted on a line graph to analyze the trend in the stock
over the three year period
The All-time High & All-time low of the stock over a three year period
was found out & probable reasons behind the same were explored.
Also any significant rise or downfall in the stock was found & probable
reasons were explored.
Every Pyramid (Rise & subsequent fall) & Inverted Pyramid (fall &
subsequent rise) pattern on the plotted graph were highlighted & also
analyzed.
Also the recovery period of the stock in days was calculated i.e. the time
stock took to recover the global recession of 2008.
The detailed Balance Sheet analysis of the stock was carried out to judge
whether the company under analysis will be able to recover another
recession in the future if it were to happen.
L&T has diversified business portfolio and it operates through its different
operating divisions
which include:
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24

Engineering & Construction Projects

EPC Power
Heavy Engineering
Engineering, Construction & Contracts
Electrical & Electronics
Machinery & Industrial Products
IT and Integrated Engineering Services
Financial Services

L&T, one of the Indias largest Engineering Companies, was incorporated in

February 1946. It was converted into a public limited company in 1950. L&T,
along with its group companies, provides integrated design, engineering,
procurement, construction and project management services to various sectors. The
company is present in multiple operating segments such as Engineering &
Construction (E&C), Electrical & Electronics (E&E), Machinery & Industrial
Products (MIP) and others. It has exposure to infrastructure BOT projects in roads,
ports and real estate. Through its subsidiaries like L&T Finance,
L&T Infrastructure Finance and L&T Infotech, L&T has also diversified into
financial services and the IT/ITeS sector.
The E&C division of L&T undertakes engineering
design and construction of buildings, factories, infrastructure, industrial and power
transmission & distribution, while the E&E segment is engaged in manufacturing
of electrical standard products, systems and equipment.
The MIP division of L&T is focused on manufacturing
industrial valves, construction and hydraulic equipment, machinery for mining,
paper and rubber processing industry.

25

L&T is regarded as the preeminent infrastructure major

often referred to as the builder of the India of the 21st century. Its
achievements across sectors include:
Hydrocarbon projects executed in India, the Middle East and South East

Asia
Power projects executed in India, the Gulf and Sri Lanka.
The worlds largest coal gasifier made in India and exported to China
The worlds biggest EO Reactor for a petrochemical complex in the Gulf
The worlds largest FCC (Fluid Catalytic Cracker) Regenerator for a refinery
Asias highest viaduct
Infrastructure projects in Jordan, U.A.E. and South East Asia
The worlds longest limestone conveyor
Indias widest range of switchgear
A wide range of construction and mining equipment

26

COMPETITORS ANALYSIS (ULIPs

COMPARISION):
This phase of the project involved comparing one of the most successful ULIP
product under BSLI i.e. BSLI Classic Life Plan stable with the existing similar
products of competitors in the marketplace.
After identifying the similar product of competitors & collection of relevant
data, the detail comparison was carried considering all the parameters
mentioned above. The competitors selected for the study included LIC, Baja
Allianz & ING Vysya.

INTRODUCTION TO BSLI CLASSIC WHOLE LIFE PLAN

While one works hard towards achieving ambitions, one also wishes to save for
a comfortable retirement. And want a plan that gives you the flexibility to
manage your savings. The BSLI Classic Life Plan gives complete control over
the investments by directing premiums to range of 10 Investment Funds along
with a range of rider options to give the security of financial protection.
This plan offers:
Flexibility of directing your savings in 10 Investment Funds, as per risk
appetite
Choice of Pay Term
Whole life cover
Enhanced financial security for loved ones
How BSLI Classic Life Plan works?
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27

 Select the Savings Date that suits your retirement goals.

Select the Basic Premium you want to pay every year.
Receive Basic Sum Assured which is the minimum death benefit payable on
the demise of the life insured.
Select the number of years you want to pay your premiums, and select your
Pay Term from option of 5-Pay / 10-Pay / 15-Pay / 20-Pay / To Savings
Date.
It also has the option to choose Enhanced Sum Assured to increase the
financial security for loved ones. This increases life cover over and above
the Basic Sum Assured at a nominal cost.
It also has the option to choose from our range of riders and customize the
security of your family's financial future.

Plan Summary:
Policy Term

Whole life

Entry Age

18 to 45 years 18 to 50 years 18 to 55 years 18 to 60 years

Savings Date

To age 55

Basic Premium

Minimum Rs. 25,000 p.a. if paid annually

Minimum Rs. 30,000 p.a. if paid monthly, quarterly or
semi-annually

Pay Term

Short pay 5, 10, 15, 20

years

Premium Payment
Frequency

Monthly, Quarterly, Semi-annually or Annually

Top-up Premium

Minimum Rs. 5,000

Enhanced Sum Assured

Minimum Rs. 50,000, subject to maximum of 30 years

to Savings Date

To age 60

To age 65

To Savings Date

COMPARISION WITH COMPETITION

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28

To age 70

INSURER
ULIP
Entry Age
Term
Premium Pay Term
Maturity Age
Mode

Basic Sum Assured

Guaranteed Additions

Death Cover

BIRLA SUN LIFE

CLASSIC LIFE PLAN
18 - 60 Years
Whole Life
5pay, 10pay, 15pay,To
savings date
70 Years
Yearly, Half-Yearly,
Quarterly, Monthly

LIC
ENDOWMENT PLUS
7-60 Years
10 to 20 Years
5 pay,to Policy term

18 Years(Min),70 Years(Max)
Yearly, Half-Yearly, Quarterly,
Monthly
Minimum Sum Assured:
Basic Premium multiplied
(Policy Term +1) times the
by: The higher of 10 or the
annualized premium
number of years to attain
Maximum Sum Assured:
age 70 divided by 2, for
30 times of the annualized
entry ages below 45; or The
premium if age at entry is upto
higher of 7 or the number of
45 years
years to attain age 70
25 times of the annualized
divided by 4, for entry ages
premium if age at entry is 46 to
45 and above
60 years
On 10 policy anniversary
and on every 5 policy
anniversary thereafter.
Guaranteed Addition is
A guaranteed minimum interest
2.50% of the Basic
rate of 3.5% p.a. shall be
Premiums paid in the last 60
credited to the Discontinued
months. In addition on 11
Policy Fund constituted by the
policy anniversary and
fund value of all discontinued
every policy anniversary
policies.
thereafter. Guaranteed
Addition is 0.25% of the
average Fund Value in the
last 12 months
Greater of (a) the Fund
Higher of Sum Assured and the
Value as on date of
Policyholders Fund Value shall
intimation of death or (b)
be available as death benefit.
the Basic Sum Assured

29

Extended Cover

Riders

Fund Type
Allocation Charges
(1st Year)
Allocation Charges
(2nd Year)
Allocation Charges
(3rd Year and
onwards)
Allocation Charges (on
any top up premium)
Fund Management
Charges

Enhanced Sum Assured

(min Rs 50000)-premium
calculated accordingly, Top
up premiums (min Rs
5000)-Basic Sum Assured
will be automatically
increased by the top-up
premium being paid
multiplied by:125% if the
attained age of the life
insured is less than 45
years; or 110% if the
attained age of the life
insured is 45 years or more
Axis
BSLI Accidental Death and
Disability Rider
BSLI Critical Illness Rider
BSLI Surgical Care Rider
BSLI Hospital Care Rider
BSLI Waiver of Premium
Rider

NO

Axis
Accident Benefit Option
Critical Illness Benefit Rider:

10 funds attached

4 funds attached

7.5% of Basic Premium

7.5% of Basic Premium

6.5% of Basic Premium

5% of Basic Premium

5.0% of Basic Premium

3% of Basic Premium

2% of Top Up Premium
paid

NA

1.00% p.a. for Income

Advantage, Assure,
Protector and Builder

0.50% p.a. of Unit Fund for

Bond Fund

1.25% p.a. for Enhancer and 0.60% p.a. of Unit Fund for
Creator
Secured Fund
~

30

1.35% p.a. for Magnifier,

Maximiser, Multiplier and
Super 20

0.70% p.a. of Unit Fund for

Balanced Fund
0.80% p.a. of Unit Fund for
Growth Fund

Policy Admin Charge

INSURER
ULIP
Entry Age
Term
Premium Pay Term
Maturity Age
Mode

Basic Sum Assured

Rs. 20 per month for the

first five policy years.

Rs. 30/- per month during the

first policy year.

Rs. 25 per month in the

sixth year and inflate at 5%
p.a. thereafter.

Rs 30/- per month escalating at

3% p.a. thereafter, throughout
the term of the policy shall be
levied

BIRLA SUN LIFE

CLASSIC LIFE PLAN
18-60 Years
Whole Life
5 pay, 10 pay, 15 pay, To
savings date
70 Years
Yearly, Half-Yearly,
Quarterly, Monthly
Basic Premium multiplied
by: The higher of 10 or the
number of years to attain
age 70 divided by 2, for
entry ages below 45; or The
higher of 7 or the number of
years to attain age 70
divided by 4, for entry ages
45 and above

31

BAJAJ ALLIANZ
I-GAIN III
18-60 Years
10,15 & 20 years
5 pay-No limit
75 Years
Yearly, Half-Yearly, Quarterly,
Monthly
10 times of Annualized
Premium for entry age below
45 years
7 times of Annualized
Premium for entry age 45 years
& above

Guaranteed Additions

On 10 policy anniversary
and on every 5 policy
anniversary thereafter.
Guaranteed Addition is
2.50% of the Basic
Premiums paid in the last
60 months. In addition on
11 policy anniversary and
every policy anniversary
thereafter. Guaranteed
Addition is 0.25% of the
average Fund Value in the
last 12 months

NA

Death Cover

Greater of (a) the Fund

Value as on date of
intimation of death or (b)
the Basic Sum Assured
reduced for partial
withdrawals

Fund value as on date of

receipt of intimation of death at
the Company's office The
death benefit payable would be
calculated separately for
regular premium and top up
premiums.

Extended Cover

Enhanced Sum Assured

(Min Rs 50000)-premium
calculated accordingly, Top
up premiums (min Rs
5000)-Basic Sum Assured
will be automatically
increased by the top-up
premium being paid
multiplied by:125% if the
attained age of the life
insured is less than 45
years; or 110% if the
attained age of the life
insured is 45 years or more

NA

32

Riders

Fund Type
Allocation Charges
(1st Year)
Allocation Charges
(2nd Year)
Allocation Charges
(3rd Year and
onwards)
Allocation Charges (on
any top up premium)
Fund Management
Charges

Policy Admin Charge

Mortality Charges
Misc. Charges

10 funds attached

Bajaj Allianz UL Family

Income Benefit Rider
Bajaj Allianz UL Term Rider
Bajaj Allianz UL Waiver of
Premium Benefit Rider
Bajaj Allianz UL Critical
Illness Benefit Rider
Bajaj Allianz UL Hospital Cash
Benefit Rider
Bajaj Allianz UL Accidental
Permanent Total / Partial
Disability Benefit Rider
7 fund attached

7.5% of Basic Premium

2 % of Basic Premium

6.5% of Basic Premium

2 % of Basic Premium

5.0% of Basic Premium

2 % of Basic Premium

Axis
BSLI Accidental Death and
Disability Rider
BSLI Critical Illness Rider
BSLI Surgical Care Rider
BSLI Hospital Care Rider
BSLI Waiver of Premium
Rider

2% of Top Up Premium
paid
1.00% p.a. for Income
Advantage, Assure,
Protector and Builder
1.25% p.a. for Enhancer
and Creator
1.35% p.a. for Magnifier,
Maximiser, Multiplier and
Super 20
Rs. 20 per month for the
first five policy years. Rs.
25 per month in the sixth
year and inflate at 5% p.a.
thereafter.
(1.546 to 16.267) per 1000
Rs. 50 per request for
premium re-direction, fund
switch and partial
~

33

2% of Top Up Premium paid

1.35 % for Equity Growth
Fund 2,Accelerator Mid cap
fund 2, Pure stock Fund
1.25 % for Asset allocation &
Blue chip equity fund
0.95 % for Liquid & Bond
fund
Rs. 32 per month inflating at
5% at each policy anniversary.
The charge will be deducted at
each monthly anniversary by
cancellation of units.
1.72 to 7.37 per 1000
The miscellaneous charge of
Rs.100/- per transaction in
respect of change in premium

withdrawal. Rs. 100 per

policy revival.

Partial Withdrawal

Surrender

LOANS

Policy Discontinuance
Charges
In Policy Year 1
In Policy Year 2
In Policy Year 3
In Policy Year 4
In Policy Year 5

Unlimited partial
withdrawals any time after
five complete policy years.
The minimum amount of
partial withdrawal is Rs.
5,000. There is no
maximum limit, but you are
required to maintain a
minimum Fund Value of Rs.
25,000 plus any top-up
premiums
One can surrender your
policy to us after the
completion of five policy
years and receive the Fund
Value at that time.
The minimum loan amount
is Rs. 5,000 and the
maximum loan amount is
40% of the fund value net
of any discontinuance
charges. The interest we
charge on such loans will be
fixed by us from time to
time
For AP of Rs. 25,000 or
more
Lower of 6% of AP, 6% of
FV, Rs. 6,000
Lower of 4% of AP, 4% of
FV, Rs. 5,000
Lower of 3% of AP, 3% of
FV, Rs. 4,000
Lower of 2% of AP, 2% of
FV, Rs. 2,000
Nil
~

34

paying term
All partial withdrawals will be
first made from eligible top up
premium fund value, if any on
First in First out (FIFO) basis.
Once the eligible top up
premium fund value is
exhausted, further partial
withdrawals will be made from
the regular premium fund value
One can surrender your policy
to us after the completion of
six policy years and receive the
Fund Value at that time.

NA

Lower of 6% of AP, 6% of FV,

Rs. 6,000
Lower of 4% of AP, 4% of FV,
Rs. 5,000
Lower of 3% of AP, 3% of FV,
Rs. 4,000
Lower of 2% of AP, 2% of FV,
Rs. 2,000
Nil

Analysis:
The LIC of India has highest net investable premium, Fund value & IRR
followed by Bajaj Allianz & Birla Sunlife due to low overall cost structure
of LIC.
BSLI Classic offers whole life cover unlike LIC endowment plus which only
offers 20 years max policy term.
BSLI offers enhanced cover option which is not available under LIC
endowment plus.
BSLI Classic plan offers a wider choice of funds i.e.10 Funds compared to
LIC Endowment Plus which only offers choice of 4 funds.
BSLI offers 5 rider options unlike LIC Endowment plus which offers only 2
rider options.
LIC Endowment Plus has lower Mortality charges & fund management
charges compared to BSLI classic plan.
The fund value of BSLI @6% is lower than ING Vysya but @10% gross
returns fund value & IRR of BSLI are higher.
BSLI Classic offers whole life cover unlike Bajaj I-Gain III which only
offers 20 years max policy term.
BSLI Classic offers guaranteed additions whereas Bajaj I-Gain III doesnt
offer any such option.
BSLI Classic offers enhanced cover unlike Bajaj I-Gain III which doesnt
offer any extended cover.
BSLI Classic plan offers a wider choice of funds i.e.10 Funds compared to
Bajaj I- Gain III which only offers choice of 7 funds.
Bajaj I -Gain III has lower premium allocation charges & but higher fund
management charges & admin charges compared to BSLI classic plan.
BSLI Classic plan has lower Mortality charges compared to Bajaj I- Gain

35

 BSLI Classic offers whole life cover unlike ING Prospering Life which only
offers 20 years max policy term.
BSLI Classic offers guaranteed additions whereas ING Prospering Life
doesnt offer any such option.
BSLI Classic offers 5 Rider options unlike ING Prospering Life which
doesnt offer any rider options.
BSLI Classic offers enhanced cover unlike ING Prospering Life which
doesnt offer any extended cover.
BSLI Classic plan offers a wider choice of funds i.e.10 Funds compared to
ING Prospering Life which only offers choice of 5 funds.
ING Prospering Life has lower premium allocation charges & mortality
charges but higher fund management charges & admin charges compared to
BSLI classic plan.

Funds Comparison:

The various funds of the schemes & their return performance have been presented
below.
~

36

BIRLA SUN LIFE

Funds

Inception

Maximiser(80-100% EQ)
Creator (30-50% EQ)
Enhancer (20-35% EQ)
Builder (10-20% EQ)
Income Advantage (100% D)
Multiplier (80-100% EQ)
Super 20 (80-100% EQ)
Assure (100% D)
Protector (10% EQ)
Magnifier (50-90% EQ)

Sep 2007
Jun 2004
Jun 2004
Jun 2004
Jul 2009
Nov 2007
Jul 2009
Mar 2008
Jun 2004
Mar 2008

Fund
Returns (Since
Management
Inception)
Charges
1.35%
11.45%
1.25%
14.94%
1.25%
13.03%
1%
10.87%
1%
13.64%
1.35%
5.00%
1.35%
21.28%
1%
9.28%
1%
8.51%
1.35%
17.17%

LIC OF INDIA
Fund
Returns (Since
Inception Management
Inception)
Charges
Jan 2010
0.80%
-2.82%
Jan 2010
0.70%
1.13%
Jan 2010
0.60%
-1.37%
Jan 2010
0.50%
2.52%

Funds
Growth (40-70% EQ)
Balanced (30-70% EQ)
Secured (15-55% EQ)
Bond (100% EQ)

BAJAJ ALLIANZ
Fund
Returns (Since
Inception Management
Inception)
Charges

Funds
Equity Growth Fund II(60% to 100%
EQ)
~

Dec 2010
37

1.35%

-2.91%

Pure Stock Fund(60-100% EQ)

Assest Allocation(60-100% EQ)
Bluechip Equity(60-100% EQ)
Liquid Fund(100% D)
Bond Fund
Accelator Mid Cap Fund

Jul 2006
Oct 2007
Nov 2010
Oct 2010
Oct 2010
Jan 2010
ING VYSYA

Funds

Inception

ING PrimeEquity(100% EQ)

ING Growth Fund(60% EQ)
ING Balanced Fund(40% EQ)
ING Secure Fund(20% EQ)
ING Preserver Fund(100% D)

Jan 2010
Nov 2004
Nov 2004
Nov 2004
Jan 2010

1.35%
1.25%
1.25%
0.95%
0.95%
1.25%

16.62%
7.86%
-12.23%
8.57%
13.85%

Fund
Returns (Since
Management
Inception)
Charges
1.35%
5.07%
1.25%
12.13%
1.25%
10.0%
1%
8.73%
1%
11.91%

Analysis:
Magnifier has given highest returns compared to other funds in its category
followed by Pure Stock fund of Bajaj Allianz.
Most of the funds under BSLI have given good risk adjusted returns over a
long term period.
Most of the competitors funds are recently launched & have not been able
to generate comparable returns.

INTRODUCTION TO BSLI PLATINUM

ADVANTAGE PLAN

This Plan gives the advantage to choose from 2 Investment Options Guaranteed
Option and Self-Managed Option. With the Guaranteed Option investments in the
~

38

Platinum Advantage Fund are safeguarded from any downsides in the capital
markets. And it also offers options to enhance the financial security of loved ones,
at a nominal additional cost. This plan offers a 10-year plan with a 5-year Pay
Term.

How BSLI Platinum Advantage Plan works:

1. Choose the Basic Premium one wants to pay annually for 5 years
2. Choose Investment Option from Self-managed Option or Guaranteed Option
3. Choose the Enhanced Sum Assured to increase the financial protection of
your loved ones
4. Choose from range of riders and safeguard family's financial future

Investment Options:
Self-Managed Option:

The Self-Managed Option gives the complete access to invest premiums in wellestablished suite of 10 Investment Funds, ranging from 100% debt to 100% equity.
One can choose from our range of 10 Investment Funds, to suit ones risk appetite
& can change allocations as per changing requirements

Guaranteed Option:

The Guaranteed Option allows investing your first three annual premiums in
Platinum Advantage Fund. This Fund comes with a guarantee of the highest unit
~

39

price recorded on a daily basis over 7 years. It offers optimal participation in

capital market growth, while safeguarding investments and any gains thereon.

SUMMARY & CONCLUSION

The entire project findings can be summarized as follows :

40

 Capital goods sector & banking sector was hit very badly during recession.
Capital goods Sector stock price decreased by 40% to 50% & Banking
sector decreased by 30 to 40%.
All the banking stocks touched their all-time high during the period of
November 2010
The balance sheet analysis of the L&T stock shows that though the stock
underperformed during recession, fundamentally the stock has the capability
to survive & rebound strongly after recession
The balance sheet analysis of Axis Bank shows that it is one of the best
performing private sector banks in the last five years. Though the stock price
was badly hit during recession due to global meltdown, the performance of
the bank was very commendable. The stock is a good potential investment
from a long term perspective due to its focus on emerging sectors in India.
Only 20% of the stocks of the portfolio of Bajaj Allianz Pure Stock was hit
during recession whereas BSLI maxi miser had 52% stock impacted during
recession
Pure stock is the best performing fund in the fast track fund category
Classic life Plan of BSLI is the best product in the market for whole life
ULIP plans. No other competitors are offering such products. Most of these
kind of product was withdrawn in 2nd half of 2010
Fund Management charges of LIC are very less due to the huge premium
collections with the company.
Mortality charge for higher age individuals is less in BSLI as compared to its
competitors.
In the highest NAV product category BSLIs platinum advantage is the best
product in market both in terms of highest NAV & Fund performance.
The concept Foresight is the best investment option available for the
investors as compared to other insurance plans & mutual funds considering
risk-return trade off.
~

41

 Foresight awards the investor with investment at best possible time &
returns with highest NAV.

RECOMMENDATIONS
BSLI has ten funds in their portfolio for classic life but none of the portfolio
was able to sustain the recession during recession. In order to safeguard the
investors money they should construct a portfolio which is not hit during
recession.
BSLI should balance its portfolio with combination of growth stocks like
Thermax & Yes Bank & balance the portfolio with investments in defensive

42

stocks like HUL, ITC, CIPLA, BASF etc. which are less likely to be affected
by the recession.
BSLI should make a portfolio which has limited exposure in banking &
Capital goods sector due to highly volatile nature of the sector especially
during recession.
Many insurance companies have not picked Bajaj Auto in their portfolio
while the past performance of this stock is unmatchable.
The future of automobile is not showing great signs with uncertainty in the
fuel prices still Bajaj Auto posted a 22% increase in latest quarter.
Telecom sector has underperformed in the past 3 years due to the 2G scam &
furious competition in this sector, but with all the problems sorted out Bharti
Airtel & Idea look as a descent bet in the long run.
Sun Pharma has been a performing well from past 3 years & it will continue
to grow due to the strong demand for healthcare all over the globe.
In the capital goods sector Crompton Greaves look a descent beat in the long
run due to the key merger it has done in the last one year.
IRR of BSLI is least in the whole life product categories. The IRR can be
increased by increasing the guaranteed additions from the tenth year at a
higher percentage of the fund value. This guaranteed addition is already a
USP of BSLI.
Innovative Products like foresight should be marketed appropriately & more
awareness should be created of the potential of the product to provide high
risk-adjusted returns to the investors.

43

REFERENCES & BIBILOGRAPHY

www.birlasunlife.com
www.irdaindia.org
www.moneycontrol.com
www.policybazaar.com
www.inditrade.com
www.valueresearchonline.com
www.indiainfoline.com
www.hdfcmf.com

44

45