A STUDY

CASH FLOW STATEMENT ANALYSIS

WITH REFFERENCE

TO NATIONAL INSURANCE COMPANY

SUBMITED IN PARTIAL FULFILMENT FOR THE REQUIREMENT OF

BACHELOR OF BUSINESS MANAGENT"

BANGALORE UNIVERSITY, FOR THE ACADEMIC YEAR

2012-2013
SUBMITED BY THIMMEGOWDA R G REG NO:10Q8C18011
UNDER GUIDENCE OF

Ms.TAMIZH SELVI.M

SILICON CITY COLLEGE OF MANAGEMENT AND COMMERCE, KUMAR NURSERY, NEW BANK COLONY, OFF TO KANAKAPURA ROAD, KONANAKUNTE, BANGALORE-62

DECLARATION
I THIMMEGOWDA R G, here by

declare that the Research

Project report of CASH FLOW STATEMENT ANALYSIS - A case Study on NATIONAL INSURANCE COMPANY LIMITED done under the guidance of Mr. MUKUNDA MADHAVA, manager Jayanagar branch. The empirical findings and suggestions in this report are based on the original information collected by me. This Report as been submitted in partial fulfillment of the Requirement for the award of BACHELOR OF BUSINESS MANAGENENT To Silicon City College of Management and Commerce. (Bangalore University) And as not been submitted to any other University / institution for the award any degree.

Place: Bangalore

THIMMEGOWDA R G

Date:

Reg NO: 10Q8C18011

ACKNOWLEDGEMENT

I would like to thank sincerely to all those individuals who where instrumentals in this project work.

I am extremely grateful thank to my principal Mr. B.S. VENKATESH and my project guide MS. TAMIZH SELVI .M With the valuable and timely guidance, I was able to conduct this study and complete the project work and all my other faculty members who administrated and helped me with their timely advise and thoughts in the complication in this project.

I extend my profound thank to Mr. MUKUNDA MADHAVA the Manager of NATIONAL INSURANCE COMPANY LIMITED Jayanagar Branch, for giving me the pleasure of conducting my project study in company and all the information disclosed by him.

And also, I would like to express my gratitude to my family, friends and all individuals for supporting and guiding me in completion of this project successfully.

INDEX
SL.NO:

CHAPTERS
INTRODUCTION:
Cash flow analysis Meanings Definitions Advantages Disadvantages Classifications Profoma Scope of the study Objectives of the study Limitations of the study

PAGE NO:

CHAPTER1

RESEARCH METHODOLOGY:
CHAPTER2 Research Design Data collection Primary Data Secondary Data

COMPANY PROFILE:
CHARTER3 Introduction and History Achievements & Awards Product Development Mission and vision

 Awards and Highlights Customer Relationship Management Types of Insurance services

DATA ANALYSIS & INTERPRETATION:

CHAPTER4 Introduction Importance of Data Analysis Tools used for Data analysis Years of Data Analyzed

FINDINGS AND DISCUSSIONS:

Suggestions Results Recommendations Summary conclusion

CHAPTER5

TERMINALS:
CHAPTER6 Bibliography Annexure Appendix

CHAPTER-1

INTRODUCTION

CASH FLOW STATEMENT:

Cash is the king and blood of every business, It has to flow evenly. Holding plenty of cash is never a bad thing but there are exceptions to this as well. On the other hand, too much out flows one area is equivalents of getting shot and blood pour out from the hole. Complementing the balance sheet and income statement, the cash flow statement (CFS), a mandatory part of a company's financial reports since 1987, records the amounts of cash and cash equivalents entering and leaving a company.

The CFS allows investors to understand how a company's operations are running, where its money is coming from, and how it is being spent. Here you will learn how the CFS is structured and how to use it as part of your analysis of a company. The basic and key idea is that cash is what a company needs to be healthy and it generates earnings. Cash Flow Statement is the statement of cash flow details of all cash inflow and outflows and boils it down to how much cash the company has generated in given period. Cash flow statement is calculated by adding and subtracting certain items to the net income. These adjustments must be made because, non-cash items may be included in to the net income even though it does not represent any cash in the bank.

Cash flow statement provides information about the cash receipts & payments of a firm for a particular period. It provides important information that complements the profit &loss account & balance sheet. The information about the cash flows of a firm is useful in providing users or financial statement with a basis to assess the ability of the enterprise to generate cash & cash equivalents & the needs of the enterprise to utilize these cash flows.

The Economic decisions that are taken by users require an evaluation of the ability of the enterprise to generate cash & cash equivalents & the timing & certainty of their generations. The statement deals with the provision of information about the historical changes in cash equivalents of an enterprise by means of a cash flow statement which classifies cash flows during the period from operating, investing activities.

HISTORY AND VARIATIONS:

In 1863, the Dowlais Iron Company had recovered from a business slump, but had no cash to invest for a new blast furnace, despite having made a profit. To explain why there were no funds to invest, the manager made a new financial statement that was called a comparison balance sheet, which showed that the company was holding too much inventory. This new financial statement was the genesis of Cash Flow Statement that is used today. In the United States in 1971, the Financial Accounting Standards Board (FASB) defined rules that made it mandatory under Generally Accepted Accounting Principles (US GAAP) to report sources and uses of funds, but the definition of "funds" was not clear. "Net working capital" might be cash or might be the difference between current assets and current liabilities. From the late 1970 to the mid-1980s, the FASB discussed the usefulness of predicting future cash flows. In 1987, FASB Statement No. 95 (FAS 95) mandated that firms provide cash flow statements. In 1992, the International Accounting Standards Board issued International Accounting Standard 7 (IAS 7), Cash Flow Statement, which became effective in 1994, mandating that firms provide cash flow statements.

MEANINGS
CASH:
In simple terms cash is nothing but it is the money. The cash comprises of cash in hand & demand deposit with bank (cash at bank).

CASH EQUIVALENTS:
There is short term; highly liquid investments are readily convertible in to known amount of cash & which are subject to an insignificant risk of changes in value.

CASH FLOWS:
Cash Flows are the Inflows & outflows of cash & cash equivalents. It means the movement of cash in to the organization or out of the organization and the differences between the cash inflows and outflows is known as "Net cash Flow" which can be either net cash inflow or net cash outflow. Cash flow is the difference between total income and total expenses. This amount is carried over to the next period as beginning cash.

CUMULATIVE CASH FLOW:

Is the difference between current cash flow and cash flow from the previous period.

CASH INFLOW:
The cash inflow means the movement of cash in to the business or organization. In other word 'All cash equivalents received by the organization.

CASH OUTFLOW:
The cash outflow means the movement of cash from organization to out of the organization. In other word all cash and cash equivalents paid by the organizations.

CASH FLOW STATEMENT:

In financial accounting, a cash flow statement, also known as statement of cash flows or funds flow statement is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.

DEFENITIONS OF CASH FLOW STATEMENT

The document provides aggregate data regarding all cash inflows a company receives from both of its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given quarter. Cash flow statement is a statement which shows how the operations of the company affects the cash position of the company during a financial year and therefore companies usually make both cash and funds flow statement.

The cash flow statement is concerned with the flow of cash in and cash out of the business. The statement captures both the current operating results and the accompanying changes in the balance sheet. Summary of the actual or anticipated incomings and outgoings of cash in a firm over an accounting period. It answers the questions: From where the money will come from? To where the money will go?

Cash flow statement asses the amount, timing, and predictability of cash inflow and cash out flow, and are used as the basis for budgeting and business planning. A cash flow statement is the financial statement that measures the cash generated or used by a company in a given period.

Cash flow refers to the amount of cash moving in or out of a business. A cash flow statement, also known as the statement of cash flows, describes the cash flow during a given period covered by the statement.

The cash flow statement is one of several core financial documents in any business enterprise.

PURPOSE OF CASH FLOW STATEMENT:

A cash flow statement is designed to give a more complete financial picture of a company.

Rather than analyzing long-term financial prospects, as some other financial documents do, a cash flow statement focuses on a company's access to liquid assets in the short term.

Essentially, a cash flow statement shows how much real money a company has.

The balance sheet is a snapshot of a firm's financial resources and obligations at a single point in time, and the income statement summarizes a firm's financial transactions over an interval of time.

These two financial statements reflect the accrual basis accounting used by firms to match revenues with the expenses associated with generating those revenues. The cash flow statement includes only inflows and outflows of cash and cash equivalents; it excludes transactions that do not directly affect cash receipts and payments. These non-cash transactions include depreciation or writeoffs on bad debts or credit losses to name a few. The cash flow statement is a cash basis report on three types of financial activities: Operating activities. Investing activities. Financing activities. Non-cash activities are usually reported in footnotes.

APPROACH TO CASH FLOW ANALYSIS:

A company's cash flow can be defined as the number that appears in the cash flow statement as net cash provided by operating activities, or "net operating cash flow," or some version of this caption.

However, there is no universally accepted definition. For instance, many financial professionals consider a company's cash flow to be the sum of its net income and depreciation (a non-cash charge in the income statement).

While often coming close to net operating cash flow, this professional's shortcut can be way off the mark and investors should stick with the net operating cash flow number.

PEOPLE AND GROUPS INTERESTED IN CFS

Accounting personnel, who need to know whether the organization will be able to cover payroll and other immediate expenses Potential lenders or creditors, who want a clear picture of a company's ability to repay Potential investors, who need to judge whether the company is financially sound Potential employees or contractors, who need to know whether the company will be able to afford compensation Shareholders of the business.

ADVANTAGES OF CFS
The cash flow statement provides information regarding inflows and outflows of cash of a firm for a period of one year. Therefore cash flow statement is important on the following grounds. Provide information on a firm's liquidity and solvency and its ability to change cash flows in future circumstances. Provide additional information for evaluating changes in assets, liabilities and equity. Improve the comparability of different firms' operating performance by eliminating the effects of different accounting methods. Indicate the amount, timing and probability of future cash flows. The cash flow statement has been adopted as a standard financial statement because it eliminates allocations, which might be derived from different accounting methods, such as various timeframes for depreciating fixed assets. Cash flow statement helps to identify the sources from where cash inflows have arisen within a particular period and also shows the various activities where in the cash was utilized.

 Cash flow statement is significant to management for proper cash planning and maintaining a proper matching between cash inflows and outflows. Cash flow statement shows efficiency of a firm in generating cash inflows from its regular operations. Cash flow statement reports the amount of cash used during the period in various long-term investing activities, such as purchase of fixed assets. Cash flow statement reports the amount of cash received during the period through various financing activities, such as issue of shares, debentures and raising long-term loan.

Cash flow statement helps for appraisal of various capital investment programmes to determine their profitability and viability. It acts like a filter and is used by many analyst and investors to judge whether company has prepared the financial statements properly or not because if there is any discrepancy in the cash position as shown by balance sheet with cash flow statement than it means that statements are incorrect.

LIMITATIONS OF CFS
Despite a number of uses, Cash Flow Statement suffers from the following limitations: (1) Ignore Accounting Concept of Accrual Basis: As CFS is based on cash basis of accounting, it ignores the basic accounting concept of accrual basis. (2) Ignores Non-cash Transactions: CFS ignores the non-cash transactions. In other words, it does not consider those transactions which do not affect the cash e.g., issue of shares against the purchase of fixed assets, conversion of debentures into equity shares, etc. (3) Not Suitable for judging the profitability: CFS is not suitable for judging the profitability of a firm as non-cash charges are ignored while calculating cash flows from operating activities. (4) Based on Secondary Data: CFS is based on secondary data. It merely rearranges the primary data already appearing in other statements i.e., Balance Sheet and Income Statement. (5) Short-term analysis: CFS is a technique of short-term financial analysis. It does not help much in knowing the long-term financial position. (6) Not based on full information: CFS does not present true picture of the liquidity of a firm. Liquidity does not depend upon 'cash' alone. Liquidity, also affected by the assets which can be easily converted into cash. Exclusion of these assets obstructs the true reporting of the ability of the firm to meet its liabilities.

CLASSIFICATIONS OF CFS
A cash Flow Statement relating to a particular period is classified in to following three main categories of cash inflows and out flows. 1- Operating activities 2- Investing Activities 3- Financing Activities

CASH FLOW FROM OPERATING ACTVITIES:

Measuring the cash inflows and outflows caused by core business operations, the operations component of cash flow reflects how much cash is generated from a company's products or services. This is the key source of a company's cash generation. It is the cash that the company produces internally as opposed to funds coming from outside investing and financing activities. In this section of the cash flow statement, net income (income statement) is adjusted for non-cash charges and the increases and decreases to working capital items - operating assets and liabilities in the balance sheet's current position. Operating activities include the production, sales and delivery of the company's product as well as collecting payment from its customers. This could include purchasing raw materials, building inventory, advertising, and shipping the product.

1. OPERATING CASH FLOWS INCLUDES:

Receipts from the sale of goods or services Receipts for the sale of loans, debt or equity instruments in a trading portfolio Interest received on loans Payments to suppliers for goods and services. Payments to employees or on behalf of employees Interest payments (alternatively, this can be reported under financing activities in IAS 7, and US GAAP) buying Merchandise Items which are added back to or subtracted from the net income figure (which is found on the Income Statement) to arrive at cash flows from operations generally include: Depreciation (loss of tangible asset value over time) Deferred tax Amortization (loss of intangible asset value over time) Any gains or losses associated with the sale of a non-current asset, because associated cash flows do not belong in the operating section.(unrealized gains/losses are also added back from the income statement)

A FEW OF THE OPERATING ACTIVITIES ARE:

Cash receipts from the sale of goods and providing services. Cash receipts from commissions, fees or other revenues Cash payment to suppliers for goods and services Cash payments to employees Dividends received

RULES OF OPERATING ACTIVITIES:

The following rules can be followed to calculate Cash Flows from Operating Activities when given only a two year comparative balance sheet and the Net Income figure. Cash Flows from Operating Activities can be found by adjusting Net Income relative to the change in beginning and ending balances of, Current Assets, Current Liabilities, Sometimes Long Term Assets. When comparing the change in long term assets over a year, the accountant must be certain that these changes were caused entirely by their devaluation rather than purchases or sales (i.e. they must be operating items not providing or using cash) or if they are non-operating items.

 Decrease in non-cash current assets are added to net income Increase in non-cash current asset are subtracted from net income Increase in current liabilities are added to net income Decrease in current liabilities are subtracted from net income Expenses with no cash outflows are added back to net income (depreciation and/or amortization expense are the only operating items that have no effect on cash flows in the period) Revenues with no cash inflows are subtracted from net income Non-operating losses are added back to net income Non-operating gains are subtracted from net income The intricacies of this procedure might be seen as,

2. CASH FLOW FROM INVESTING ACTIVITIES:

DEFINITION:
An accounting of funds related to the company's investments, reported on the cash flow statement of a company's annual report. This number shows how much money the company has received or lost from its investing activities.

It includes money that the company has made (or lost) by investing its excess cash in different investments (stocks, bonds, etc.), money the company has made or lost from buying or selling subsidiaries, and all the money the company has spent on its physical property, such as plants and equipment.

For the most part, investing transactions generate cash outflows, such as capital expenditures for plant, property and equipment, business acquisitions and the purchase of investment securities. Inflows come from the sale of assets, businesses and investment securities. For investors, the most important item in this category is capital expenditures (more on this later). It's generally assumed that this use of cash is a prime necessity for ensuring the proper maintenance of, and additions to, a company's physical assets to support its efficient operation and competitiveness.

BELOW MENTIONED ARE FEW OF INVESTING ACTIVITIES:

Cash payments to acquire fixed assets. Cash receipts from the disposal of fixed assets. Acquiring and disposal of stock from third parties. Making and collecting loans to third parties. Purchase or Sale of an asset (assets can be land, building, equipment, marketable securities, etc.) Loans made to suppliers or received from customers Payments related to mergers and acquisitions. Dividends Received.

3. CASH FLOW FROM FINANCING ACTVITIES:

DEFINITION:
An accounting of funds related to the financing of the company which is reported on the cash flow statement of a company's annual report. This is where the company reports the money that it took in and paid out in order to finance its activities.

In other words, it calculates how much money the company spent or received from its stocks and bonds. This includes any dividend payments that the company made to its shareholders, any money that it made by selling new shares of stock to the public, any money it spent buying back shares of its stock from the public, any money it borrowed, and any money it used to repay money it had previously borrowed.

Cash flow from financing activities typically reflects the company's purchase or sale of stock and any proceeds from or payments on debt financing. The measure varies with the different capital structures, dividend policies, or debt terms companies may have.

BELOW MENTIONED ARE FEW OF FINANCING ACTIVITIES:

Proceeds from issuing short-term or long-term debt Payments of dividends Payments for repurchase of company shares Repayment of debt principal, including capital leases For non-profit organizations, receipts of donor-restricted cash that is limited to long-term purposes

Items under the financing activities section include: Dividends paid Sale or repurchase of the company's stock Net borrowings Payment of dividend tax

RULES OF FINANCING ACTIVITIES:

Finding the Cash Flows from Financing Activities is much more intuitive and needs little explanation. Generally, the things to account for are financing activities: Include as outflows, reductions of long term notes payable (as would represent the cash repayment of debt on the balance sheet) Or as inflows, the issuance of new notes payable. Include as outflows, all dividends paid by the entity to outside parties. Or as inflows, dividend payments received from outside parties. Include as outflows, the purchase of notes stocks or bonds. Or as inflows, the receipt of payments on such financing vehicles.

DISCLOSURE OF NON-CASH ACTIVITIES: Under IAS 7, non-cash investing and financing activities are disclosed in footnotes to the financial statements. Under US General Accepted Accounting Principles (GAAP), non-cash activities may be disclosed in a footnote or within the cash flow statement itself.

NON-CASH FINANCING ACTIVITIES MAY INCLUDE: Leasing to purchase an asset Converting debt to equity Exchanging non-cash assets or liabilities for other non-cash assets or liabilities Issuing shares in exchange for assets

PREPARATION METHODS OF CFS

The methods are the types which provide basic ideas or the procedure to prepare & analyse the cash flow statement. Mainly there are two types or methods of cash flow statement.

Direct method Indirect method

1. DIRECT METHOD:
The direct method for creating a cash flow statement reports major classes of gross cash receipts and payments. Under IAS 7, dividends received may be reported under operating activities or under investing activities. If taxes paid are directly linked to operating activities, they are reported under operating activities; if the taxes are directly linked to investing activities or financing activities, they are reported under investing or financing activities. Generally Accepted Accounting Principles (GAAP) vary from International Financial Reporting Standards in that under GAAP rules, dividends received from a company's investing activities is reported as an "operating activity," not an "investing activity."

DIRECT METHOD
CASH FLOWS FROM OPERATING ACTIVITIES:

Collections Payments to Suppliers Payments to Employees Insurance Payments Interest Payments Other Source/(Uses) of Cash
NET CASH FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES:

xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx

xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx

Increase in Marketable Securities Sale of Fixed Assets Purchase of New Equipment Other
NET CASH USED FOR INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of Mortgage Principal Transfer From/(To) Parent Other

NET CASH FROM FINANCING ACTIVITIES

xxx xxx xxx xxx xxx

xxx xxx xxx Xxx Xxx

NET INCREASE/(DECREASE) IN CASH CASH, BEGINNING OF YEAR CASH, END OF YEAR

xxx xxxx

xxx xxxx

2. INDIRECT METHOD:
The indirect method uses net-income as a starting point, makes adjustments for all transactions for non-cash items, then adjusts from all cash-based transactions.

An increase in an asset account is subtracted from net income, and an increase in a liability account is added back to net income. This method converts accrualbasis net income (or loss) into cash flow by using a series of additions and deductions.

INDIRECT METHOD
CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income Add Expenses Not Requiring Cash: Depreciation Amortization of Goodwill Other Other Adjustments: Add Reduction in Accounts Receivable Add Increase in Wages Payable Add Increase in Accounts Payable Subtract Decrease in Accounts Payable Subtract Increase in Inventory Subtract Increase in Prepaid Expenses Other
NET CASH FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES:

xxx xxx xxx xxx

xxx xxx xxx xxx

xxx xxx xxx xxx xxx xxx xxx xxx

xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx

Increase in Marketable Securities Sale of Fixed Assets Purchase of New Equipment Other
NETCASH USED FOR INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES:

xxx xxx xxx xxx xxx

Payment of Mortgage Principal Transfer From/(To) Parent Other

NET CASH FROM FINANCING ACTIVITIES

xxx xxx xxx xxx

NET INCREASE/(DECREASE) IN CASH CASH, BEGINNING OF YEAR CASH, END OF YEAR xxx Xxxx xxx xxxx

ITEMS IN CASH FLOW STATEMENT:

1. CASH ITEMS:
Cash items in the cash flow statement encompass all items that can be categorised under cash and cash equivalent. These include cash, bank, bank overdraft, short term investment.

2. NON CASH ITEMS:

Non-cash items include any outflows or inflows that are accrued over time such as depreciation/amortization expenses or accretion expenses but are not necessarily physical cash outflows (the money is not going anywhere parse).

ALL ITEMS IN CFS

NET INCOME: The net income line from the income statement. Cash is reconciled against this starting point. DEPRECIATION: Depreciation expenses in the income statement do not affect cash. For a personal example, think of the depreciation in your vehicle's value each year. Although it diminishes your net worth by reducing the amount you could sell the car for, it does not affect your cash holdings.

SHARE BASED COMPENSATION: Tech companies like Intel often reward employees by granting them stock or stock options. The estimated final value of these must be expensed on the income statement, but issuing stock or options does not require cash, so the amount expensed is added back here.

ASSET IMPAIRMENT: The value of assets on the balance sheet is in most cases estimated. Intel's accountants decided that, due to weak demand, the value of some assets was lower than was being carried on the balance sheet. The resulting write-down affected the balance sheet value, but did not affect cash holdings, so it is added back here. This line item also contained employee severance charges that were expensed in the current period, but not yet paid out in cash.

TAX BENEFIT FROM SHARE BASED PAYMENTS: When employees exercise their stock options, the amount of profit they receive can be written off Intel's tax bill, as employee compensation is tax deductible. On the cash flow statement, this value is subtracted from operating cash and added to cash from investments as a re-classification exercise.

AMORTIZATION OF INTANGIBLE ASSETS: Similar to Depreciation or Asset Impairment, Intel has set up a schedule to degrade the balance sheet value of some of its intangible assets over a period of time. While this affects the balance sheet and is counted as an expense on the income statement, it does not affect cash and is added back in here.

GAINS ON EQUITY INVESTMENTS: As mentioned in the balance sheet article, Intel holds equity positions in a few companies it works with, notably VMware (VMW) and Micron (MU). Like your personal portfolio, unrealized gains and losses affect net worth, but not cash balances. Therefore the gain recorded in the income statement is subtracted back out here. DEFERRED TAXES: As mentioned in the balance sheet review, deferred taxes represents over or under-estimated tax payment carry-forwards. Again, this is a carrying account, only for tracking tax balances; changes in it are strictly for accounting purposes and do not involve cash.

CHANGES IN WORKING ASSETS AND LIABILITIES: Intel's accounts receivable, inventory, accounts payable, and other working capital balances obviously fluctuate on a daily basis. Two things to look for here are accounts receivable rising (Intel not able to collect it's owed cash payments), and inventory rising as a percentage of revenues. These represent weakness in Intel's customer base, and rising inventory is a big concern as technology products degrade in value very quickly. Over time, this line item should work out to about break-even. Consistent negative values here indicate poor management of collection and demand forecasting. NET CASH FROM OPERATIONS: The sum of all of the above line items. This is the amount of cash Intel earned over the reported period, one of the most important pieces of data available.

ADDITIONS TO PROPERTY, PLANT, AND EQUIPMENT (CAPITAL EXPENDITURES): Any items the company purchases for business that have a useful life over one year are considered "capital expenditures". These are not expensed in the income statement, but are charged off gradually through depreciation. For Intel, these are things like new chip-making equipment, office furniture, computers, and so forth.

ACQUISITIONS, NET OF CASH ACQUIRED: This is the cash Intel spent purchasing other businesses.

PURCHASES OF AVAILABLE-FOR-SALE INVESTMENTS: Cash Intel put into purchasing equity and/or bonds for the purpose of earning a higher return. "Available-for-sale" means these are usually done on the open market.

MATURITIES AND SALES OF AVAILABLE-FOR-SALE INVESTMENTS: The inverse of the above. Proceeds from equity and/or bonds that matured or were sold in the period.

INVESTMENTS IN NON-MARKETABLE EQUITY INSTRUMENTS: Cash spent for a considerable equity investment that was done off-the-market. In this particular case, Intel invested nearly $1.5 billion for a joint venture stake in IM Flash Technologies.

NET PROCEEDS FROM DIVESTITURES: Cash received from the sale of various assets and businesses the company no longer deemed strategic. Looking over the 10-K, this includes optical networking components group, media and signaling businesses, and several others.

OTHER INVESTING ACTIVITIES: The catch-all for investing-based items that don't fit anywhere else. These consist of a number of items spread all over the 10-K, which I won't list here.

NET CASH FROM INVESTING ACTIVITIES: All of the investing based items (here, the previous 7) added together.

DECREASE IN SHORT-TERM DEBT: Cash Intel used to pay off some of its short-term debt balances.

PROCEEDS FROM GOVERNMENT GRANTS: There is not much detail on this in the 10-K. Presumably Intel received a nominal amount of cash from some government agency.

EXCESS TAX BENEFIT FROM SHARE-BASED PAYMENTS: See the similar entry under the operating cash section. ADDITIONS TO LONG-TERM DEBT: Cash received from selling corporate bonds.

PROCEEDS FROM SALES OF SHARES TO EMPLOYEES: Most tech companies and many other companies as well, have employee share purchase programs where employees can purchase equity at reduced prices. The amount of cash Intel's employees paid the company for these shares is recorded here.

PURCHASE AND RETIREMENT OF COMMON STOCK. The amount Intel spent to buy back and retire its own shares.

PAYMENT OF DIVIDENDS: Just what it seems - the cash paid out to shareholders in the form of dividends.

NET CASH FROM FINANCING ACTIVITIES: All of the financing based items (here, the previous 7) added together. NET CHANGE IN CASH HOLDINGS: Calculated as (Net Cash from Operations + Net Cash from Investing + Net Cash from Financing). This is the amount of cash added to or subtracted from

CHAPTER-3

COMPANY PROFILE

INTRODUCTION AND HISTORY OF NIC LMTD:

National Insurance Company Limited was incorporated in 1906 with its Registered office in Kolkata. Consequent to passing of the General Insurance Business Nationalisation Act in 1972, 21 Foreign and 11 Indian Companies were amalgamated with it and National became a subsidiary of General Insurance Corporation of India (GIC) which is fully owned by the Government of India. After the notification of the General Insurance Business (Nationalisation) Amendment Act, on 7th August 2002, National has been de-linked from its holding company GIC and presently operating as a Government of India undertaking. National Insurance Company Ltd (NIC) is one of the leading public sector insurance companies of India, carrying out non-life insurance business. Headquartered in Kolkata, NIC's network of about 1000 offices, manned by more than 16,000 skilled personnel, is spread over the length and breadth of the country covering remote rural areas, townships and metropolitan cities. NIC's foreign operations are carried out from its branch offices in Nepal. Befittingly, the product ranges, of more than 200 policies offered by NIC cater to the diverse insurance requirements of its 14 million policyholders. Innovative and customized policies ensure that even specialized insurance requirements are fully taken care of. The paid-up share capital of National is Rs.100 crores Starting off with a premium base of 500 million Rs (Rs 500 crores) in 1974, NIC's gross direct premium income has steadily grown to 4021.97 million Rs (4021.97 crores) in the financial year 2007-2008.

National transacts general insurance business of Fire, Marine and Miscellaneous insurance. The Company offers protection against a wide range of risks to its customers. The Company is privileged to cater its services to almost every sector or industry in the Indian Economy viz. Banking, Telecom, Aviation, Shipping, Information Technology, Power, Oil & Energy, Agronomy, Plantations, Foreign Trade, Healthcare, Tea, Automobile, Education, Environment, Space Research etc. National Insurance is the second largest non-life insurer in India having a large market presence in Northern and Eastern India. The steady growth in premium income has been commensurately matched by profits over the years. As of March 2008, NIC's general reserve stood at 1457.25 million rupees (1457.25 crores rupees) with an asset value of 8867.99 million rupees (8867.99 crores rupees) signals strong financial fundamentals. No wonder than that NIC has been accorded AAA/STABLE financial strength rating by CRISIL rating agency, which reflects the highest financial strength to meet policyholders obligations.

ACHIVEMENTS OF NATIONAL INSURANCE COMPANIES ARE:

The fastest growing Non-life Insurance Company in India

The second largest Non-life Insurance Company in India

Internationally recognized as one of the top 5 General Insurance Companies in the Asia Pacific.

CUSTOMER SERVICE INITIATIVES:

Establishing Connectivity among 1000 offices with in the country Facility to get Policy through NET soon Tie-ups with leading Banks, Corporate Sectors, State Governments Zonal Advisory Committees set up to maintain progress. May I help you counters set up at Head Office and all Regional Offices. Citizens Charter Commitments being implemented by all offices.

PRODUCT DEVELOPMENT:
More than 200 products available to cater to the needs of various sectors of the economy.

Continuous product development to meet emerging needs of society and industry.

R&D cell set up at Head Office for distinctive product innovation relevant to indigenous conditions and rural masses.

New covers launched: PARIVAR Mediclaim for Family, VIDYARTHI-Mediclaim for Students, UCO Medi + Care Bima Policy, Star National Swasthya Bima Policy, VARISTHA Mediclaim for Senior Citizens.

MISSION:
To be the most preferred choice of customers for General Insurance by building relationships and grow profitably.

VALUES:
Leveraging technology to integrate people and processes To excel in service and performance To uphold the highest ethical standards in conducting our business.

COMMITEMENTS:
In areas coming within competence of General Insurance, respond to all commercially viable general insurance requirements of the citizenry, not hitherto available, within three months from the date on which such a demand is received. In areas covered by tariff submit appropriate proposals to the Tariff Advisory Committee with comments within two months. Continue to provide customized insurance products for weaker sections of the society at affordable price, within six months from the date of receipt of request for a specific type of cover. Establish full and efficient computerized customer information counters at all regional centers, which will be further extended to cover the Divisional and Branch offices in stages.

 Establish more equipped "MAY I HELP YOU" facility to cater to customers' information requirements at the Head Quarters and the Regional Offices. Ensure issuance of 90% of documents on a day to day basis. Prepare booklets on standard policy covers setting out essential information and make such booklets readily available for purchase at suitable places. Organize Zonal Advisory Committees meeting at the four metropolitan cities on a regular basis from time to time to interact with customers and get feedback on insurance services. Promote customer education in general insurance by holding workshops in important regional centers. Make available to a customer, on request to the Policy issuing office, the status of his claim and/or claim settlement details within 7 working days. Settle all claims within a time schedule envisaged hereunder ; Personal line insurance claims within 30 days on completion of all requirements. Property claims within 60 days on completion of all requirements. Liability claims within 30 days on completion of process of law.

CUSTOMER RELATIONSHIP MANAGEMENT:

CGMS (Customers Grievance Management System), an On Line grievance redressal system has been launched by the Company in September 2011 and integrated with the Integrated Grievance Management System (IGMS) of IRDA. Two days Training Programmes on 3rd and 4th June 2011 of all ROs Grievance Officers on On line System of Grievance Disposal was organized at NCIL, Narendrapur. Theoretical inputs as well as hands on training were imparted. User Manuals were also provided in soft form.

All operating offices have been instructed to displaying a prominent place Policyholder Servicing Turnaround Time as prescribed by IRDA and also to advice intermediaries to communicate the same to all their customers. It has been our endeavour to minimize the grievances by rendering quality services at the operating levels rather than resolution of customer grievances.

All Regional Offices have been advised to abide strictly by the PPI Regulations 2002. A single window facility Samman for senior citizens has been introduced and is available in the Company website. A designated officer attends to the queries/complaints etc. on priority basis and resolves the same immediately.

SERVICES/TYPES OF POLICIES OF NIC LMTD.

1. PERSONAL LINE INSURANCE:
Personal Line Insurance is meant to cover risks of person and property of individuals or group of individuals or liability developing upon them. Insurance of persons would include Personal Accident, Mediclaim, Critical Illness, Amartya Siksha Yojana, among others. Insurance of property would include Householders', Niwas Yojana, Motor etc. Insurance of liability would include liability devolving on a person arising out of his personal actions / inactions or out of the practice of his/her profession, such as, Personal Liability, Professional Indemnity for a Doctor / Lawyer etc.

2. RURAL LINE INSURANCE:

Since nationalization our Company is moving ahead with the task of taking General Insurance business to the rural segments, keeping in view the social objective of serving the needs of the economy in the best interest of the weaker sections of the community. To provide financial protection against loss of their small income generating assets due to the occurrence of fortuitous events, our company has devised a number of insurance policies specially designed for the rural people and weaker section of urban society.

3. INDUSTRIAL LINE INSURANCE:

Industrial Insurance is another branch of non-life insurance which covers various risks faced by the industry and serves to sustain the growth of the industrial activity. These insurances can be sub-divided into broadly two heads as Project Insurance and Operational Insurance. The two basic forms of Project Insurance are Erection All Risk Insurance and Contractor's All Risk Insurance. Commonly chosen Operational Insurance policies are Fire policy, Machinery Insurance policy, Electronic Equipment Insurance policy and Consequential Loss (Fire) policy.

4. COMMERCIAL LINE INSURANCE:

The mainstay of our economy is commercial activity of various kinds, covering trades, transport, banking etc. These organizations are exposed to risks, which can be categorized as loss of or damage to property / assets and liability arising out of an action /inaction in the course of the commercial activity. National Insurance offers different options, which enable a commercial organization to protect itself against losses arising from various perils. These options can be classified as package policies, specific policies to protect against property loss and specific policies to cover liability arising due to errors and omissions in the course of transaction of commercial activity.