assessment of insurance policies and procedures of...

Summer Internship Report

On

ASSESSMENT OF INSURANCE POLICIES AND PROCEDURES OF VARDHMAN SPINNING AND GEN. MILLS

By

SHANKY SINGLAA0101909386

MBA Class of 2011

Under the Supervision ofMS. L.K.DHILLON

ProfessorDepartment of FINANCE

In Partial Fulfillment of Award of Master of Business Administration

AMITY BUSINESS SCHOOLAMITY UNIVERSITY UTTAR PRADESH

SECTOR 125, NOIDA - 201303, UTTAR PRADESH, INDIA2010

1

AMITY UNIVERSITY UTTAR PRADESH

AMITY BUSINESS SCHOOL

DECLARATION

I, Shanky Singla student of Masters of Business Administration from Amity Business School, Amity University Uttar Pradesh hereby declare that I have completed Summer Internship on “

ASSESSMENT OF INSURANCE POLICIES AND PROCEDURES OF VARDHMAN SPINNING AND GEN. MILLS

” as part of the course requirement.

I further declare that the information presented in this project is true and original to the best of my knowledge.

Date: 28/06/10 Shanky Singla

Enroll. No: A0101909386

Place: Noida

MBA Class of 2011

2

AMITY UNIVERSITY UTTAR PRADESH

AMITY BUSINESS SCHOOL

CERTIFICATE

I hereby certify that Shanky singla students of Masters of Business Administration at Amity Business School, Amity University Uttar Pradesh has completed Summer Internship on

“ASSESSMENT OF INSURANCE POLICIES AND PROCEDURES OF VARDHMAN SPINNING AND GEN. MILLS”, under my guidance.

MS. L.K.DHILLON

(Lecturer/Asst. Prof./Prof.)

Department of Finance

Acknowledgement

4

This study of ASSESSMENT OF INSURANCE POLICIES AND PROCEDURES OF VARDHMAN SPINNING AND GEN. MILLS

Could not have been possible by my efforts only. I would like to express my deep

gratitude to those who have accompanied me and gave me the guidelines in various

ways to make the efforts a reality.

I am grateful to my Industry Mentor Mr. O.P.Samkria for the encouragement and

enlightening given by him which has been of immense help towards the successful

completion of the project.

I would also like to express my special thanks to my faculty mentor Ms.L.K.Dhillon

for her timely advice and valuable guidance during the project study.

My heartiest thanks to the library and the other staff of Vardhman for their

cooperation and help throughout my tenure here.

Above all, I would like to express my deep gratitude to my family and friends for

providing me moral support and help

SHANKY SINGLA

Enroll. No: A0101909386

Program: MBA(Gen)2009-11

CONTENTS

5

Declaration

Certificate from Industry Guide

Certificate from Faculty guide

Acknowledgement

S.No. Chapter Name

1 INTRODUCTION

2 FINANCE

3 RESEARCH METHODOLOGY

4 LITERATURE REVIEW

5 INSURANCE

6 ANALYSIS

7 CONCLUSION AND RECOMMENDATION

1 INTRODUCTION

1.1Introduction Vardhman

1.2 Mission and vision

1.3 History

1.4Portfolio

1.5Holdings

1.6Achievements6

1.7Products

1.8Facilities

1.9 Globalisation

1.10 Exporting countries

1.11 Alliances

1.12 Corporate social responsibility

2 FINANCE

2.1 Finance department of finance

2.2 Need for financial planning

3 LITERATURE REVIEW3.1Vardhman textiles set up separate thread unit3.2 Insurance and asset building for the under banked

4 INSURANCE

4.1 Fire insurance

4.2 Machinery insurance

4.3 Marine insurance

4.4 Marine cargo insurance

4.5Misc. Insurance

4.5.1 Group Mediclaim Insurance

4.5.2 Group Personal Accident

4.5.3 WC Policy

4.5.4 Money Policy

7

4.5.5 Fidelity Guarantee policy

5 RESEARCH METHODOLOGY

5.1Research Method

5.2Data Collection Methodology

5.3Study Type

6 ANALYSIS

7 CONCLUSION AND RECOMMENDATION

VARDHMAN SPINNING AND GENERAL MILLS

8

1. INTRODUCTION

1.1 Introduction of Vardhman

9

Vardhman Group is a leading textile conglomerate in India having a turnover of $700 mn.

Spanning over 24 manufacturing facilities in five states across India, the Group business

portfolio includes Yarn, Greige and Processed Fabric, Sewing Thread, Acrylic Fibre and

Alloy Steel.

Vardhman Group manufacturing facilities include over 8,00,000 spindles, 65 tons per day

yarn and fibre dyeing, 900 shuttleless looms, 90 mn meters per annum processed fabric, 33

tons per day sewing thread, 18000 metric tons per annum acrylic fibre and 100,000 tons per

annum special and alloy steel.

Vardhman has evolved through history from a small beginning in 1965 into a modern textile

major under the dynamic leadership of its chairman, S.P.Oswal. His vision and insight has

given Vardhman an enviable position in the textile industry. Under his leadership, Vardhman

is efficiently using resources to innovate, diversify, integrate and build its diverse operations

into a dynamic modern enterprise

Mission:

10

Vardhman aims to be world class textile organization producing diverse

range of products for the global textile market. Vardhman seeks to achieve customer delight

through excellence in manufacturing and customer service based on creative combination of

state-of-the-art technology and human resources. Vardhman is committed to be responsible

corporate citizen.

VISION:

“To be globally recognized as a Leading Supplier of Quality Fabrics”

11

1.3 History

The industrial city of Ludhiana, located in the fertile Malwa region of Central Punjab is

otherwise known as the “Manchester of India”. Within the precincts of this city is located the

Corporate headquarters of the Vardhman Group, a household name in Northern India. The

Vardhman Group, born in 1965, under the entrepreneurship of Late Lala Rattan Chand

Oswal has today blossomed into one of the largest Textile Business houses in India.

At its inception, Vardhman had an installed capacity of 14,000 spindles, today; its capacity

has increased multifold to over 8 lacs spindles. In 1982 the Group entered the sewing thread

market in the country which was a forward integration of the business. Today Vardhman

Threads is the second largest producer of sewing thread in India. In 1990, it undertook yet

another diversification – this time into the weaving business. The grey fabric weaving unit at

Baddi (HP), commissioned in 1990 with a capacity of 20,000 meters per day, has already

made its mark as a quality producer of Grey poplin, sheeting, shirting in the domestic as well

as foreign market. This was followed by entry into fabric processing by setting up Auro

Textiles at Baddi and Vardhman Fabric at Budhni, Madhya Pradesh. Today the group has 900

shuttleless looms and has processing capacity of 90mn meters fabrics/annum.

In the year 1999 the Group has added yet another feather to its cap with the setting up of

Vardhman Acrylics Ltd., Bharuch (Gujarat) which is a joint venture in Acrylic Fibre

production undertaken with Marubeni and Exlan of Japan. The company also has a strong

presence in the markets of Japan, Hong Kong, Korea, UK and EU in addition to the domestic

market. Adherence to systems and a true dedication to quality has resulted in obtaining the

coveted ISO 9002/ ISO 14002 quality award which is the first in Textile industry in India and

yet another laurel to its credit.

12

1.4 Portfolio

The group portfolio includes Yarn, Fabrics, Sewing Thread, Fibre and Alloy Steel.

Business Wise Turnover for the financial Year 2008-09

Actual 2008-09 Group Total( Rs

crore ) USD Million % Share

Yarn 1513 329 47%

Fabric 689 150 22%

Sewing Thread 337 73 11%

Steel 327 71 10%

Power plant 66 14 2%

Fibre 254 55 8%

Total 3186 693 100%

Yarns

Yarn Manufacturing is the major activity of the group accounting for 47 percent of the group

turnover. Vardhman is virtually a supermarket of yarns, producing the widest range of cotton, 13

synthetics and blended, Grey and Dyed yarns and Hand Knitting Yarns, in which Vardhman

is the market leader in India. The group has twenty one production plants with a total

capacity of over 8 lacs spindles, spread all over the country. In many of the yarn market

segments, Vardhman holds the largest market share. Vardhman is also the largest exporters of

yarn from India, exporting yarns worth more than USD 150 million.

Sewing Thread

Vardhman is the second largest producer of sewing thread in the country. The sewing thread

manufacturing capacity is being expanded from 17 tons per day to 33 tons per day in its

sewing thread plants located at Hoshiarpur, Baddi and Ludhiana. Sewing threads contributes

11 percent of the group turnover.

Fabrics

the group has created state-of-the-art fabric weaving and processing facilities in its plant at

Baddi, Northern India. The group has installed 900 shuttle less looms and a fabric processing

capacity of 90 million meters per annum in collaboration of Tokai Senko of Japan. Fabrics

business contributes 22 percent to the group turnover

Fibre

The group has set up an Acrylic Staple Fibre plant at Bharuch in Gujarat in collaboration with

Marubeni and Japan Exlan of Japan. The plant has annual capacity of 18000 tons per annum.

Fibre contributes 8 percent to the total turnover of the group.

14

Steel

The Group is also present in upper-end of the steel industry. The group has manufacturing

capacity of 100000 tons of special and alloy steel. The group supplies its steel products to

some of the most stringent quality steel buyers like Maruti and Telco. It contributes 10

percent to the total turnover of the group.

1.5Holdings

Vardhman Holding Limited

Vardhman Textiles Limited

Vardhman Acrylic Limited

VMT Spinning Company Limited

Vardhman Yarns and Threads Limited

1.6 Achievements

It’s an overwhelming feeling when the efforts and hard work put in are recognized and

felicitated. A feeling that galvanizes the Group into believing in more, in itself and

reaffirming its commitment to offer products that invoke trust and reliability.

Back home, the Vardhman Group became India’s first textile company to be awarded

ICO9002/ ISO 14002 Certification. It is the largest producer and exporter of yarns and Grey

woven fabrics from India. Vardhman is also the largest producer of tyercord yarns and the

second largest producer of sewing threads in India. The Vardhman Group vision of

15

excellence is matched by a dedication and sincerity to be the best and excel in every industry

it has a presence.

Textile Export Promotion Council 2007-08

Special Achievement Award in Yarn Category


Silver Top Exporter Award in Yarn Category


Bronze Trophy in Processed Yarn Category


World Trophy in highest export in Yarn Category


Bronze Trophy for Highest Global Export Category (Overall)


World Trophy in highest export in Yarn Category


Silver Trophy for Highest Global Export Category (Overall)


Gold trophy in EOU/EPZ for export of cotton yarn Textile Export Promotion Council 2003-04

Bronze trophy in mill fabric exporter category Textile Export Promotion Council 2002-03

Gold Trophy in EOU/EPZ for export of cotton yarn Textile Export Promotion Council 1998-99

Silver Trophy

16


Bronze Trophy Textile Export Promotion Council 1996-97

Silver Trophy Govt. Of India Award 1994-5, 1995-96

Award of Merit Textile Export Promotion Council 1993-94

(Merchant Export Category for Fabrics)

Bronze Trophy Textile Export Promotion Council 1993-94

(Merchant Export Category for Fabrics)

Gold Trophy Textile Export Promotion Council 1990-00

Gold Trophy

17

1.7 Products

Yarns

Yarn is the largest strategic business unit of the Vardhman Group with 8,00,000 spindles and

65 MT tons per day yarn and fiber dying capacity. The Group offers one-stop solution for

variety of yarn requirements of the leading customers in India and the international markets.

Vardhman offers the widest range of specialized greige and dyed yarns (NE 10 to NE 200) in

cotton, polyester, acrylic and varieties of blends. The group offers value added products like

18

Organic Cotton, Melange, Lycra, Ultra yarns (contamination controlled), gassed mercerized,

super fine yarns and fancy yarns for hand knitting. Vardhman is India’s largest exporter of

cotton yarn to the most quality conscious markets like EU, USA and Far Eastern countries

Products

Cotton Yarn Special Blended Yarn Organic Cotton Yarn Core Spun Yarn Fair Trade cotton Yarn Melanges Organic Fair Trade Cotton Yarn Gassed Mercerised Ellitwist Modal Yarn Vortex Yarn Tencel Yarn Slub Yarn Viscose Yarn Acrylic Yarn Hand Knitting Yarn Poly –Cotton Yarn Speciality Yarn Acrylic – Cotton yarn

19

Fabrics

“VISION : To be globally recognized as a Leading Supplier of Quality Fabrics”

Vardhman is among the few fully integrated fabric suppliers in the country. An exquisite

range of fabrics for shirting and trousers enables Vardhman to offer fashion solutions to the

leading clothing manufactures in the world. The state-of-the-art manufacturing facilities

having 900 shuttleless looms and producing 90 mn meters per annum processed fabric are

located in North and Central India, which cater to the highly customized fabric needs of the

buyers. An integrated fabric supply chain extending from raw materials to yarns and from

weaving to processing provides the winning edge to the customers.

20

Shirting

Count range Ring spun Ne 20’s to 80’s Ring spun Blends 2/40’s to 2/210’s 100% cotton, Polyester cotton, Cotton stretch DowXLA, Cotton Tencel, Cotton Modal, Cotton Bamboo, Cotton silk, Cotton Nylon, Cotton Nylon stretch, Cotton Linen.

Weave Yarn Dyed: Chambray, fil-a-fil, checks, stripes, Oxford, HBT Others (yarn dyed & piece dyed) Plain, twill, satin, oxford, dobby, herringbone, Pique Cord.

Fabric weight 2-5.6 oz/yd’2

Finished width 58”

Bottom weights Count range Ring spun Ne 20’s to Ne 2/80’s Open end Ne 6’s to Ne 16’s 100% cotton,

Polyester cotton, Cotton stretch DowXLA, Cotton Tencel, Cotton Modal, Cotton Bamboo, Cotton silk, Cotton Nylon, Cotton Nylon stretch, Cotton Linen Coolmax.

Weave Chambray, fil-a-fil, checks, stripes, Oxford, HBT Others (yarn dyed & piece dyed) Plain, twill, Drill, satin, oxford, dobby, herringbone, Pique Cord, Honey comb

Fabric weight 6.00 to 12.00 Oz.yd’2 Finished width 58” to 60 Finishes Soft, Peach, Mechanical stretch, Microsand, Easy to iron, Water resistant, Stain

Release, Stiff finish, Airo finish, Carbon finish, Diamond finish, Airo enzyme, Soft Easy Care, Soil resistant, Thirsty finish, Feather touch, Banana Peel and to add Ammonia finish.

Eco-Friendly Blends

Bamboo, Organic Cotton, Linen

Also certified by FLO, OEKOTEX, SKAL.

21

THREADS

Vardhman is a leading player in the Indian sewing thread market. The joint venture with

A&E Threads of USA offers complete thread solutions from tailoring to industrial

applications. With 33 tons per day capacity spread over three plants located in North and

South India, Vardhman is uniquely positioned to serve the garment manufacturers across the

world. Vardhman’s customer value proposition includes threads made from cotton, polyester,

core spun, nylon and filaments, which are AZO free and meet OEKO Tex Standards.

22

FIBER

The acrylic fiber of Vardhman is acclaimed for a wide variety of textile applications. The

modern manufacturing plant based on renowned Japan Exlan Wet Spun technology produces

18000 MT per annum acrylic fiber at Gujarat (Western India). The fiber marketed under the

brand name VARLAN has achieved high level of recognition in the Indian market because of

super soft touch and silky appearance.

Product Features

Superb soft touch & silky appearance; resilence; excellent dye –ability; brilliant shades, high

bulk yarn products incorporating shrinkable fibres; low pill formation; better crease recovery;

high resistance to chemicals, light, weathering and midew make VARLAN a preferred fibre

in knitted, woven and other applications.

23

Product Range

Acrylic Bright & Semi-dull Non shrinkable fibre in 1.2, 1.5,2,3, 5, 7, 10, 15 deniers in a

wide range of cut 24engths. Acrylic Bright & Semi-dull Shrinkable fibre with different shrinkage levels in 2,3,5 deniers

in a wide range of cut lengths Acrylic Tow endless Bright & Semi dull in 2, 3 denier.

Specialty acrylic fibres suitable for Open end spinning; Soft handle, Water absorbent

applications etc.

Vardhman Acrylics Ltd

Vardhman Group ventured into the manufacture of Acrylic Fiber/Tow in 1999. The joint

venture, Vardhman Acrylics Ltd. (VAL) was set up together with two leading Japanese

business houses namely Japan Exlan Co. Ltd., a part of Toyobo Group of Japan and

Marubeni Corporation Japan. The company has set up an 18000 TPA Acrylic Staple Fibre

and Tow production plant at Jhagadia, Distt. Bharuch in the state of Gujarat, India. The world

class wet spun technology for the manufacture of Acrylic fiber / Tow has been sourced from

Japan Exlan Co. Ltd., Japan. It is a state of the art, highly automated production facility

making it amongst the most advanced plants of its’ type in the world. VAL’s products are

marketed under the brand name “VARLAN®”.

24

STEEL

Vardhman Special Steel is a niche player in the special and alloy steel market of India. With

installed capacity of 1, 00,000 MT per annum, Vardhman offers alloy steel made with

contemporary technologies like electro-magnetic stirrers, vacuum degasification, auto mould

level controlled and auto controlled cooling etc. With continuous research and development

efforts, Vardhman Special Steel meets the stringent quality requirements of commercial

vehicles, tractors, cars, two wheelers, defence applications, railway components and other

engineering products.

Engineered for the future

Vardhman Special Steels incorporates some of the most advanced manufacturing facilities

with equally reliable support facilities. The plant has well conceived layout plan with modern

material handling facilities-all designed for economic processing of materials and human

skills. Vardhman’s ability to adopt changes in technology is evident in its extensive use of

automation and contemporary concepts

1.8 FACILITIES

Yarn Manufacturing Units Location Spindles Vardhman Spinning and General Mills Ludhiana (Punjab) 64572

25

Vardhman Spinning Mills Baddi (Himachal Pradesh)

36288

Auro Spinning Mills Baddi (Himachal Pradesh)

77792

Arisht Spinning Mills Baddi (Himachal Pradesh)

82128

VMT Spinning Company Limited Baddi (Himachal Pradesh)

45120

Arihant Spinning Mills Malerkotla (Punjab) 113804

Anant Spinning Mills Mandideep (Madhya Pradesh)

74496

Vardhman yarns Satlapur (Madhya Pradesh)

170528

Vardhman Fabrics (Yarns Division) Bhudhni(Madhya Pradesh)

60000

Vardhman Yarns and Threads Ltd. Spinning

Hoshiarpur (Punjab) 60352

Spinning-Total 785080 Rotors

Auro Spinning Baddi (Himachal Pradesh)

1248

Vardhman Fabrics Bhudhni(Madhya Pradesh)

2160

Total 3408

Yarn & Fibre Dyeing Units Location Production Capacity Vardhman Spinning and General Mills, Dye House

Ludhiana (Punjab) 20 Tonnes per day

Auro Dyeing Baddi (Himachal Pradesh)

35 Tonnes per day

Fibre Dyeing 15 Tonnes per day Yarn Dyeing 20 Tonnes per day Mahavir Mercerizing Unit Hoshiarpur (Punjab) 15 Tonnes per day Total 65 Tonnes per day

Fabric – Weaving Units Location Production Capacity

Auro Weaving Mills Baddi (Himachal Pradesh)

264 looms

Mahavir Spinning Mills Baddi (Himachal Pradesh)

236 looms

26


400 looms

Total 900 looms Fabric Processing Units ( Finished Fabric)

Location Production Capacity

Auro Textile Baddi (Himachal Pradesh)

50 million meters per anuum


40 million meters per anuum

Total 90 million meters per anuum

Sewing Thread Business Location Production Capacity Vardhman Yarns and Threads Limited (Unit –I)

Hoshiarpur (Punjab) 21 MT per day

Vardhman Yarns and Threads Limited (Unit –II)

Ludhiana (Punjab) 7 MT per day

Vardhman Yarns and Threads Limited (Unit –III)

Perundrai (Tamil Nadu) 3 MT per day

Vardhman Yarns and Threads Limited (Unit –IV)

Baddi (Himachal Pradesh)

2 MT per day

Total 33 MT per day Steel Business Location Production Capacity

Steel Unit-Vardhman Special Steels Ludhiana (Punjab) 100000 MT per annum

Acrylic Business Location Production Capacity Fibre Manufacturing Unit-Vardhman Acrylic Ltd.

Jhagaria (Gujarat) 18000 MT per annum

1.9 Globalization

27

•

Vardhman ventured in to the global market in 1986 with an export value of one core to

reach exports of $150 mn in FY 2008-09.

• Little wonder then, that Vardhman, today, exports 40% of its yarn production to

more than 25 countries and has a strong presence in markets like the EEC, USA,

Canada, China, Japan, Korea, Mexico, Brazil and Mauritius, Middle East.

Vardhman has a share of more than 6% in total Yarn exports from India.

Its trusted, tested and reliable workforce, coupled with the latest technology, quality

consciousness, customer oriented services and strong logistics has given Vardhman an edge

over its competitors and in the world’s most quality conscious and price sensitive markets.

Thereby making Vardhman a truly international organisation in terms of sourcing from and

catering to the world market

28

29

1.10 We export to the world!

Some of our prominent markets are –

Australia Portugal

South Africa Iran

Tunisia Morocco

Brazil Turkey

Bangladesh Russia

Belgium Saudi Arabia

China Singapore

Canada Sri Lanka

Colombia Spain

Egypt Switzerland

Germany Syria

Greece Thailand

Hongkong U.K.

Indonesia Ukraine

Israel Uruguay

Italy USA

Japan Venezuela

Korea Vietnam

Lebanon New Zealand

Malaysia Mauritius

1.11 ALLIANCES

Vardhman’s International alliances

GarmentsNisshinbo Textiles Inc., Japan

Fabric Dyeing & Finishing

Tokai Senko, Japan Fiber & Yarn Dyeing

Nihon Sanmo Dyeing Co. Ltd., Japan

Gassed Mercerized Yarns

Kiyung Bang South Korea Cotton Yarn

Toho Rayon, Japan Sewing Thread

American & Efird Inc., USA Acrylic Fibre

Marubeni Corp, and Japan Exlan of Japan

30

4. INSURANCE

31

1.12 CORPORATE SOCIAL RESPONSIBILITY

• Sri Aurobindo Socio-Economic and Management Research Institute is engaged in the promotion of education, research and publications highlighting social and economic issues facing the society. The Institute runs a Human Resource Development Centre for providing career counselling and guidance to college students in Punjab. The teams of experts also visit the colleges in the state to prepare college students for gainful employment in the industry.

• Sprung from a keen desire to set up an educational institution in Ludhiana and inspired by the writings of Sri Aurobindo and the Mother, the Trust has set up a college – Sri Aurobindo College of Commerce and Management (affiliated to the Punjab University) with the mission to create an institution with distinction dedicated to the ideals of creating disciplined career oriented young people ready for going for administrative and management roles in enterprises or to set up their own business as entrepreneurs.

4.1 FIRE INSURANCE

Topics• Indian Insurance Scene

• Company Performance

• History Of Fire Insurance

• Basic Coverage/ Exclusion /Conditions

• Add- On Coverage

• Special Stock Coverage Policies

• Business Interruption Policies

• Summary

FIRE INSURANCE – HISTORY• Started somewhere in the 14th century

• Developed in to a business in 17th century

• Only fire was the insured peril

• As principles and practice of general insurance got developed, more perils were added to the fire cover and the policy became a package policy

32

PROPERTY COVERED- STRUCTURAL• Buildings

• Electrical installations

• Pipelines

• Tanks

• Structures in open

PROPERTY COVERED- CONTENTS• Plant and machinery

• Furniture fixture fittings

• Stocks- RM/WIP/FG/packaging

• Stocks in open

• Stocks in tanks

33

• Stocks in warehouses/godowns

BASIC COVERs.no COVER AND NOT BY/ TO SOLUTION1. FIRE Own fermentation

natural heating spontaneous combustion*Heating or dying process burning by authorities

ADD ON COVER

2. LIGHTENING3. EXPLOSION/IMPLOSION Boilers ETC. Where

steam is generated

Apparatus where centrifugal force is generated

Boiler explosion policy

Machinery breakdown policy

4. AIR CRAFT DAMAGE Pressure wave damages NIL

34

5. RIOT,STRIKE,MD & TD Cessation of work temporary dispossession burglary housebreak, theft, larcency

NIL

6. STORM,FLOOD,INUNDATION7. IMPACT DAMAGE Vehicles belongings or

ownedADD ON COVER

8. SUBSIDENCE LANDSLIDW Normal crackling, settlement coastal/river defective design, structural alteration

NIL

9. BURSTING OF WATER TANKS/PIPES

10. MISSILE TESTING OPERATION11. LEAKAGE FROM SPRINKLER

INSTALLATIONSRepairs to sprinkler alterations to building

12. BUSH FIRE Forest fire ADD ON COVER

POLICY CONDITIONSS.NO EXCLUSION REASON1. • Misrepresentation

• Misdiscription• Non- Disclosure

Violation of utmost good faith

2. No cover after 7 days from fall or displacement due to uninsured perils

NIL

3. • Alteration of activity• Unoccupied property more than 30 days• Change of hands other than will/law

• UGF• INSURABLE

INTEREST

4. Marine policy coverage5. • Cancellation of policy by insured

• Cancellation of policy by insurer• Short period premium• 15 days notice

6. Duty of the insured• Intimation within 15 days• List of items damaged with value, submit bills,

A/C Books ETC.LIABILITY OF THE COMPANY

35

http://web.ebscohost.com/ehost/detail?vid=6&hid=9&sid=c4949c37-5975-48a5-8ed1-df3431adee1b@sessionmgr4&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3D%3D#toc%23toc

• Not liable if claim is not tenable within 12 months

• Exemptions for pending action or arbitration

7. Duty of the Insurer• Keep possession of damaged property• Sell or dispose

8. FRADULENT CLAIMS• Policy benefits will be forfeited

Violation of utmost good faith

9. Claim settlement option to with insurer10. CONDITION OF AVERAGE

• Every item will bear a rateable preparation if undersigned

11. CONTRIBUTION CONDITION• If other policies also cover the same property,

apportionment of loss by all the policies.12. SUBROGATION RIGHTS

• Rights to obtain relief from other parties to be given to the company

13. ARBITRATION• If claim is admissible and quantum is under

dispute, arbitration is carried out14. Written communication

By insured15. REUNSTATEMENT OF SUM INSURED

To full value after the loss by pay RI premium, which is deducted from claim amount

SPECIAL STOCK POLICIES

Floater policy

• No minimum sum insured

• One sum insured for stocks floating in various locations

• Highest rate+ 10% extra

Declaration policy

• Minimum S.I. is Rs. 1 cr.

• No short period policy

• No cover for stock in process

• Monthly declarations

• Premium adjustment after 12 months with minimum retention

36


Floater declaration policy

• Minimum S.I. is Rs. 2 cr.

• No short period policy

• No cover for stock in process

• Monthly declarations for stock floating in various locations

• Premium adjustment after 12 months with minimum retention

4.2 MACHINERY INSURANCE

With the increasing use of various kinds of machinery in different areas of industrial activities or any other field, the risk of breakdown of Electrical / Mechanical machines is increasing day by day. The high cost of repair warrants an insurance cover for such machinery. The fire policy specifically excludes the break down risks.

COVER

The policy covers unforeseen and sudden physical loss / damage to the machinery whilst:

a) In operation

b) or at rest

c) During Overhauling / Maintenance

d) being dismantled for the purpose of re-erection within the same premises.

The policy offers cover against all kinds of accidental, Electrical and Mechanical Breakdowns due to internal and external causes.

Internal causes

Damage due to faulty material, defects in casting, faulty construction, overheating of parts, short circuiting (electrical fires within the electrical equipments), faulty erection, disruption in case of rotating bodies due to centrifugal forces, failure of operation of safety devices, etc.

External causes

Damage due to lack of skill, carelessness, falling bodies, electrical over-pressure, failure of other connected machinery, entry of foreign object etc.

37


4.3 Marine insurance policy

IntroductionMarine insurance is the insurance of ships and goods in transit

Type of Marine InsuranceMarine Cargo & Marine Hull

SUBJECT MATTER OF INSURANCE• Insurance of goods in transit By Rail, Road, air or By sea

• Insurance of ships/boats whilst in dock, in sea, during repairs

• Insurance of freight Charges

• Insurance of the duty on goods

WHO HAS INSURABLE INTEREST• The Seller of the Goods

• The Buyer of the Goods

• The Transporter of the Goods

• The Financer of the Goods

FIXATION OF THE SUM INSUREDMaximum C.I.F. + 10%

• C= COST

• I= INSURANCE

• F= FREIGHT

• 10% = For other expenses

• Like handling etc.

38


CONTRACTS OF THE SALES

Analysis of a proposal starts with sale contract.

Eg. Terms of sales, price to be paid, who is responsible for insurance

FCA- FREE ON CARRIER

FAS- FREE ALONGSIDE SIDE

FOB- FREE ON BOARD- Seller risk up to loading on ship-from where the buyer’s risk starts

FOR- FREE ON RAIL/ ROAD

C%F- COST AND FREIGHT- Buyer takes insurance pays

CIF- Cost Insurance % freight ( seller takes the insurance)

39

EX works- seller’s minimum obligations. Not responsible for loading. All expenses borne by buyer including insurance

SPECIAL FEATURES OF MARINE POLICY

• Assign ability

• Agreed value policy

• Modified indemnity

• Time policies

4.4 MARINE CARGO INSURANCE• International in character- policy clauses, Inco terms

• Premium paid in local currency- claims in foreign currency

• Claims paid beyond SI(property+ expenses)

• Insurable interest at the time of loss

• No arbitration

• Recovery from carrier

MARINE CARGO CLAUSES

Clauses specify the risk covered

Three types of clauses

1. Clauses-C The restricted cover

2. Clause-B The basic cover

3. Clause-A The all risk cover

The insurance has two basic features:-1. The insurance of goods during inland transit use-ITC clause A,B or C

40

2. Insurance of goods export from/ import to India i.e. Import or Export Use ICC clause A,B or C

INLAND TRANSIT CLAUSE- A• RISK COVERED:

This insurance covers all risks of loss or damage to the subject matter insured damage the general exclusions, war exclusion & strike exclusion

Duration from the time the goods leave the seller warehouse – Transit- until the expiry of 7 days after arrival at final railway or destination town or buyer warehouse.

INLAND TRANSIT CLAUSE- B• Physical loss/ damage to insured goods caused by-

Fire

Lighting

Breakage of bridges

Collision with or by the carrying vehicle

Overturning of carrying vehicle

Derailment/ accident of the like nature to the carrying railway wagon/ vehicle

Exclusion: Identical to inland transit ( rail/road) Clause ‘A’+ mediclaim damage.

INLAND TRANSIT CLAUSE - C• RISK COVERED:

Physical loss/ damage to goods caused by- Fire Lightning

• Exclusion: general exclusion

WAR

41

Strike Exclusion

MARINE CLAIMS

MARINE CARGO CLAIMS• TOTAL LOSS- Entire shipment is Lost due to the insured peril

• PARTIAL LOSS- Cargo is damaged partially damaged or the loss of the entire package

• EXPENSES- Which are incurred to prevent aggravation of loss

The type of losses and the extent depends on cover taken

Documents for ICC – Claims

• For particular average

Policy Document

Bill Of lading

Invoice

Survey Report

Debit note or the claim bill copy of protest & subrogation

• Ship Survey report

• L.O.B Certificate

• Short landing certificate

• Bill of entry

• Bill of repairs/ replacement

• A/C of Sale proceeds

• Correspondence

CLAIM PROCEDURE• Immediate Notice of the Claim

42

• Survey Before Taking Delivery

• For shortage- Certificate of shortage, landed But Missing

• For Damaged- certificate

• Non-delivery- Certificate

• Monetary Claim on Carrier.

4.5 MISCELLANEOUS INSURANCE

4.5.1 Group Mediclaim Insurance

4.5.2 Group Personal Accident

4.5.3 WC Policy

4.5.4 Money Policy

4.5.5 Fidelity Guarantee policy

4 .5.1 GROUP MEDICLAIM INSURANCE

Hospitalization Expenses – These include room charges and operation theatre charges,

nursing expenses, fees of medical practitioner, anaesthetist and consultants.

Medicine, Consumables and Diagnostic Expenses – Cost of anaesthesia, blood, oxygen,

surgical appliances, medicine and drugs, diagnostic material and X-rays, dialysis,

chemotherapy, radiotherapy, pacemaker, artificial limbs and organs.

Domiciliary Hospitalization – The policy covers treatment for illnesses at home, subject to:

-Adverse medical condition restricting the patient from being shifted to a hospital

43

-Lack of accommodation in any hospital/nursing home.

Day Care Treatment – The policy will cover expenses incurred towards technologically

advanced treatment that does not require hospitalisation for 24 hours or more.

Domiciliary Hospitalization – We also provide cover for treatment administered at home,

subject to specified conditions.

Pre and Post-Hospitalization –Mediclaim Insurance Policy covers medical expenses for a

specified number of days.

Following Extensions would be required to be taken under Mediclaim Policy for better

coverage:

• Floater Cover

• Pre-Existing Diseases Coverage

• Time Limit Waivers ( 30 Days & First Year Exclusions Waivers)

• Maternity Benefit Extension

4.5.2 GROUP PERSONAL ACCIDENT

COVERS:

• Covers Accidents arising out of visible, external and violent means.

• Covers Death and Disability.

44

• Death should arise out of an accident caused by an external, visible and violent

means.

• A person is said to have been disabled when he is prevented from engaging in any

occupation or business following an accident. Disablement may or may not result in

loss of earning capacity

DISABLEMENT

FOLLOWING THREE TYPES OF DISABLEMENT IS COVERED UNDER THE POLICY

1. PERMANENT TOTAL DISABLEMENT (PTD)

2. PERMANENT PARTIAL DISABLEMENT (PPD)

3. TEMPORARY TOTAL DISABLEMENT (TTD)

PERMANENT TOTAL DISABLEMENT

Occurs when disablement is

• Permanent and Irrevocable

• Injured Person is prevented from engaging in gainful employment of any kind

• Loss of Limbs (feet or hands), Eyes or any vital part of the body, by physical

separation, are examples of PTD

• Involves disablement of permanent and irrevocable nature but the disablement is only

partial in nature. Examples of the above would be loss of Toe or a finger etc.

TEMPORARY TOTAL DISABLEMENT

• Total Disablement of the person for a Temporary Period which may last for a certain

number of Days or Weeks.

• An example can be a fracture following an Accident.

SUM INSURANCE

45

Linked to the income of the Employee. Maximum Sum Insurance that can be taken is 48 - 72

Times the monthly emoluments earned. Lesser Sum Insurance can also be taken.

ASSIGNMENT

• Insured has to exercise his right to assign Policy monies at the time of taking Policy.

• Assignment is to nominate the person to receive the Policy monies in the event of Death of the Insured.

CLAIMS:

• Duly completed Claim Form

• Copy of FIR if accident reported to Police

• Medical Reports for Disablement Claims, supported by medical expenses bills

• Death Certificate and Post Mortem Report for Death Claim

• Legal Heir Certificate if no assignment has been made

• Any other Document Insurers may deem fit depending on Merits of the Case.

SALIENT FEATURES OF GPA POLICIES OF VARDHMAN

• TTD Benefit is 0.5 % of CSI subject to max Rs.10,000/- per Week

• TTD Benefit is subject to 14 Days Excess

4 .5.3 WORKMEN’S COMPENSATION (W.C.)

This policy is intended to cover the employers against the legal liability to all employees under the

(a) Workmen’s Compensation Act 1923 and all subsequent amendment to said Act prior to the issuance of Policy

(b) Fatal Accidents Act 1855 and

46

(c) Common Law for death or bodily injury, sickness, illness or disease arising out of and during the course of employment. The policy would cover all types of workmen, whether permanent or temporary or under contract. The liability towards the Workmen’s Compensation is statutory as per the Workmen’s Compensation Act 1923.

RECENT CHANGES IN WC ACT

Vide Amendment No. 65 – F / 2009 in WC Act, 1923, following major changes have been effected by Central Govt notification dated January 18,2010

Scope of Act has been amended to include all employees, as against only Workmen in the Act.

This means that all employees will be entitled for compensation in case of Death/Injury suffered arising and in course of employment

Compensation due to Death/Injury under the Act will not be restricted on the basis of Rs. 4000/- per month as the wage/salary drawn by the employee (workman).

This mean that “Claim would be settled on the basis of Actual salary drawn by the employee”.

No Medical Expenses limit applicable in treatment for Injury suffered arising and in course of employment

This means that the earlier cap of Rs.2000/- is gone.

In view of the existing Policy Wordings which reads as “subsequent amendment to the said Act prior to the date of issue of the policy ”,the changes should automatically be held covered under the WC Policy of Vardhman issued wef 01.04.2010.However,they have yet to revert to our queries raised to them in this regard.

Presumably, Insurers are still examining the impact of these major changes in coverage and PSUs and many others have yet to firm up their responses.

Some Private Sector Insurers have firmed up their responses (IFFCO Tokio) but they are reluctant to inform.

47

4 .5.4 MONEY INSURANCE

This Money insurance policy covers:

• Loss of money in transit caused by robbery, theft, or any fortuitous event.

• Loss of money from the insured’s premises during business hours caused by theft or robbery

• Loss of money from the insured’s safe or strong room caused by theft or robbery.

The term money includes cash, bank drafts, currency notes, treasury notes, postal orders, money orders and postage stamps. The loss of money in transit must occur whilst being carried by the insured or his authorized employee, that is, the employees named in the schedule.

SOME OF THE ILLUSTRATIVE EXTENSIONS UNDER THE MONEY POLICY OF VARDHMAN

• Riot & Strike

• Retention of Cash in excess of 48 Hours by additional 72 Hours

• No condition of motorized Carryings

• Cash can be carried on foot as well as motorized transport

• Terrorism Risk extension

• Unnamed basis

• Not mandatory that the cash will be carried with any security guard

• Transit of cash in any bag or briefcase

• Transit any time day or night on 24X7X365 days basis

• Coverage under Section I (a), (b) & (c)

• Money Carried by Vendors of Vardhman under Contract

• Deductible Nil

Note: Some Insurers have imposed restrictions of Armed Guards company for carryings beyond certain limit

48

4 .5.5 FIDELITY GUARANTEE INSURANCE

This Policy indemnifies the employer for monetary loss due to fraud or dishonest acts of the salaried employees in connection with his occupation and duties. It thus covers the interest of the Employer in the money or property lost due to infidelity of the employees.

• Acts committed during the Policy Period is covered.

• The Geographical Scope of the Policy is worldwide.

In case the employee ceases to be in the service of the employer, discovery of the loss must be made within six months of death, dismissal or retirement of the employee.

5. RESEARCH METHODOLOGY

5.1Research Method

The first and the foremost task given was to research on the insurance. As how many types of insurances are there and how many of them does Vardhman covers.

The last years files and the data was provided along with the current year’s data and I had to analyse and compare as what are the similarities and what changes are there which has been made this year’s insurance plan as in the gun insurance last year’s insurance company i.e. 2009-10 was The Oriental Insurance and this year they shifted to The New India Assurance.

49

Analyze was done on the basis of sum- insured and the premium paid among this year’s figures and last year’s figure’s.

5.2 Data Collection Methodology

Secondary Data

The data used in the research was the secondary data. As last year’s and current year’s files were provided through which all the research part was done. An extensive research over the internet helped in obtaining appreciatively relevant information on the market for Vardhman group of companies and for the market scenario of finance and the insurance.

5.3 Study type

The study begins with secondary data of the companies records in the exploratory phase, followed by the company’s profile, insurance types, in depth knowledge about the insurance, the procedures, the claims procedures and cover note.

6. ANALYSIS

COMPARISION OF INSURANCE POLICIES F/Y 2009-10 & 2010-11

PARTICULARS F/Y 2009-10 F/Y 2010-11 EXCESS/SHORT

GODOWN UNIT-I 3645.00 4370.00 725.00 GODOWN UNIT-II 1020.00 1020.00 0.00 SALE DEPOT GODOWN 400.00 425.00 25.00 JINDAL YARN HOUSE GODOWN 20.00 25.00 5.00

50

MEHTA BANDHU GODOWN 8.00 10.00 2.00 BRANCHES GODOWN 200.00 150.00 -50.00 MSML ST-II 1300.00 1500.00 200.00 VTL FOCAL POINT 3300.00 3300.00 0.00

TOTAL 9893.00 10800.00 907.00 TRANSIT INSURANCE 40000 36000 4000

s.no Insuranse Name 2008-09 2009-10 in lakh. in lakh

sum insured

sum insured

Difference

1 Cash-In-Transit Policy 2834.25 1624.5 -1209.7551

2 Group Personal Accident

for Staff- 1368 16663 15295 for workers 7651 59612 51961

3 for policy of Godown Stock (branches) for kolkata,tripura,delhi for MSML-2 for Vardhman textile ltd. (ST-II) 2960 8028 5068

4Fire Policy of Godown Stock(VSGM Unit-I-II 12712 13430 718

5Composite Transit Fixed Asset Declaration Policy 0 10000 10000

TOTAL27525.2

5109357.

581832.

25

s.no Insuranse Name 2008-09 2009-10

premium paid

premium paid

Difference

52

1 Cash-In-Transit Policy 3185 5162 1977

2 Group Personal Accident for Staff- 3074 202960 199886 for workers 17193 460265 443072

3 for policy of Godown Stock (branches) for kolkata,tripura,delhi for MSML-2 for Vardhman textile ltd. (ST-II)

384479 248555.98

-135923.

02

4Fire Policy of Godown Stock(VSGM Unit-I-II 389363 248568 -140795

5Composite Transit Fixed Asset Declaration Policy 0 33090 33090

TOTAL #REF!1198600

.98401306

.98

7. CONCLUSION AND RECCOMENDATION

The sum insured has increased in many of the insurance policies. For the group personal accident policy, for staff, the sum insured has seen an increase from 1368 to 16663 and, for workers, from 7651 to 59612.

The company has preferred the New India Assurance Co. Ltd. for its insurance from many years now and the rate of premium on certain categories likes cash in transit and stock in transit has seen increase and all other assets policy, inside godown policies & GPA policies have all seen a decrease over the past few years.

I would recommend that the company should consult and enquire with other companies for lower rate of premium and reduce the unnecessary expenses within the organization. And

53

also, the sum insured on different policies as per the need to the company may also be increased.

And a proper check should be kept on the cash in transit and stock in transit because all such small expenses can result in big loss one day.

54