Invest in training agents: Vijayan tells insurers

Mumbai: Insurance behemoth Life Insurance Corporation of India (LIC) today called upon the industry to invest heavily in training their agents if it wants to grow more profitably, reports PTI.

Pointing out that the biggest challenge to faster growth is non-professional or poorly/un-trained agents, LIC chairman T S Vijayan said it is high time that the life insurance industry professionalised its distribution channels by training its agents.

"We have to migrate to fully-trained professional agents.

Unless we as an industry invest in training our agents and making them qualified trained professionals, we cannot continue to grow. If we don't invest in this, at least we should entrust this job to some professional institutes which can do this for us," Mr Vijayan said at an insurance seminar organised by the Associated Chambers of Commerce and Industry (Assocham) here today.

Pointing out that when LIC was created on 1 September, 1956 by nationalising as many as 245 private players, all of them making profits but even after a decade of operations, the private players are still in the red, he said better trained agents can help the industry clip at faster growth.

Stating that the controversial Unit-Linked Insurance Plans (ULIPs) have been the biggest growth driver ever since their induction, has for the past few years been contributing over 80% of new incremental premia, Mr Vijayan said, the Insurance Regulatory & Development Authority (IRDA) guidelines on ULIPs will offer the policyholders a much-fairer deal.

The IRDA norms on new ULIPs come into force from today, which besides offering life cover on all ULIPs, also offer lower lock-in periods among others.

On the just-introduced Direct Taxes Code (DTC), which exempts income tax on investment of up to Rs1 lakh in approved funds, he said it will help a lot more the people to buy insurance policies.



Deepak vyas

7 years ago

Mr.Vijayan, Statement show he wants Industry to grow in a professional manner, & he is concerned about selling the Product which matches the Financial Planning of the customer.

These sectors look good: IT in the near term, metals over the long term

Over the past month, the BSE Metals and IT indices have been sluggish performers. In the last few sessions they have actually slipped into a bearish mode. Is there an opportunity here? Or are IT and metal stocks best avoided?

CLSA, one of Asia's main brokerages, throws some light on the IT and metals sector in India. For metals, there is very little clarity about pricing. However, one thing is certain, says CLSA - "Indian metal firms are about to enter a phase of strong volume growth over the next three years as multiple projects get commissioned, which should drive faster earnings accretion for most."

The firm evaluated companies on six parameters - volume growth, gearing, product-mix improvement/cost-reduction measures, resource ownership, conversion costs and  commodity-price support and came up with Hindustan Zinc, Sterlite, Hindalco, Jindal Steel and JSW Steel as getting the best composite scores. "These companies are reasonably valued at 8.1-13.9 x FY12CL earnings," the report says. However, it believes that these stocks will offer superior returns only over 18 months. This is not a short-term bet.

CLSA prefers base metals to iron ore and steel. Among non-ferrous metals, it prefers aluminium to zinc on a relative basis and expects iron-ore prices to decline from the current $148/tonne to $90/tonne by 2011. Its resources team believes that seaborne iron ore supply will grow faster than demand from 2H10 and break the decade-long trend of undersupply.

This will also put pressure on steel prices. While it accepts that oversupply still exists in nonferrous metals, it prefers aluminium to zinc, based on cost support and because aluminium benefits from renminbi appreciation (Chinese smelters are not as cost effective).

According to CLSA, volumes will actually average a 15% compounded annual growth rate (CAGR) over 2011-13, compared with 5% in 2008-11 - a threefold jump. Most of the capacity is coming up in steel and aluminium. Take a look at the timeline below (Source: CLSA report dated 30 August 2010).

Of the projects above, CLSA envisages delays for SAIL, Sesa Goa, Sterlite Energy and Vedanta Aluminium. Vedanta Aluminium has been denied approval to start mining bauxite at the Niyamgiri hills.

Sterlite Energy's first 600MW unit has seen a six-month delay and there could be some delays at the remaining three units as well.

Within the steel expansions, the most competitive one is by JSPL at $602/tonne against global average costs of $1,000/tonne while Tata Steel and SAIL will prove to be the most expensive at $975/tonne and $1,000/tonne. However, most are relatively lower than the global average and hence, competitive. The aluminium expansions are at a much lower cost than the global average: BALCO at $2,328/tonne, Vedanta Aluminium at $2,336/tonne, and Hindalco at $2,761/tonne against a global average of $4,000.

While volume growth is expected to accelerate for most metal companies, the highest will be experienced by Sterlite (26%-48% volume CAGR), Sesa Goa (20%-25% CAGR), Jindal Steel (10%-25% CAGR) and JSW Steel (7%-40% CAGR).

CLSA does not foresee any supply off-take problems. It points out that "India is a net importer (of steel) but is a net exporter in aluminium and zinc. However, Indian aluminium and zinc producers feature lower on the global cost curve and it is highly unlikely that they will face a problem selling their output in global markets." The broker also points out that companies like Hindustan Zinc and Sesa Goa will acquire global scale after expansion. In fact, Sesa could become the world's fourth-largest iron ore company in four years (even though it will still be far behind the top three) while Hindustan Zinc is set to become the world's largest zinc producer.

As mentioned earlier, CLSA ranked Indian metal firms on six parameters to come up with favourites. In terms of volume growth, Sterlite, Sesa Goa and JSW Steel were the best. In terms of gearing, Bhushan Steel and Tata Steel scored the lowest while Hindustan Zinc, which has net cash of $2.5 billion, Nalco with $600 million and SAIL with $1.2 billion scored the best. In product mix and cost-reduction measures, Bhushan Steel and JSW Steel scored the best. Hindustan Zinc, Sesa Goa and JSPL got the best scores in resource ownership while Hindustan Zinc, Sesa, Bhushan and JSW scored highest in conversion costs.

Turning to IT, CLSA has a near-term positive view. It believes that with order-book trends pointing up and IT budgets improving over the next couple of months, stocks should do well. It prefers Tier-I stocks over Tier-II ones and reiterates Infosys and TCS as top picks.

It says, "Over 52% of the 118 CIOs surveyed this month indicated that their 2011 IT budgets could be up y-o-y in 2011 with 41% indicating that services outsourcing to low-cost locations will rise through 2011."

CLSA does not expect the kind of industry-wide pricing pressure seen in FY09. It expects attrition to reduce, going forward. It believes that "protectionist noises (from the US) have been driven by the mid-term senate elections in the US and should go down post Nov 2010."


UID: Will NAC come to the rescue of India’s democracy?

It is important that the UID project be halted and a committee be appointed to look into the various issues plaguing the project; further, a thorough feasibility and impact assessment study is needed before more taxpayer money is spent on this venture

Today's Hindustan Times carries an article titled 'Unique ID plan hits advisory panel roadblock'. The article states that some of the members of NAC (the National Advisory Council, an apex body appointed by the prime minister and headed by Sonia Gandhi, UPA chairperson), have raised serious concerns about the UID project.

"There is no real informed debate on the project which has enormous potential of segregating the population (based on few parameters). It is a matter concerning people at large - public money being spent to profile common public," a member told Hindustan Times, adding the opinion is shared by some more people in the council.

"There is a vast difference between the census and UID. Without explaining what it means, memorandums of understanding (MoUs) are being inked with private companies. They say UID would reform systems like the public distribution system (PDS), but no detail of how it will is available in the public domain," said activist Aruna Roy.

The NAC of India is an advisory body set up to monitor the implementation of the UPA government's manifesto, the Common Minimum Programme (CMP). It is a brainchild of Congress party president, Sonia Gandhi. It is also informally called as UPA's Planning Commission for social agenda.

The NAC is a mix of activists, retired bureaucrats, economists, politicians and an industrialist with unstinting passion for social change.

To give an instance of the stellar record of the members of the NAC, here is a brief from their Wikipedia profiles.

Aruna Roy is a political and social activist who founded and heads the Mazdoor Kisan Shakti Sangathana ('Workers and Peasants Strength Union'). She is best known as a prominent leader of the Right to Information movement, which led to the enactment of the Right to Information (RTI) Act in 2005. In 2000, she received the Ramon Magsaysay Award for Community Leadership.

Anu Aga is an Indian businesswoman and social worker, who led Thermax Ltd, the Rs 830-crore energy and environment engineering major, as its chairperson from 1996-2004. She had figured among the eighth richest Indian women, and in 2007 was part of the 40 Richest Indians by net worth according to Forbes magazine.

After retiring from Thermax, she took to social work, and in 2010 was awarded the Padma Shri (Social Work) by the Indian government.

Jean Drèze is a development economist who has been influential in Indian economic policymaking. He is a naturalised Indian of Belgian origin. His work in India includes issues like hunger, famine, gender inequality, child health and education, and the NREGA. He had conceptualised and drafted the first version of the NREGA.

His co-authors include Nobel laureate in economics Amartya Sen, with whom he has written on famine, and Nicholas Stern, with whom he has written on policy reform when market prices are distorted. He is currently an honorary Professor at the Delhi School of Economics, and Senior Professor at the GB Pant Social Science Institute, Allahabad.

Deep Joshi is an Indian social worker and NGO activist and the recipient of the 2009 Magsaysay award. He was recognised for his vision and leadership in bringing professionalism to the NGO movement in India. He co-founded a non-profit organisation, Professional Assistance for Development Action (PRADAN) of which he is the executive director. He was awarded the 2009 Magsaysay award for Community Leadership for his work for 'development of rural communities'.

Some of the members of the NAC want answers to questions about UID. Nandan Nilekani, UIDAI chairperson, was supposed to address the NAC on Monday, but apparently the discussion has been postponed to late September.

As has been stated by various articles, these concerns are not just valid but are of a very serious nature. To put it bluntly, the UID is building an infrastructure for future authoritarianism in the country. It is most important to thrash these concerns out completely. In fact, it is important that the UID project be halted and a committee be appointed to look into these issues deeply; further a thorough feasibility and impact assessment study is needed before more of taxpayer's money is spent on this project. What is at stake is not just possibly hundreds of thousands of crores of  taxpayer's money, but democracy itself.

Let us hope that the esteemed NAC members will have a thorough discussion with UIDAI regarding this issue, and resolve these issues.

(The author has a B Tech from IIT Bombay, and a PhD from Columbia University, New York. He currently runs a start-up, Teknotrends Software Pvt Ltd that does cutting-edge work in the area of network security).




7 years ago

I absolutely agree with arihant, there is no head or tail to this article. It’s just meaningless. Not a thing is mentioned about how uid is wrong. Its such journalism which is plaguing India today
The other interesting thing is there is so much wrong in India today, instead of writing about that these kind of journalist write about non issues


7 years ago

Let all the concerns be listed serially in the article rather than trying to garner respect on the basis of the profiles of people.

This article appears to be more of an attempt to scare and brainwash than inform. I am expecting that ML will ensure sufficient factual and relevant detailing of any such articles in future.

K B Patil

7 years ago

You have the NAC and then you have the cabinet. Of the cabinet members, the HM is easily the most effective and dynamic person, a go getter. The flip side is that he is very obstinate. As Digvijay Singh put it aptly, he suffers from "INTELLECTUAL ARROGANCE".
So, all citizens who rightly prize their privacy, are worried about the government's overdrive regarding access to emails, our mobile conversations etc. Imagine how vulnerable we will be in a corrupt setup. Apart from the daily routine corruption that we all face, babus can now have a great new way of making money on the side. Just access a person's bank records and you might have a whole lot of identity theft and similar problems. Isn't it our Home Minister's duty to build in adequate safeguards. I dont see any and that's my worry.

Ram Krishnaswamy

7 years ago

Let us hope that the National Advisory Council can apply the breaks on this runaway train called Aadhaar before a catastrophic crash


7 years ago

The manner in which UID is being pushed through despite some serious objections is a matter of concern. I agree with the author that the UID project has to be halted until all aspects of UID, including those relating to privacy, are reviewed in a transparent manner. Going by the composition of NAC, it appears to be the right forum where a beginning can be made. . Given the importance of the issue, I hope that NAC would be able to take it up in the next meeting.

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