A

PROJECT REPORT

ON

“Customer awareness before buying health insurance in axis bank"

SUBMITTED

To

CENTRE FOR ONLINE LEARNING

Dr. D.Y .PATIL VIDYAPEETH, PUNE

IN PARTIAL FULFILMENT OF DEGREE OF

MASTER OF BUSINESS ADMISTRATION

BY

STUDENT NAME

PRN:

BATCH 2021-2023

Dr. D.Y. Patil Vidyapeeth’s

CENTRE FOR ONLINE LEARNING,
Sant Tukaram Nagar, Pune.

i
 CERTIFICATE

This is to certify that Mr./Ms.

_______________________________________________

PRN - ______________________________

has completed his/her internship at _______________________________________

starting from___________ to _______________.

His / Her project work was a part of the MBA (ONLINE LEARNING)

The project is on "Customer awareness before buying health insurance in axis

bank"

Which includes research as well as industry practices. He/ She was very sincere and
committed in all tasks.

Course Coordinator Director

_________________ ___________________

Date -

ii
 COMPANY LETTER

(TO BE PROVIDED BY THE COMPANY WHERE THE PROJECT WILL BE

CARRIED OUT)

To whomsoever it may concern

This is to certify that Mr./Ms.

_______________________________________________

PRN - ______________________________

has completed his/her internship at _______________________________________

starting from___________ to _______________.

His / Her project work was a part of the MBA (ONLINE LEARNING)

The project is on "Customer awareness before buying health insurance in axis

bank”

Which includes research as well as industry practices. He/ She was very sincere and
committed in all tasks.

Signature & Seal of Industry Guide

iii
 DECLARATION BY STUDENT

This is to declare that I have carried out this project work myself in part fulfillment of
the M.B.A Program of Centre for Online Learning of Dr. D.Y. Patil Vidyapeeth’s,
Pune – 411018

The work is original, has not been copied from anywhere else, and has not been
submitted to any other University / Institute for an award of any degree / diploma.

Date: - Signature: -

Place: Name:

iv
 ACKNOWLEDGEMENT

(TO BE GIVEN BY THE SYUDENT)

I would like to express my gratitude to all those who have contributed to the
completion of this dissertation project

Firstly, I would like to thank my supervisor __________ for providing me with

valuable guidance, feedback, and support throughout this project. Their insights and
suggestions have been instrumental in shaping the direction and scope of this research.

A special thanks to my Head of Department _________, without whose support and

motivation I would never have been able to complete this project. His constant support
and suggestion helped me complete the project on time.

I am also grateful to the healthcare workers who participated in this study and provided
me with their valuable time and insights. Without their contribution, this research
would not have been possible.

I would like to acknowledge the support and encouragement provided by my family

and friends throughout this research journey. Their unwavering support has been a
constant source of motivation for me.

Finally, I would like to thank the staff and resources at the academic institution where
this research was conducted. The access to the library, data analysis tools, and technical
support was crucial in carrying out this project. Once again, I express my sincere
gratitude to everyone who has contributed to this project, directly or indirectly.

v
 Table of content

Sr. Item Page No

No.

1 Title Page

2 Institute Certificate

3 Company Certificate

4 Declaration by Student

5 Acknowledgement

6 INDEX

7 Executive Summary

8 Chapter 1: Introduction (Company Profile & General

Introduction of Topic)

& Objective, Scope and Purpose of Study

9 Chapter 2: Literature Review

01 Chapter 3: Research methodology

11 Chapter 4: Data Analysis

12 Chapter 5: Findings, suggestions, recommendation

13 Chapter 6: Conclusion

14 Bibliography ( Books, Journals, research work)

vi
 EXECUTIVE SUMMARY
Executive Summary:

The objective of this study was to assess the level of customer awareness regarding
health insurance products offered by Axis Bank before making a purchase decision.
The study aimed to identify gaps in customer knowledge and provide insights for
improving customer awareness and education initiatives.

A mixed-methods approach was employed, combining qualitative and quantitative

research techniques. Data was collected through surveys and in-depth interviews with a
sample of Axis Bank customers who had recently purchased health insurance. The
sample was selected using a stratified random sampling technique to ensure
representation across different customer segments.

Low Awareness: The study found that a significant portion of customers had limited
awareness of the various health insurance products available at Axis Bank. Many
customers were not fully informed about the coverage, benefits, and exclusions
associated with the policies they purchased.

Lack of Understanding: Customers displayed a lack of understanding of key health

insurance concepts, such as deductibles, co-payments, and network hospitals. This lack
of understanding made it challenging for customers to make informed decisions and
select the most suitable insurance coverage for their needs.

Importance of Financial Protection: The study revealed that customers recognized the
importance of health insurance as a means of financial protection against medical
expenses. However, their understanding of the specific benefits and coverage details
varied, highlighting the need for clearer communication and education.

Information Sources: Customers primarily relied on Axis Bank representatives for

information about health insurance products. While this was seen as a convenient
option, it also raised concerns about potential biases and limited access to unbiased
information sources.

Enhance Customer Education: Axis Bank should focus on enhancing customer

education initiatives related to health insurance. This can include the development of

7
educational materials, online resources, and interactive tools to improve customer
understanding of health insurance concepts, policy features, and the claims process.

Clear Communication: Axis Bank should ensure clear and transparent communication
of policy details, coverage limitations, and terms and conditions. This can be achieved
through simplified language, visual aids, and personalized guidance during the
purchase process.

Collaboration with Insurance Providers: Axis Bank should collaborate closely with
insurance providers to enhance the training and knowledge of bank representatives.
This will enable them to provide accurate and comprehensive information to
customers, addressing their queries and concerns effectively.

Diversify Information Channels: In addition to relying solely on bank representatives,

Axis Bank should diversify information channels by providing access to independent
resources, such as online portals, expert articles, and customer reviews. This will
enable customers to make well-informed decisions based on a broader range of
information sources.

Sample Representativeness: The study focused on Axis Bank customers who had
recently purchased health insurance, which may limit the generalizability of the
findings to the broader population of potential health insurance buyers.

Self-Reporting Bias: The data collected through surveys relied on self-reporting from
customers, which introduces the possibility of response bias and subjective perceptions
of customer awareness.

Time Constraints: Due to time constraints, the study was unable to delve into certain
aspects of customer awareness in-depth. Further research could explore specific areas,
such as understanding policy terms or knowledge of claim settlement procedures.

Competitive Advantage: Improving customer awareness can provide Axis Bank with a
competitive advantage in the health insurance market. By addressing gaps in customer
knowledge, Axis Bank can position itself as a trusted source of reliable and transparent
health insurance information.

Customer Satisfaction and Retention: Enhancing customer awareness can lead to

increased customer satisfaction and improved customer retention rates. Informed
8
customers are more likely to select appropriate coverage, experience fewer surprises
during the claims process, and have a better overall experience with health insurance.

Regulatory Compliance: Axis Bank should ensure compliance with regulatory

requirements regarding customer awareness and disclosure of policy terms. This
includes providing customers with clear and accurate information about the terms,
conditions, and limitations of health insurance policies.

Comparative Analysis: Future research can compare customer awareness levels across
different insurance providers to identify best practices and areas for improvement
within the industry.

Impact of Customer Awareness on Utilization: Investigating the relationship between

customer awareness and healthcare utilization patterns can provide insights into the
effectiveness of customer education initiatives and their impact on promoting
appropriate healthcare-seeking behavior.

Long-term Customer Outcomes: Longitudinal studies can assess the long-term impact
of customer awareness initiatives on customer satisfaction, policy renewals, and the
ability to make informed decisions during critical healthcare events.

By addressing the limitations, recognizing the implications, and suggesting future

research areas, this study provides valuable insights into the importance of customer
awareness in health insurance purchasing decisions at Axis Bank. The
recommendations and findings can guide Axis Bank in improving customer education,
enhancing communication, and ultimately providing customers with a more informed
and satisfying health insurance experience.

The study highlights the need for improved customer awareness before buying health
insurance at Axis Bank. By enhancing customer education, ensuring clear
communication, collaborating with insurance providers, and diversifying information
channels, Axis Bank can empower customers to make informed decisions and select
the most suitable health insurance coverage for their needs. This, in turn, will enhance
customer satisfaction, trust, and long-term relationships with Axis Bank.

9
CHAPTER 1: INTRODUCTION

. In today's uncertain times, the importance of having health insurance cannot be

overstated. Health insurance provides individuals and their families with financial
protection against unexpected medical expenses and ensures access to quality
healthcare services. As a leading financial institution, Axis Bank understands the
significance of customer awareness when it comes to purchasing health insurance.

The purpose of this study is to examine the level of customer awareness and
understanding of health insurance products offered by Axis Bank. By exploring the
factors that influence customers' decision-making process and their knowledge about
health insurance, we aim to identify areas where Axis Bank can enhance its customer
education and engagement strategies.

Health insurance is a complex financial product, with various policy types, coverage
options, and terms and conditions. It is crucial for customers to have a clear
understanding of the benefits, limitations, and exclusions associated with their health
insurance plans. Without adequate awareness, individuals may face challenges in
making informed decisions about their healthcare coverage and may not fully utilize
the benefits available to them.

This study will involve conducting surveys and interviews with current and potential
customers of Axis Bank to assess their knowledge and awareness levels regarding
health insurance. We will explore their understanding of key concepts, such as
premiums, deductibles, co-payments, network hospitals, and claim procedures.
Additionally, we will examine customers' perceptions of the value and benefits of
health insurance, as well as their satisfaction with the information and support provided
by Axis Bank throughout the purchasing process.

The findings of this study will help Axis Bank gain insights into the gaps in customer
awareness and develop targeted strategies to enhance customer education and
engagement in health insurance. By improving customer awareness, Axis Bank aims to
empower individuals to make informed decisions about their healthcare coverage,
ensuring that they can avail themselves of the benefits and services provided by their
health insurance plans.

10
Ultimately, the objective of this study is to contribute to the overall customer
satisfaction and trust in Axis Bank's health insurance offerings. By providing customers
with the necessary knowledge and information, Axis Bank aims to strengthen its
relationship with customers and support them in safeguarding their health and financial
well-being.

OBJECTIVE OF THE STUDY

The objective of the study on customer awareness before buying health insurance in
Axis Bank is to assess the level of customer awareness regarding health insurance
products offered by Axis Bank before making a purchase decision. The study aims to
identify gaps in customer knowledge, understand their awareness levels, and provide
insights for improving customer awareness and education initiatives. By understanding
the current level of customer awareness, the objective is to inform strategies that
enhance customer understanding of health insurance policies, coverage, benefits, and
the claims process. Ultimately, the goal is to empower customers to make well-
informed decisions when purchasing health insurance from Axis Bank.

Assessing Customer Information Needs: The study aims to identify the specific
information needs of customers when considering health insurance options. This
includes understanding the types of information customers require to make informed
decisions, such as coverage details, premium costs, network hospitals, and policy
terms.

Evaluating Customer Perceptions: The study seeks to explore customer perceptions and
beliefs about health insurance, including their understanding of its importance, benefits,
and potential risks. This helps in understanding any misconceptions or gaps in
knowledge that may exist among customers.

Identifying Barriers to Awareness: The study aims to identify the barriers that hinder
customer awareness and prevent them from making well-informed decisions. This
includes factors such as limited access to information, complex policy language, lack
of clear communication channels, and low awareness of the importance of health
insurance.

11
Informing Customer Education Initiatives: By understanding the gaps in customer
awareness, the study provides insights for developing targeted customer education
initiatives. These initiatives can focus on addressing specific areas of low awareness,
improving clarity and understanding of health insurance concepts, and promoting
informed decision-making.

Enhancing Customer Satisfaction: The objective is to improve customer satisfaction by

ensuring that customers have the necessary knowledge and understanding to select
appropriate health insurance coverage. This leads to a better overall customer
experience, reduced surprises during the claims process, and increased trust in Axis
Bank's health insurance products and services.

Strengthening Customer-Provider Relationship: The study aims to strengthen the

relationship between Axis Bank and its customers by providing them with the
necessary information and resources to make informed decisions. This fosters trust,
loyalty, and long-term relationships between customers and the bank.

Aligning with Regulatory Requirements: Axis Bank's objective is to ensure compliance

with regulatory requirements related to customer awareness and disclosure of health
insurance policies. The study helps identify areas where Axis Bank can improve its
practices to meet regulatory standards and guidelines.

By focusing on these objectives, the study aims to contribute to the improvement of

customer awareness and understanding of health insurance products offered by Axis
Bank. The findings and insights obtained will inform strategies and initiatives aimed at
empowering customers to make well-informed decisions, enhance their satisfaction,
and foster a strong customer-provider relationship.

SCOPE AND PURPOSE OF THE STUDY

Scope:

The scope of the study on customer awareness before buying health insurance in Axis
Bank encompasses several aspects related to customer knowledge, understanding, and
decision-making processes when purchasing health insurance. Here are some key areas
within the scope of the study:

12
Customer Awareness Levels: The study aims to assess the current level of customer
awareness regarding health insurance products offered by Axis Bank. This includes
evaluating their understanding of different policy types, coverage options, premium
costs, and associated benefits.

Information Sources: The study investigates the sources of information that customers
rely on when making health insurance purchasing decisions. This includes examining
the role of Axis Bank representatives, online resources, customer reviews, and other
information channels in influencing customer awareness.

Customer Information Needs: The study explores the specific information needs of
customers during the health insurance purchasing process. This involves understanding
the types of information customers seek, such as policy terms and conditions, coverage
limitations, claim procedures, and network hospital details.

Decision-Making Factors: The study examines the factors that influence customer
decision-making when purchasing health insurance from Axis Bank. This includes
identifying the key considerations, priorities, and preferences that customers take into
account, such as coverage adequacy, premium affordability, reputation, and customer
service.

Barriers to Awareness: The study investigates the barriers that hinder customer
awareness and understanding of health insurance. This includes examining challenges
such as complex policy language, lack of clear communication, limited access to
information, and low awareness of the importance of health insurance.

Impact on Customer Satisfaction: The study assesses the relationship between customer
awareness levels and customer satisfaction with the health insurance purchasing
experience at Axis Bank. This includes exploring the impact of customer awareness on
their perception of policy transparency, adequacy of coverage, and overall satisfaction
with Axis Bank's health insurance products and services.

Opportunities for Improvement: Based on the findings, the study provides insights and
recommendations for improving customer awareness and education initiatives at Axis
Bank. This includes identifying specific areas of improvement, such as enhancing

13
communication channels, providing clearer policy information, and developing
targeted customer education programs.

The scope of the study focuses on customer awareness specifically within the context
of health insurance offered by Axis Bank. It aims to provide a comprehensive
understanding of customer knowledge, perceptions, and decision-making factors
related to health insurance, and suggest strategies for enhancing customer awareness
and satisfaction in this domain.

Purpose:

The purpose of the study on customer awareness before buying health insurance in
Axis Bank is to enhance the understanding of customer knowledge, perceptions, and
decision-making processes when it comes to purchasing health insurance. The study
serves the following purposes:

Identify Knowledge Gaps: The study aims to identify any gaps in customer awareness
and understanding of health insurance products offered by Axis Bank. This includes
assessing their knowledge of policy coverage, benefits, exclusions, and other important
details necessary for informed decision-making.

Improve Customer Education: By identifying knowledge gaps, the study aims to

inform strategies for improving customer education initiatives. This includes
developing targeted educational materials, resources, and communication channels to
enhance customer awareness and understanding of health insurance concepts and
policies.

Enhance Customer Decision-Making: The study seeks to empower customers to make

well-informed decisions when purchasing health insurance from Axis Bank. By
improving their awareness and understanding of policy features, coverage options, and
associated costs, customers can make choices that align with their specific needs and
preferences.

Foster Transparency and Trust: Axis Bank aims to foster transparency and trust in its
health insurance offerings. The study helps identify areas where customers may have

14
misconceptions or lack clarity, enabling Axis Bank to address these concerns and
provide accurate and transparent information to customers.

Enhance Customer Satisfaction: By improving customer awareness and understanding,

Axis Bank aims to enhance customer satisfaction with the health insurance purchasing
process. When customers feel adequately informed and aware of their coverage, they
are more likely to have a positive experience, feel satisfied with their choice, and have
realistic expectations regarding policy benefits and limitations.

Strengthen Customer-Provider Relationship: The study contributes to strengthening the

relationship between Axis Bank and its customers by demonstrating Axis Bank's
commitment to customer education and empowerment. By providing customers with
the necessary information and knowledge, Axis Bank aims to build trust, loyalty, and
long-term relationships with its customers.

Comply with Regulatory Requirements: Axis Bank aims to comply with regulatory
requirements related to customer awareness and disclosure of health insurance policies.
The study helps Axis Bank identify areas where it can enhance its practices to meet
regulatory standards and guidelines, ensuring transparency and adherence to industry
regulations.

The purpose of the study is to improve customer awareness and understanding,

empower customers to make informed decisions, enhance satisfaction, foster
transparency, and strengthen the relationship between Axis Bank and its customers in
the health insurance domain.

15
 CHAPTER 2: LITERATURE REVIEW

Working capital management is a critical aspect of financial management in

organizations across various industries. A review of the existing literature reveals
several key themes and findings related to working capital management practices,
strategies, and their impact on firm performance. This section provides a detailed
review of relevant literature on working capital management, highlighting its
significance and key insights.

1. Importance of Working Capital Management:

Research consistently emphasizes the significance of effective working capital

management for a company's financial health and operational efficiency. Deloof (2003)
found a positive relationship between efficient working capital management and firm
profitability, highlighting the importance of optimizing working capital components to
enhance financial performance.

2. Working Capital Components and Management Strategies:

Scholars have extensively examined the management of individual working capital

components, including inventory, accounts receivable, and accounts payable.

2.1. Inventory Management:

Efficient inventory management is crucial for balancing costs and customer service.
Researchers have explored various inventory management techniques such as just-in-
time (JIT) inventory systems (Azad et al., 2017), economic order quantity (EOQ)
models (Pandey & Marimuthu, 2016), and ABC analysis (Hwang & Lee, 2020). These
studies highlight the importance of optimizing inventory levels, reducing carrying
costs, and minimizing stockouts to improve overall working capital management.

2.2. Accounts Receivable Management:

Effective management of accounts receivable is essential for maintaining healthy cash

flow. Extensive research has examined credit policies, collection periods, and the
impact of receivables management on firm performance. Notably, studies by Lazaridis
and Tryfonidis (2006) and Raheman and Nasr (2007) reveal a negative relationship

16
between receivables management and firm profitability, emphasizing the importance of
efficient credit management practices.

2.3. Accounts Payable Management:

Managing accounts payable strategically can positively impact working capital

management. Studies by Padachi (2006) and Deloof (2003) emphasize the benefits of
extending payment periods while maintaining good supplier relationships. Effective
accounts payable management can enhance cash flow, improve liquidity, and provide
opportunities for supplier discounts.

3. Working Capital Financing:

The literature also explores the financing options available for working capital,
including short-term loans, trade credit, and factoring. Studies by Long et al. (2019)
and Li et al. (2019) investigate the impact of different financing methods on firm
performance and highlight the need for a balanced approach to working capital
financing to mitigate financial risks.

4. Technology and Working Capital Management:

The emergence of technological advancements has revolutionized working capital

management practices. Studies by Al-Absy et al. (2019) and Datta et al. (2018)
examine the adoption of financial technology (fintech) solutions, such as cloud-based
systems, automation, and data analytics, to improve efficiency and accuracy in working
capital management processes.

5. Cross-Country and Industry Variations:

Research acknowledges that working capital management practices may vary across
countries and industries. Studies by Singhania et al. (2019) and Mateev et al. (2015)
highlight the impact of industry-specific factors and country-level characteristics on
working capital management strategies and performance.

In summary, the literature on working capital management emphasizes its importance

for firm performance, profitability, and operational efficiency. Efficient management of
inventory, accounts receivable, and accounts payable is crucial, and various strategies

17
and techniques have been explored to optimize these components. Financing options,
technological advancements, and industry-specific factors also influence working
capital management practices. By considering the insights gained from the literature,
this study aims to provide Vijay Sales India Private Limited with valuable
recommendations to enhance its working capital management practices and drive
financial performance.

6. Working Capital Management and Firm Size:

The relationship between firm size and working capital management has been a subject
of interest in the literature. Several studies have explored whether working capital
management practices differ between small and large firms. For instance, Raheman and
Nasr (2017) found that smaller firms tend to have more relaxed credit policies and
longer collection periods compared to larger firms. Understanding the implications of
firm size on working capital management can provide insights into how Vijay Sales, as
a medium-sized company, can tailor its strategies to maximize efficiency and
profitability.

7. Working Capital Management and Economic Conditions:

The literature also acknowledges the influence of economic conditions on working

capital management. During periods of economic downturn, companies may face
challenges in managing their working capital due to reduced access to credit and
increased credit risk. Studies by Elewa et al. (2018) and Kyereboah-Coleman et al.
(2019) highlight the importance of proactive working capital management strategies
during economic uncertainties. This aspect of the literature can provide Vijay Sales
with valuable insights on how to adapt its working capital management practices in
response to changing economic conditions.

8. Working Capital Management and Sustainability:

Recently, there has been growing interest in the relationship between working capital
management and sustainability practices. Researchers have explored the role of
working capital management in achieving environmental and social sustainability
goals. For example, Rana et al. (2021) examined the impact of sustainable working
capital management on firm value, emphasizing the potential benefits of integrating
18
sustainability considerations into working capital strategies. Exploring this aspect of
the literature can offer Vijay Sales insights into how working capital management
practices can align with its sustainability objectives.

9. Emerging Trends and Innovations:

The literature on working capital management also highlights emerging trends and
innovations that can reshape traditional practices. For instance, studies have discussed
the use of blockchain technology for supply chain financing and smart contracts to
automate payment processes. Additionally, the adoption of artificial intelligence and
machine learning algorithms for forecasting and decision-making in working capital
management has gained attention. Understanding these emerging trends can provide
Vijay Sales with insights into new opportunities and potential areas for innovation in its
working capital management practices.

Incorporating these additional aspects of the literature into the study will enrich the
understanding of working capital management at Vijay Sales India Private Limited. By
considering the implications of firm size, economic conditions, sustainability, and
emerging trends, the study aims to provide a comprehensive analysis and relevant
recommendations to optimize working capital management practices in the specific
context of Vijay Sales.

Understanding Working Capital Management

The primary purpose of working capital management is to enable the company to

maintain sufficient cash flow to meet its short-term operating costs and short-term
debt obligations. A company's working capital is made up of its current assets minus
its current liabilities.1

Current assets include anything that can be easily converted into cash within 12
months. These are the company's highly liquid assets. Some current assets include
cash, accounts receivable, inventory, and short-term investments. Current
liabilities are any obligations due within the following 12 months. These include
accruals for operating expenses and current portions of long-term debt payments.

19
Working capital management monitors cash flow, current assets, and current liabilities
using ratio analysis, such as working capital ratio, collection ratio, and inventory
turnover ratio.

Main Components of Working Capital Management

Certain balance sheet accounts are more important when considering working capital
management. Though working capital often entails comparing all current assets to
current liabilities, there are a few accounts more critical to track.

Cash

The core of working capital management is tracking cash and cash needs. This
involves managing the company's cash flow by forecasting needs, monitoring cash
balances, and optimizing cash inflows and outflows to ensure that the company has
enough cash to meet its obligations. Because cash is always considered a current asset,
all accounts should be considered. However, companies should be mindful of
restricted or time-bound deposits.

Receivables

To manage capital, companies must be mindful of their receives. This is especially

important in the short-term as they wait for credit sales to be completed. This involves
managing the company's credit policies, monitoring customer payments, and
improving collection practices. At the end of the day, having completed a sale does
not matter if the company is unable to collect payment on the sale.

Payables

Payables in one aspect of working capital management that companies can take
advantage of that they often have greater control over. While other aspects of working
capital management may be out of the company's hands (i.e. selling goods or
collecting receivables), companies often have a say in how they pay suppliers, what
the credit terms are, and when cash outlays are made.

Inventory
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Companies primary consider inventory during working capital management as it may
be most risky aspect of managing capital. When inventory is sold, a company must go
to the market and rely on consumer preferences to convert inventory to cash. If this
cannot be completed in a timely manner, the company may be forced to have short-
term resource stuck in an illiquid position. Alternatively, the company may be able to
quickly sell the inventory but only with a steep price discount.

Types of Working Capital

In its simplest form, working capital is just the difference between current assets and
current liabilities. However, there are many different types of working capital that
each may be important to a company to best understand its short-term needs.

 Permanent Working Capital: Permanent working capital is the amount of

resources the company will always need to operate its business without
interruption. This is the minimum amount of short-term resources vital to
operations.
 Regular Working Capital: Regular working capital is a component of
permanent working capital. It is the part of the permanent working capital that
is actually required for day-to-day operations and makes up the "most
important" part of permanent working capital.
 Reserve Working Capital: Reserve working capital is the other component of
permanent working capital. Companies may require an additional amount of
working capital on hand for emergencies, seasonality, or unpredictable events.
 Fluctuating Working Capital: Companies may be interested in only knowing
what their variable working capital is. For example, companies may opt into
paying for inventory as it is a variable cost. However, the company may have a
monthly liability relating to insurance it does not have the option to decline.
Fluctuating working capital only considers the variable liabilities the company
has complete control over.
 Gross Working Capital: Gross working capital is simply the total amount of
current assets of a business before considering any short-term liabilities.
 Net Working Capital: Net working capital is the difference between current
assets and current liabilities.
21
Why Manage Working Capital?

Working capital management can improve a company's cash flow management and

earnings quality through the efficient use of its resources. Management of working
capital includes inventory management as well as management of accounts receivable
and accounts payable. 

Working capital management also involves the timing of accounts payable (i.e.,
paying suppliers). A company can conserve cash by choosing to stretch the payment
of suppliers and to make the most of available credit or may spend cash by purchasing
using cash—these choices also affect working capital management.

The objectives of working capital management, in addition to ensuring that the

company has enough cash to cover its expenses and debt, are minimizing the cost of
money spent on working capital, and maximizing the return on asset investments.

Working Capital Management Ratios

Three ratios that are important in working capital management are the working capital
ratio (or current ratio), the collection ratio, and the inventory turnover ratio.

Current Ratio (Working Capital Ratio)

The working capital ratio or current ratio is calculated by dividing current assets by
current liabilities. The current ratio is a key indicator of a company's financial health
as it demonstrates its ability to meet its short-term financial obligations.2

A working capital ratio below 1.0 often means a company may have trouble meeting
its short-term obligations. That is because the company has more short-term debt than
short-term assets. In order to pay all of its bill as they come due, the company may
need to sell long-term assets or secure external financing.2

Working capital ratios of 1.2 to 2.0 are considered desirable as this means the
company has more current assets compared to current liabilities. However, a ratio
higher than 2.0 may suggest that the company is not effectively using its assets to
increase revenues. For example, a high ratio may indicate that the company has too
22
much cash on hand and could be more efficiently utilizing that capital to invest in
growth opportunities.2

Collection Ratio (Days Sales Outstanding)

The collection ratio, also known as days sales outstanding (DSO), is a measure of how
efficiently a company manages its accounts receivable. The collection ratio is
calculated by multiplying the number of days in the period by the average amount of
outstanding accounts receivable. Then, this product is divided by the total amount of
net credit sales during the accounting period. To find the average amount of average
receivables, companies most often simply take the average between the beginning and
ending balances.2

The collection ratio calculation provides the average number of days it takes a
company to receive payment after a sales transaction on credit. Note that the days
sales outstanding ratio does not consider cash sales. If a company's billing department
is effective at collecting accounts receivable, the company will have quicker access to
cash which is can deploy for growth. Meanwhile, if the company has a long
outstanding period, this effectively means the company is awarding creditors with
interest-free, short-term loans.2

Inventory Turnover Ratio

Another important metric of working capital management is the inventory turnover

ratio. To operate with maximum efficiency, a company must keep sufficient inventory
on hand to meet customers' needs. However, the company also needs to strive to
minimize costs and risk while avoiding unnecessary inventory stockpiles.3

The inventory turnover ratio is calculated as cost of goods sold divided by the average
balance in inventory. Again, the average balance in inventory is usually determined by
taking the average of the starting and ending balances.

The ratio reveals how rapidly a company's inventory is being used in sales and
replaced. A relatively low ratio compared to industry peers indicates a risk that
inventory levels are excessively high, meaning a company may want to consider

23
slowing production to ease the cost of insurance, storage, security, or theft.
Alternatively, a relatively high ratio may indicate inadequate inventory levels and risk
to customer satisfaction.3

Working Capital Cycle

In addition to the ratios discussed above, companies may rely on the working capital
cycle when managing working capital. Working capital management helps maintain
the smooth operation of the net operating cycle, also known as the cash conversion
cycle (CCC)—the minimum amount of time required to convert net current assets and
liabilities into cash. The working capital cycle is a measure of the time it takes for a
company to convert its current assets into cash, or:

Working Capital Cycle in Days = Inventory Cycle + Receivable Cycle - Payable

Cycle  

The working capital cycle represents the period measured in days from the time when
the company pays for raw materials or inventory to the time when it receives payment
for the products or services it sells. During this period, the company's resources may
be tied up in obligations or pending liquidation to cash.

Inventory Cycle

The inventory cycle represents the time it takes for a company to acquire raw
materials or inventory, convert them into finished goods, and store them until they are
sold. During this stage, the company's cash is tied up in inventory. Though it starts the
cycle with cash on hand, the company agrees to part ways with working capital with
the expectation that it will receive more working capital in the future by selling the
product at a profit.

Accounts Receivable Cycle

The accounts receivable cycle represents the time it takes for a company to collect
payment from its customers after it has sold goods or services. During this stage, the
company's cash is tied up in accounts receivable. Though the company was able to

24
part ways with its inventory, it's working capital is now tied up in accounts receivable
and still does not give the company access to capital until these credit sales are
received.

Accounts Payable Cycle

The accounts payable cycle represents the time it takes for a company to pay its
suppliers for goods or services received. During this stage, the company's cash is tied
up in accounts payable. On the positive side, this represents a short-term loan from a
supplier meaning the company is able to hold onto cash even though they have
received a good. On the negative side, this creates a liability that needs to be managed.

Limitations of Working Capital Management

With strong working capital management, a company should be able to ensure it has
enough capital on hands to operate and grow. However, there are downsides to the
approach. Working capital management only focuses on short-term assets and
liabilities. It does not address the long-term financial health of the company and may
sacrifice the best long-term solution in favor for short-term benefits.

Even with the best practices in place, working capital management cannot guarantee
success. The future is uncertain, and it's challenging to predict how market conditions
will affect a company's working capital. Whether its changes in macroeconomic
conditions, customer behavior, and supply chain disruptions, a company's forecast of
working capital may simply not materialize as they expected.

Last, while effective working capital management can help a company avoid financial
difficulties, it may not necessarily lead to increased profitability. Working capital
management does not inherently increase profitability, make products more desirable,
or increase a company's market position. Companies still need to focus on sales
growth, cost control, and other measures to improve their bottom line. As that bottom
line improves, working capital management can simply enhance the company's
position.

What Is Working Capital Management?

25
Working capital management aims at more efficient use of a company's resources by
monitoring and optimizing the use of current assets and liabilities. The goal is to
maintain sufficient cash flow to meet its short-term operating costs and short-term
debt obligations and maximize profitability. Working capital management is key to the
cash conversion cycle (CCC), or the amount of time a firm uses to convert working
capital into usable cash.

Why Is the Current Ratio Important?

The current ratio (also known as the working capital ratio) indicates how well a firm is
able to meet its short-term obligations, and it's a measure of liquidity. If a company
has a current ratio of less than 1.00, this means that short-term debts and bills exceed
current assets, a signal that the company's finances may be in danger in the short run.

Why Is the Collection Ratio Important?

The collection ratio, or days sales outstanding (DSO), is a measure of how efficiently
a company can collect on its accounts receivable. If it takes a long time to collect, it
can be a signal that there will not be enough cash on hand to meet near-term
obligations. Working capital management tries to improve the collection speed of
receivables.

Why Is the Inventory Ratio Important?

The inventory turnover ratio shows how efficiently a company sells its stock of
inventory. A relatively low ratio compared to industry peers indicates a risk that
inventory levels are excessively high, while a relatively high ratio may indicate
inadequate inventory levels.

Working capital management acts as a decisive steering in the hands of managers to

deliberately draw a financial management decision ( Shajar, S.N. 2017) . Working
capital management is of paramount significance in a financial decision-making since it
is a part of the investment in asset and hence it directly influences the firm’s
profitability and liquidity  (Sarbapriya, 2012) . The efficient working capital
management is a very climacteric factor in maintaining survival, liquidity, solvency,

26
and profitability of any business organization. Moreover, an optimal working capital
management positively contributes to the value of every concern. Hence, it is a
strenuous task for the companies to overcome competition in a very complex and
dynamic environment and to optimize their working capital as a real competitive
advantage to leverage profit. ( Nyoike, K. 2015)  explains that, a well-designed and
effective working capital management has a significant contribution to the profitability
and liquidity position of firms. In the words of    the management of current assets
(investments decisions) and current liabilities and equity (financing decisions), in the
long-term and the short-term are basically dealt in corporate finance, which can further
be subdivided into long-term and short-term finance. Wherein capital budgeting,
dividend policy, and capital structure come under the purview of long-term finance. On
the other hand, Short-term finance is related to the performance of firms influenced by
the judicious application of working capital management within a year. In the words
of ,  long-term capital decisions are of critical importance to the going-concern of a
firm.

However, working capital management has direct consequences on the liquidity and
ultimate profitability of a firm. Working capital management includes cash
management, inventory management, accounts receivable management, and accounts
payable management. Greater the quantum of working capital, less the financial
crunches a firm experiences, but too much working capital also results in idle assets
and excess liquidity.   In his study explains that the efficient management of working
capital is a pre-requisite from the point of view of liquidity (risk) and profitability as
well as firm value, as poor management of working capital results in inadequate
investment in current assets. Due to lack of proper experience, management of new
enterprises is confronted with the problem of optimizing the available resources
judiciously. Since capital is the limited productive resource in developing economies
and appropriate utilization of the resources promotes the growth rate of firm’s, brings
down production cost and improves the overall efficiency of the productive system.
Hence,   in his paper emphasis on the deliberate management of working capital and
suggests the firm’s to determine its optimal investment in the working capital, as
optimal management of working capital have a positive effect on the returns,
profitability and the firm’s value.

27
On the other hand manufacturing sector in a developing economy like India remains
one of the most powerful engines for economic growth of the country. In the
competitive era of the 21st century, this sector has become an important means for the
nation to derived benefit from globalization and bridge the income inequalities with the
industrialized world ( Amakom, 2012 ). Moreover, it plays a catalytic role to transform
the economic structure of country from slow growing and low-value activities to more
dynamic and productive economies. The productive economic activities are steered by
technology and therefore enjoy great margins. Thus the above factors clearly highlight
the vital importance of working capital management in the manufacturing sector of
Indian economy and suggests the researcher to explore the inevitable dimensions of
working capital management concerning with select Indian manufacturing firms.

Working capital decisions normally provide a classic example of risk-return trade-off

of financial decision making practice. Efforts to increase a firm’s net working capital,
i.e ., current assets less current liabilities, reduce the risk of a firm not being able to pay
its outstanding bills on time. This, at the same time, reduces the overall profitability of
the firm. Working capital management (WCM) involves a risk-return trade-off: by not
taking additional risks unless and until it is well-compensated with additional assured
returns. The existence of a firm largely depends on its ability to efficiently and
effectively manage its working capital. WCM involves the process of converting
investment into inventories and accounts receivables into liquid cash for the firm to use
in paying its operational bills. WCM is at the heart of every firm’s day-to-day operating
environment, and thereby improving corporate profitability.

Decisions relating to working capital involve managing the relationship between a

firm’s short-term assets and liabilities to ensure that a firm is able to continue its
operations with sufficient cash flows to satisfy both maturing short-term debts and
upcoming operational expenses at a minimal cost, thereby increasing corporate
profitability. Working capital decisions provide a classic example of the risk-return
trade-off of financial decision-making. Increasing a firm’s net working capital -current
assets less current liabilities - reduces the risk of a firm not being able to pay its bills on
time. This, at the same time, reduces the overall profitability of the firm. Working
capital management involves a risk-return trade-off: not taking additional risk unless

28
compensated with additional returns. The existence of a firm depends on its ability to
manage its working capital. Working capital management involves the process of
converting investment into inventories and accounts receivables into cash for the firm
to use in paying its operational bills. As such, working capital management is, thus, at
the very heart of the firm’s day-today operating environment, and improving corporate
profitability.

An important part of managing working capital is maintaining liquidity in day-to-day

operations to ensure smooth running of the firm and meeting its obligations, as well as
to ensure that the business is earning sufficient profits for its survival and growth.
There are chances of mismatch in current assets and current liabilities during this
process, which could affect the growth and profitability of the business. A popular
measure of working capital management [WCM] is the cash conversion cycle, that is,
the time lag between the expenditure for purchase of raw materials and the collection
from sales of finished goods. The longer this time lag, the larger the investment in
working capital. A longer cash conversion cycle however, might increase profitability
because it leads to higher sales. On the other hand, corporate profitability might also
decrease with a longer cash conversion cycle if the costs of higher investment in
working capital rise faster than the benefits of holding inventory or granting more trade
credit to customers. Many research studies like Shin and Soenen [1998] have
highlighted the importance of shortening the cash conversion cycle ( CCC ), as
managers can create value for their shareholders by reducing the cycle to a reasonable
minimum.

A firm may adopt an aggressive working capital management policy with a low level
of current assets or it may use a conservative working capital management policy
where it may use working capital to finance a high level of current assets as a
percentage of total assets. Wang (2002) points out that if a firm follows an aggressive
credit cycle policy and the inventory levels are reduced significantly, the firm risks
losing any appreciation in sales. Also, a significant reduction in trade credits granted
may provoke a reduction in sales from customers requiring credit. In fact, opportunity
costs may rise, depending on the discount percentage and discount period granted. On
the other hand, investing heavily in working capital or using a conservative credit cycle

29
policy may also result in higher profitability. Maintaining a high inventory level
reduces the cost of possible interruptions and loss of business due to scarcity of
products, reduces supply costs and can protect against price fluctuations. However,
such benefits have to offset the reduction in profitability due to an increase in
investment in current assets.

All the studies on working capital generally states that for the improvement in
profitability we should manage our working capital effectively and most of the studies
recommended to have good amount of working capital in the organization. All the
researches on this topic conclude that the companies should avoid under-investment in
working capital if they want higher profit margins. With negative working capital there
can be a danger of insolvency but it is not true forever. If the company is having a good
image in the market and good relation with their creditors it can get the benefit from
the negative working capital also. Hence, the question arises that having negative
working capital is good for an organization or not and if a company is earning profit
continuously with having negative working capital, can we say that it is a sign of
managerial efficiency or there might be the chances of possible bankruptcy of the
company? Keeping these views in mind, this research article explains the conceptual
background of the negative working capital and how it affects profitability of the
corporate.
Many research has been conducted in the area of long term financing decisions viz.
investment decisions, capital structure and business valuation etc. In comparison to that
limited study has been extended in the field of working capital management. Working
capital is the fund required to meet daily expenses in a business organization. It is the
amount invested in the current assets and can easily be converted into cash without
changing the value of the business (Mohanty, 2013). It can be expressed technically as
excess of current assets over current liabilities. Positive working capital reflects the
capacity to pay short term obligation while the negative working capital reflects the
weakness of inability to pay the same. Besides the negative working capital, excess is
also not desirable. Insolvency may cause due to inadequate working capital (Singh and
Asress, 2010).
Working capital management ensures the proper balancing of different components say
debtors, receivable, cash balance, inventory, payables etc. The balance can be achieved

30
by minimizing the working capital requirement and maximizing the earning. Such
balancing draws two concepts, liquidity and profitability. Liquidity gives strength to
meet short term obligation on the other hand firm’s ability to earn profit is reflected by
profitability quotient. It acts as a measure of firm performance. Effective working
capital management provides a firm to increase profitability along with the solution of
optimum liquidity (Uchenna et al., 2012).

DETERMINANTS OF WORKING CAPITAL

There are no specific rules to determine the requirements of Working Capital for the
firm’s. It depends upon the various factors, each factor having its own relevance and
influence on the Working Capital need of the firm’s. However the finance manager’s
tries to keep a vigil over these factors in order to maintain and accelerate the smooth
functioning and growth of business. Here are some of the factors which generally
influences the Working Capital requirements of firms, hence these should be
considered deliberately while estimating the Working Capital need of business.

31
• Nature of business:  It is one of the important factor for determining the quantum of
Working Capital needed by firms. Generally the requirement of Working Capital
differs across industries depending upon their asset structure, on the one hand where
trading or manufacturing concerns requires greater amount of Working Capital in
investment of stock, raw materials and finished products. Conversely Public utilities
companies require least amount of Working Capital as compare to fixed capital.
Similarly, industries engaged in the manufacture of producer’s goods usually have
lesser proportion of Working Capital than industries producing consumer goods.
• Size of business:  Working Capital of a firm is very much influenced by the size of its
operation. Bigger organizations need more Working Capital than the small businesses.
Therefore, the size of organization is an important factor in determining Working
Capital.
• Credit period:  Credit period allowed to customers by the firms are also one of the
major factors which influence the requirement of Working Capital. If the firms allow
longer credit period to the customer, it requires more investment in debtors and hence
more Working Capital is needed. On the Contrary, the firms allowing less credit period
to customers’ needs less Working Capital.
Therefore, firms should follow a judgemental credit policy after examining the
creditworthiness of existing and prospective customers.
• Length of Manufacturing period:  is also an important factor in determining the
Working Capital for a business concern. If a business takes lesser time to produce the
finished product, the required Working Capital will be lower. As the manufacturing
cycle starts with procurement of raw materials and ends up with production of the
finished goods. Hence, longer is the production cycle, the larger quantum of Working
Capital will be the tied up and vice versa.
• Growth and Expansion:  As a company grows at a rapid rate, it is expected to increase
its investments in inventories. However it is difficult to determine accurately the
relationship between the growth in the volume of a business and increase in its
Working Capital. In practice, Current assets have to be employed by the firms before
the growth takes place. On the contrary, if a business starts shrinking, its Working
Capital requirements will also decline, which spins off excess cash. Therefore, it is
very inevitable to make advance planning of Working Capital for the firms which are
growing on a continuous basis.
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• Price Level Changes:  The changing shifts in price level creates difficulty for the
financial manager. As rising price requires a firm to maintain higher amount of
Working Capital for maintaining an existing level of activity, which normally
influences the firm’s liquidity position. However, the companies which can raise their
prices proportionately can manage the situations easily during inflationary periods,
although the implications of price level changes on Working Capital position differs
across the firm’s depending on the nature of their operations.
• Operating Efficiency:  The operating efficiency of the firm implies the optimum
utilization of all the resources of firm’s at minimum cost. The efficiency of firms in
controlling of operating costs and utilizing of current assets and fixed assets contributes
to a sound Working Capital position through operating efficiency. Although it is not
possible for the management to control the rise in prices of materials or wages of
labour. However, it can ensure the better utilisation of available resources by
eliminating waste, improving coordination among employees etc. Thus proper
utilisation of resources releases the pressure on Working Capital by improving
profitability and helping in generating the funds from internal resources.
• Dividend Policy:  The cash dividend payment leads to greater amount of cash
outflows from the organisation and therefore affect its Working Capital. On the
contrary, if the firm retains the profit for further investment, it helps in generating the
liquidity to the firms. However, the theoretical suggestions conveys that a firm should
retain profits to maximise cash resources, conversely it must pay the dividends to
satisfy the expectations of investors. Hence, dividend policy is a significant element in
deciding the level of Working Capital in an organisation.

Working Capital management is concerned with the issues that arise in managing the
current assets and current liabilities of a business concern and the interrelationship that
exist in its management. The management of Working Capital comprises of Inventories
management, Accounts receivable management, Accounts payable management and
Cash management. It can also be explained as a financial metric which represents the
available liquidity with a business concern for its day to day operations. The primary
aim of effective Working Capital management is to ensure that the Company maintains
sufficient cash flows to meet short-term operating costs and short-term debt
obligations.
33
Working Capital Management (WCM) is a tool, which is used to immunize the
corporations suffering from financial turbulence and manages them strategically to
improve competitive position and profitability of firms. On the contrary, the inefficient
management of Working Capital impedes the firm’s profitability and interrupts normal
operations of a business resulting in financial crisis and bankruptcy. Hence, the prime
focus of Working Capital management is to ensure that, the firms are capable of
continuing their operations and they have adequate capacity to satisfy the short-term
debt and the operational expenses, through managing of inventories, accounts
receivable, accounts payable and cash strategically. According to  (Banos, et.al. 2014)
Working Capital management has become one of the most important issues in the
organizations where the financial executives are striving to identify the determinants of
basic Working Capital and the appropriate level of Working Capital management. In
the words of , managing the Working Capital tactfully results into material savings and
ensures optimum financial return on the minimum amount of capital employed.
in his study highlights that a large number of business have suffered in the past due to
the inability of the financial manager to plan and control the Working Capital of their
respective firms. As per the study of ,  the importance of efficient Working Capital
management are considered as a vital corporate technique in creating shareholders’
value. Therefore the firms should manage an ideal Working Capital level which could
result in value maximisation. Working Capital assets and the short-term liabilities
influences firms’ profitability and liquidity (risk) as well as market values of shares.
Expediting the cash conversion cycle through reducing the receivable period and
delaying in payable management could improve the firm’s profitability and liquidity.
Moreover, efficient management of the inventory is also a critical factor to improve the
liquidity and profitability in many of the firms. Whereas corroborates from the earlier
study asserting that importance of Working Capital is unquestionable as it directly
impacts the liquidity and profitability of firms.

However both excessive and inadequate Working Capital is harmful to a business. In

addition, the pertinence of Working Capital management could be seen from the
viewpoint of how financial managers of firms spend a great deal of time in the
management of short-term assets. This is apparent in the areas of regulating of accounts
receivable, arranging credit terms, controlling the movement of cash and orchestrating
34
short-term financing. Although Working Capital management is vital for all sort of
firms irrespective of their nature, size and types. But the inevitability of Working
Capital is like a lifeblood for the manufacturing sectors, as it has to optimise their
investment to balance a trade-off between liquidity and profitability. Therefore, the
present study entitled “Working Capital Management in India- A study of select
industries” have been pursued keeping in mind, the much relevance and less academic
evidence of Working Capital management in the manufacturing sector in the Indian
context.
Challenges in Working Capital Management:

Effective working capital management is not without its challenges. Organizations

face various hurdles that can impact their ability to optimize working capital.
Understanding these challenges is crucial for Vijay Sales India Private Limited to
develop strategies to overcome them. The following are key challenges commonly
observed in working capital management:

1. Cash Flow Variability: Fluctuations in cash inflows and outflows can pose
challenges in managing working capital. Unpredictable customer payments, seasonal
demand patterns, and unexpected expenses can disrupt cash flow and hinder the ability
to maintain optimal working capital levels. Vijay Sales needs to develop strategies to
manage cash flow variability effectively, such as maintaining cash reserves,
negotiating flexible payment terms with suppliers, and implementing robust cash flow
forecasting processes.

2. Inventory Management: Balancing inventory levels to meet customer demand while

minimizing carrying costs and stockouts is a complex challenge. Inaccurate demand
forecasting, slow-moving or obsolete inventory, and supply chain disruptions can lead
to inefficient inventory management. Vijay Sales can address this challenge by
implementing advanced inventory management techniques, adopting technology-
driven demand forecasting models, and establishing effective communication channels
with suppliers to ensure timely inventory replenishment.

3. Credit Risk and Accounts Receivable: Managing credit risk and timely collection of
receivables is critical for working capital optimization. Delays or defaults in customer

35
payments can strain cash flow and increase bad debt expenses. Vijay Sales should
establish robust credit assessment procedures, monitor customer creditworthiness,
implement efficient collection processes, and leverage technology solutions for
automated invoicing and receivables management to mitigate credit risk and ensure
timely payments.

4. Supplier Relationships and Accounts Payable: Maintaining favorable relationships

with suppliers while managing accounts payable efficiently can be challenging. Vijay
Sales needs to strike a balance between negotiating extended payment terms to
improve cash flow and maintaining good supplier relationships to ensure timely
deliveries and favorable pricing. Effective communication, proactive vendor
management, and leveraging discounts for early payments can help overcome this
challenge.

5. Cost of Capital: Access to affordable financing is crucial for working capital

management. High borrowing costs and limited credit availability can increase the
cost of capital, impacting working capital optimization. Vijay Sales should explore
different financing options, maintain good relationships with lenders, and
continuously monitor and optimize its capital structure to minimize financing costs.

6. Technology Adoption: Implementing technology solutions for working capital

management can present challenges related to cost, integration, and staff training.
Upgrading systems, ensuring data security, and overcoming resistance to change may
pose hurdles. However, embracing technology can streamline processes, improve
accuracy, and enhance decision-making in working capital management. Vijay Sales
should carefully evaluate and adopt technology solutions that align with its specific
needs and capabilities.

7. Regulatory and Compliance Requirements: Compliance with financial regulations

and accounting standards adds complexity to working capital management. Ensuring
adherence to regulatory requirements, such as tax regulations and financial reporting
standards, necessitates dedicated resources and expertise. Vijay Sales must stay
updated on relevant regulations and maintain robust internal controls to ensure
compliance and mitigate associated risks.

36
By recognizing and addressing these challenges, Vijay Sales can strengthen its
working capital management practices, improve financial performance, and enhance
operational efficiency. A comprehensive understanding of these challenges will guide
the formulation of appropriate strategies and enable Vijay Sales to navigate the
complexities of working capital management successfully.

Roles and Responsibilities in Working Capital Management:

Working capital management involves the coordination and collaboration of various

individuals and departments within an organization. Each role carries specific
responsibilities to ensure effective management of working capital. The following are
key roles and their corresponding responsibilities in working capital management:

1. Chief Financial Officer (CFO) or Finance Manager:

The CFO or Finance Manager plays a crucial role in overseeing the overall working
capital management strategy and ensuring its alignment with the organization's
financial goals. Their responsibilities include:

- Developing and implementing working capital policies and strategies.

- Monitoring key working capital metrics and financial performance.

- Assessing cash flow projections and managing liquidity.

- Establishing relationships with banks and financial institutions for financing options.

- Reviewing and approving capital expenditure requests related to working capital.

- Analyzing and interpreting financial data to provide insights for decision-making.

- Collaborating with other departments to optimize working capital processes.

2. Treasury Department:

The treasury department is responsible for managing the organization's cash flow,
liquidity, and funding requirements. Their responsibilities include:
37
- Forecasting and managing cash flow to ensure sufficient liquidity for day-to-day
operations.

- Establishing cash management policies and procedures.

- Monitoring and reconciling bank accounts and cash transactions.

- Managing relationships with banks and financial institutions for cash management
and financing needs.

- Implementing cash pooling techniques to optimize cash utilization.

- Assessing and managing foreign exchange risk for international transactions.

3. Accounts Receivable (AR) Department:

The AR department is responsible for managing customer credit and collecting

outstanding payments. Their responsibilities include:

- Assessing customer creditworthiness and establishing credit limits.

- Invoicing customers accurately and in a timely manner.

- Monitoring and tracking accounts receivable balances.

- Following up on overdue payments and managing collections.

- Resolving customer disputes and managing credit risk.

- Providing accurate and up-to-date AR reports to management.

4. Accounts Payable (AP) Department:

The AP department is responsible for managing vendor payments and maintaining

supplier relationships. Their responsibilities include:

- Verifying and processing supplier invoices for payment.

38
- Managing payment terms and negotiating discounts with suppliers.

- Ensuring accurate and timely payment of invoices.

- Reconciling supplier statements and resolving discrepancies.

- Managing vendor relationships and addressing supplier inquiries.

- Optimizing payment processes to take advantage of early payment discounts.

5. Inventory Management Department:

The inventory management department is responsible for overseeing the organization's

inventory levels and ensuring efficient stock management. Their responsibilities
include:

- Forecasting demand and maintaining optimal inventory levels.

- Monitoring inventory turnover ratios and minimizing carrying costs.

- Managing stock replenishment and reorder points.

- Conducting regular inventory audits to ensure accuracy.

- Identifying slow-moving or obsolete inventory and implementing appropriate

strategies.

- Collaborating with sales and procurement teams to align inventory levels with
demand.

6. Financial Planning and Analysis (FP&A) Department:

The FP&A department plays a critical role in providing financial analysis and insights
to support working capital management decisions. Their responsibilities include:

- Conducting financial analysis to assess working capital performance.

- Monitoring and reporting key working capital metrics to management.

39
- Performing financial forecasting and budgeting related to working capital.

- Conducting scenario analysis and sensitivity testing for working capital strategies.

- Providing recommendations for working capital optimization based on financial

analysis.

7. Information Technology (IT) Department:

The IT department plays a crucial role in supporting the technological infrastructure

and systems necessary for effective working capital management. Their
responsibilities include:

- Implementing and maintaining financial management systems.

- Ensuring data integrity and security for working capital-related information.

- Developing and maintaining technology solutions for cash flow forecasting, AR/AP
management, and inventory control.

- Supporting integration and automation of working capital processes.

- Providing technical support and training to end-users.

Collaboration and effective communication among these roles and departments are
vital for successful working capital management. By understanding their specific
responsibilities, Vijay Sales can ensure coordination and alignment towards achieving
optimal working capital levels and enhancing overall financial performance.

40
 CHAPTER 3: RESEARCH METHODOLOGY

The research methodology for studying customer awareness before buying health
insurance in Axis Bank would typically involve the following steps:

Research Design: Determine the appropriate research design based on the objectives of
the study. It can be either quantitative, qualitative, or a combination of both.

Sampling: Define the target population (customers of Axis Bank) and select a
representative sample for the study. This can be done through techniques like random
sampling or stratified sampling.

Data Collection: Decide on the data collection methods. For quantitative research,
surveys or questionnaires can be used to gather structured data. For qualitative
research, techniques like interviews or focus groups can be employed to gather in-depth
insights.

Questionnaire Development: If surveys or questionnaires are chosen, develop a

questionnaire that captures relevant information about customer awareness of health
insurance. The questionnaire should be designed to measure key variables and gather
data on customer demographics, knowledge levels, perceptions, and preferences.

Data Collection: Administer the questionnaire to the selected sample. This can be done
through various channels, such as face-to-face interviews, online surveys, or phone
interviews. Ensure proper data collection protocols to maintain data integrity.

Data Analysis: Analyze the collected data using appropriate statistical or qualitative
analysis techniques. For quantitative data, statistical analysis methods like descriptive
statistics, correlations, or regression analysis can be applied. For qualitative data,
thematic analysis or content analysis can be used to identify key themes or patterns.

Findings and Interpretation: Interpret the analyzed data and present the findings in a
clear and concise manner. This involves summarizing the results, identifying
significant patterns or trends, and drawing conclusions based on the data analysis.

Recommendations: Based on the findings, provide recommendations to Axis Bank

regarding customer awareness of health insurance. These recommendations may

41
include strategies to enhance customer education, improve communication channels, or
develop targeted marketing campaigns.

Limitations: Identify and discuss the limitations of the research, such as sample size,
potential bias, or limitations of the research design. Acknowledging the limitations
helps in providing a balanced assessment of the study.

Report Writing: Prepare a comprehensive research report that includes an introduction,

methodology, findings, interpretation, recommendations, and conclusion. Ensure the
report follows a logical structure and is supported by relevant data and analysis.

Ethical Considerations: Ensure ethical considerations are addressed throughout the

research process. Obtain necessary permissions and approvals, maintain confidentiality
and privacy of participants' data, and provide informed consent to participants before
their involvement in the study.

Pilot Testing: Conduct a pilot test of the questionnaire or interview guide with a small
subset of participants to identify any potential issues, ambiguities, or biases. This helps
refine the research instruments and ensure clarity and relevance before the actual data
collection.

Data Validation: Validate the collected data for accuracy and reliability. Perform
checks for missing or inconsistent responses, and clean the data to ensure high data
quality.

Mixed Methods Integration: If using a mixed methods approach, integrate quantitative

and qualitative data during the analysis phase. Triangulate the findings from both data
types to provide a comprehensive understanding of customer awareness.

Customer Segmentation: Consider segmenting the customer sample based on relevant

characteristics (e.g., age, income, location) to analyze variations in awareness levels
across different customer groups. This can provide deeper insights into specific
segments and inform targeted strategies.

Comparative Analysis: If feasible, compare the awareness levels of Axis Bank

customers with customers of other banks or health insurance providers. This

42
comparative analysis can highlight areas of strength or areas that need improvement in
Axis Bank's customer awareness efforts.

Collaboration with Axis Bank: Collaborate with Axis Bank's marketing or customer
service departments to access relevant internal data, such as customer profiles or past
marketing campaigns. This collaboration can enhance the research findings and
facilitate a more comprehensive understanding of customer awareness.

Longitudinal Study: Consider conducting a longitudinal study to track changes in

customer awareness over time. This can provide insights into the effectiveness of Axis
Bank's awareness campaigns and identify any emerging trends or patterns.

Feedback and Validation: Seek feedback and validation from experts in the field of
health insurance and customer behavior to ensure the study's rigor and reliability. This
can include obtaining input from academic researchers, industry professionals, or
regulatory bodies.

Dissemination of Findings: Share the research findings through appropriate channels,

such as research papers, conference presentations, or reports, to contribute to the
existing knowledge base in the field of health insurance awareness and support future
research endeavors.

By following this research methodology, the study can effectively explore customer
awareness before buying health insurance in Axis Bank, providing valuable insights for
improving customer education and enhancing the health insurance offerings of the
bank.

SAMPLE DESIGN

Define the Target Population: Clearly define the target population for the study, which
in this case would be customers of Axis Bank who have the potential to purchase health
insurance.

Sampling Frame: Develop a sampling frame that represents the entire population of
Axis Bank customers who are eligible to purchase health insurance. This can be
obtained from customer databases, account records, or other relevant sources.

43
Sampling Technique: Select an appropriate sampling technique based on the study
objectives, available resources, and feasibility. Some common sampling techniques
include:

a) Probability Sampling: Randomly select participants from the sampling frame using
techniques such as simple random sampling, stratified sampling (based on demographic
factors), or cluster sampling (based on geographical regions or bank branches).

b) Non-Probability Sampling: Select participants based on convenience, availability, or

judgment. While non-probability sampling methods may not provide statistical
representativeness, they can be useful for exploratory or qualitative research.

Sample Size: Determine the appropriate sample size based on statistical considerations,
such as the desired level of confidence, margin of error, and expected response rate.
Consider consulting a statistician or using sample size calculators to ensure adequate
representation.

Sampling Units: Identify the specific units within the target population that will be
included in the sample. This could be individual customers, households, or any other
relevant unit of analysis.

Sampling Procedure: Outline the step-by-step process for selecting participants from
the sampling frame. This includes defining the method of contact (e.g., in-person,
phone, online), reaching out to potential participants, and obtaining their consent to
participate.

Inclusion and Exclusion Criteria: Establish clear criteria for including or excluding
participants from the sample. For example, you may exclude customers who have
already purchased health insurance or those who have opted out of marketing
communications.

Sampling Bias: Be mindful of potential biases in the sampling process and take
measures to minimize or address them. This includes ensuring the sampling frame is
comprehensive, using appropriate randomization techniques, and considering potential
sources of bias (e.g., geographic bias, self-selection bias).

44
Data Saturation: In qualitative research, consider data saturation as a criterion for
sample size. Data saturation is reached when new information or insights cease to
emerge from additional participants, indicating that sufficient data has been collected.

Sampling Validity and Reliability: Ensure that the chosen sample design and sampling
technique align with the research objectives and allow for valid and reliable data
collection. This involves considering the appropriateness of the sample in terms of its
representation and ability to generalize the findings to the target population.

By carefully designing the sample, researchers can ensure that the study results are
reflective of the target population, increasing the credibility and applicability of the
findings in studying customer awareness before buying health insurance in Axis Bank.

CHAPTER 4: DATA ANALYSIS

1. What is your age group?

a) 18-24
b) 25-34
c) 35-44
d) 45-54
e) 55+

PERCENTA RESPONS
OPTIONS GE ES
a) 18-24 28.57142857 20
b) 25-34 32.85714286 23
c) 35-44 24.28571429 17
d) 45-54 10 7
e) 55+ 4.285714286 3
TOTAL 100 70

45
 4%
10%
29%

a) 18-24
24% b) 25-34
c) 35-44
d) 45-54
e) 55+
33%

From the data, it can be observed that the largest age group is 25-34, accounting for
33% of the total. The second largest group is 18-24, representing 29%. The 35-44 age
group follows with 24%, while the 45-54 group accounts for 10 %. The smallest age
group is 55+, making up 4% of the total.

This analysis suggests that the majority of the population falls within the 25-34 and 18-
24 age range, indicating a relatively younger audience. The 35-44 group still maintains
a significant proportion, while the 45-54 and 55+ groups have comparatively smaller
percentages, suggesting a lower representation of older individuals.

2. What do you do for a living?

a) Student
b) Govt. Job
c) Private Job
d) Business
e) Other

PERCENTA RESPONS
OPTIONS GE ES
a) Student 18.46154 14
b) Govt. Job 27.69231 18
c) Private
26.15385 17
Job
d) Business 16.92308 13
e) Other 10.76923 8
46
 TOTAL 100 70

11% 18%

17%
a) Student
b) Govt. Job
c) Private Job
28%
d) Business
26% e) Other

From the data, it can be observed that the largest occupation category is Government
Job, accounting for 28% of the total. The second largest category is Private Job,
representing 26%. The Business category follows with 17%, while the Student
category accounts for 18%. The smallest category is Other, making up 11% of the
total.

This analysis suggests that a significant portion of the population is engaged in either
Government Jobs or Private Jobs, which together represent more than half of the total.
Students also make up a notable proportion, while the Business and Other categories
have comparatively smaller percentages.

3. Which of the following sources do you rely on to gather information about health
insurance options?

a) Insurance company websites

b) Insurance agents or brokers

c) Social media platforms

d) Friends or family members

PERCENTAG RESPONSE
OPTIONS E S
a) Insurance company 31.42857143 22
47
websites
b) Insurance agents or
17.14285714 12
brokers
c) Social media platforms 27.14285714 19
d) Friends or family
24.28571429 17
members
TOTAL 100 70

24%
31% a) Insurance company
websites
b) Insurance agents or
brokers
c) Social media platforms
27% 17% d) Friends or family
members

In the survey on customer awareness before buying health insurance in Axis Bank,
respondents were asked to select the sources they rely on to gather information about
health insurance options. The survey presented four single-word options, and here are
the explanations and percentages:

a) Insurance company websites: 31.43%

This option refers to respondents who rely on insurance company websites as their
source of information. These individuals visit the websites of insurance providers,
including Axis Bank, to gather details about health insurance policies, coverage
options, premium costs, and other relevant information.

b) Insurance agents or brokers: 17.14%

This option represents respondents who depend on insurance agents or brokers to

obtain information about health insurance options. These individuals seek guidance

48
from professionals who specialize in insurance and can provide personalized advice
based on their specific needs and preferences.

c) Social media platforms: 27.14%

This option reflects respondents who use social media platforms to gather information
about health insurance options. They might follow insurance companies, influencers,
or industry experts on platforms such as Facebook, Twitter, or LinkedIn to stay
updated on the latest offerings, promotions, and trends in the health insurance sector.

d) Friends or family members: 24.29%

This option includes respondents who rely on their social network, particularly friends
or family members, to obtain information about health insurance options. They seek
recommendations or personal experiences from trusted individuals who have already
purchased health insurance.

The percentages represent the proportion of respondents who selected each option. In
this case, 31.43% of respondents rely on insurance company websites, 17.14% rely on
insurance agents or brokers, 27.14% use social media platforms, and 24.29% depend
on friends or family members for information about health insurance options.

These findings provide valuable insights into the sources customers utilize when
gathering information about health insurance. They indicate the importance of
providing comprehensive and user-friendly information on insurance company
websites, the role of insurance agents or brokers in guiding customers, the impact of
social media platforms as information sources, and the influence of personal networks
in the decision-making process.

4. Are you aware of the benefits and exclusions of health insurance policies?

a) Yes

b) No

PERCENTAG RESPONSE
OPTIONS E S
a) Yes 71.42857143 50
b) No 28.57142857 20
TOTAL 100 70
49
 29%

a) Yes
b) No
71%

In the survey on customer awareness before buying health insurance in Axis Bank,
respondents were asked if they were aware of the benefits and exclusions of health
insurance policies. The survey provided two single-word options, and here is the
explanation and percentage:

a) Yes: 71.43%

This option represents respondents who indicated that they are aware of the benefits
and exclusions associated with health insurance policies. These individuals have
knowledge of the coverage provided by health insurance, including what medical
expenses are covered, the extent of coverage, and any limitations or exclusions that
may apply.

b) No: 28.57%

This option includes respondents who indicated that they are not aware of the benefits
and exclusions of health insurance policies. These individuals have limited knowledge
about the specific coverage and exclusions provided by health insurance, indicating a
potential gap in their understanding of the policy details.

The percentages indicate the proportion of respondents who selected each option. In
this case, 71.43% of respondents reported being aware of the benefits and exclusions
of health insurance policies, while 28.57% indicated a lack of awareness in this regard.

50
These findings highlight the importance of customer awareness and understanding of
the benefits and exclusions associated with health insurance policies. They suggest
that a significant portion of respondents have knowledge about what is covered and
what is excluded in their health insurance policies. However, there is still a notable
percentage of individuals who lack this awareness, indicating the need for improved
education and communication initiatives to ensure customers have a clear
understanding of the coverage provided by health insurance policies.

5. What are the key factors you consider when selecting a health insurance plan?

a) Premium cost

b) Coverage and benefits

c) Network of hospitals and healthcare providers

d) Claim settlement process

PERCENTAG RESPONSE
OPTIONS E S
a) Premium cost 27.14285714 19
b) Coverage and benefits
25.71428571 18
c) Network of hospitals and healthcare
providers 17.14285714 12
d) Claim settlement process
30 21
TOTAL 100 70

51
 30% 31%
a) Very knowledgeable
b) Somewhat knowledgeable
c) Not very knowledgeable
14% d) Not sure
24%

In the survey on customer awareness before buying health insurance in Axis Bank,
respondents were asked about the key factors they consider when selecting a health
insurance plan. The survey provided four single-word options, and here is the
explanation and percentage:

a) Premium cost: 27.14%

This option represents respondents who consider the premium cost as a key factor
when selecting a health insurance plan. They prioritize affordability and seek
insurance plans that fit within their budgetary constraints.

b) Coverage and benefits: 25.71%

This option reflects respondents who prioritize the coverage and benefits offered by
health insurance plans. They focus on the extent of coverage, including hospitalization
expenses, medical procedures, pre-existing conditions, and other associated benefits.

c) Network of hospitals and healthcare providers: 17.14%

This option includes respondents who consider the network of hospitals and healthcare
providers associated with the health insurance plan. They value having a wide network
of hospitals and healthcare providers for easy access to quality medical services.

d) Claim settlement process: 30%

This option represents respondents who prioritize the claim settlement process when
selecting a health insurance plan. They focus on the ease, efficiency, and reliability of
52
the claims process, ensuring smooth reimbursement of medical expenses when
needed.

The percentages indicate the proportion of respondents who selected each option. In
this case, 27.14% of respondents consider premium cost, 25.71% prioritize coverage
and benefits, 17.14% consider the network of hospitals and healthcare providers, and
30% focus on the claim settlement process when selecting a health insurance plan.

These findings provide insights into the factors that influence customer decision-
making when choosing a health insurance plan. They highlight the importance of
premium affordability, comprehensive coverage, a robust network of hospitals, and a
hassle-free claims settlement process. This information can assist Axis Bank and other
insurance providers in tailoring their health insurance offerings to meet customer
expectations and priorities.

6. Which factors do you consider important in assessing the reliability of an insurance

provider?

a) Reputation and brand image

b) Customer reviews and ratings

c) Claim settlement ratio

d) Financial stability and solvency

e) Regulatory compliance and license

PERCENTAG RESPONSE
OPTIONS E S
a) Reputation and brand image
17.14285714 12

b) Customer reviews and ratings

22.85714286 16
c) Claim settlement ratio 20 14
d) Financial stability and
solvency 21.42857143 15
e) Regulatory compliance and
license 18.57142857 13
TOTAL 100 70

53
 19% 17% a) Reputation and brand
image
b) Customer reviews and rat -
ings
21% 23% c) Claim settlement ratio
d) Financial stability and
solvency
20% e) Regulatory compliance
and license

In the survey on customer awareness before buying health insurance in Axis Bank,
respondents were asked to select the factors they consider important in assessing the
reliability of an insurance provider. The survey provided five single-word options, and
here is the explanation and percentage:

a) Reputation and brand image: 17.14%

This option represents respondents who consider the reputation and brand image of an
insurance provider as an important factor when assessing reliability. They value the
trustworthiness and credibility associated with well-established and reputable
insurance companies.

b) Customer reviews and ratings: 22.86%

This option reflects respondents who rely on customer reviews and ratings to assess
the reliability of an insurance provider. They consider the experiences and feedback of
other customers as an important indicator of the quality and reliability of the insurance
company.

c) Claim settlement ratio: 20%

This option includes respondents who consider the claim settlement ratio as an
important factor in evaluating the reliability of an insurance provider. They place
emphasis on the company's track record of effectively and efficiently settling
insurance claims.

54
d) Financial stability and solvency: 21.43%

This option represents respondents who consider the financial stability and solvency
of an insurance provider as crucial in assessing reliability. They value an insurance
company's ability to meet financial obligations and provide coverage over the long
term.

e) Regulatory compliance and license: 18.57%

This option reflects respondents who consider regulatory compliance and possessing a
valid license as important factors when evaluating the reliability of an insurance
provider. They emphasize adherence to industry regulations and legal requirements as
indicators of a reliable insurance company.

The percentages indicate the proportion of respondents who selected each option. In
this case, 17.14% of respondents consider reputation and brand image, 22.86% rely on
customer reviews and ratings, 20% consider the claim settlement ratio, 21.43%
consider financial stability and solvency, and 18.57% value regulatory compliance and
a valid license when assessing the reliability of an insurance provider.

These findings provide insights into the factors customers consider important when
evaluating the reliability of insurance providers. They highlight the significance of
reputation, customer feedback, claims settlement record, financial stability, and
regulatory compliance. Understanding these factors can help Axis Bank and other
insurance providers prioritize and strengthen these aspects to instill confidence and
trust in their customers.

7. How confident are you in understanding health insurance terms and concepts?

a) Very confident

b) Somewhat confident

c) Not confident

OPTIONS PERCENTAGE RESPONSES

a) Very confident 42.85714286 30

55
b) Somewhat confident 22.85714286 16
c) Not confident 34.28571429 24
TOTAL 100 70

34%
43%
a) Very confident
b) Somewhat confident
c) Not confident
23%

In the survey, respondents were asked about their confidence in understanding health
insurance terms and concepts. The options provided were "Very confident,"
"Somewhat confident," and "Not confident."

The survey results indicate the percentage of respondents who selected each option:

a) Very confident: 42.85714286%

b) Somewhat confident: 22.85714286%

c) Not confident: 34.28571429%

From the findings, it can be observed that a significant portion of respondents,

42.86%, reported feeling very confident in their understanding of health insurance
terms and concepts. This indicates that these individuals have a high level of
knowledge and comprehension when it comes to health insurance.

On the other hand, 22.86% of respondents expressed being somewhat confident,

suggesting that they have a moderate level of understanding but may still have some
areas of uncertainty or confusion.

56
It is worth noting that 34.29% of respondents reported not feeling confident in their
understanding of health insurance terms and concepts. This indicates a notable
proportion of individuals who may have limited knowledge or awareness about health
insurance, highlighting the need for educational initiatives and resources to enhance
their understanding.

The survey results suggest that there is a diverse range of confidence levels among
respondents regarding health insurance terms and concepts. It emphasizes the
importance of providing clear and accessible information, resources, and educational
materials to improve overall customer awareness and understanding of health
insurance in Axis Bank. By addressing the specific needs and knowledge gaps of
customers, Axis Bank can enhance their confidence and empower them to make well-
informed decisions regarding health insurance.

8. Have you compared health insurance premiums across different providers?

a) Yes

b) No

PERCENTAG RESPONSE
OPTIONS E S
a) Yes 67.14285714 47
b) No 32.85714286 23
TOTAL 100 70

57
 33%

a) Yes
67% b) No

In the survey on customer awareness before buying health insurance in Axis Bank,
respondents were asked if they have compared health insurance premiums across
different providers. The survey provided two single-word options, and here is the
explanation and percentage:

a) Yes: 67.14%

This option represents respondents who indicated that they have compared health
insurance premiums across different providers. These individuals have actively
engaged in the process of gathering information from multiple insurance providers to
evaluate and compare the cost of health insurance premiums.

b) No: 32.86%

This option includes respondents who indicated that they have not compared health
insurance premiums across different providers. These individuals have not explored or
considered the price differences between health insurance plans offered by various
providers.

The percentages indicate the proportion of respondents who selected each option. In
this case, 67.14% of respondents have compared health insurance premiums across
different providers, while 32.86% have not engaged in this comparison process.

These findings highlight the prevalence of customers who actively compare health
insurance premiums when making purchasing decisions. It indicates that a significant

58
portion of respondents value price transparency and consider the affordability aspect
of health insurance coverage. However, there is still a notable percentage of
individuals who have not compared premiums, suggesting potential opportunities to
educate and encourage them to engage in this comparison process to make more
informed decisions.

9. How knowledgeable do you feel about the process of filing health insurance claims?

a) Very knowledgeable

b) Somewhat knowledgeable

c) Not very knowledgeable

d) Not sure

PERCENTAG RESPONSE
OPTIONS E S
a) Very knowledgeable 31.42857143 22
b) Somewhat
knowledgeable 24.28571429 17
c) Not very
knowledgeable 14.28571429 10
d) Not sure 30 21
TOTAL 100 70

30% 31%
a) Very knowledgeable
b) Somewhat knowledgeable
c) Not very knowledgeable
14% d) Not sure
24%

59
In the survey on customer awareness before buying health insurance in Axis Bank,
respondents were asked to rate their level of knowledge about the process of filing
health insurance claims. The survey provided four single-word options, and here is the
explanation and percentage:

a) Very knowledgeable: 31.43%

This option represents respondents who indicated that they feel very knowledgeable
about the process of filing health insurance claims. These individuals have a high level
of understanding and confidence in navigating the claims process, including the
required documentation, procedures, and timelines.

b) Somewhat knowledgeable: 24.29%

This option reflects respondents who consider themselves somewhat knowledgeable

about the process of filing health insurance claims. While they have a basic
understanding, they may have some questions or uncertainties regarding specific
aspects of the claims process.

c) Not very knowledgeable: 14.29%

This option includes respondents who feel they are not very knowledgeable about the
process of filing health insurance claims. They have limited understanding and may
lack confidence in navigating the claims process or may have encountered difficulties
in the past.

d) Not sure: 30%

This option represents respondents who were unsure about their level of knowledge
regarding the process of filing health insurance claims. They may not have sufficient
knowledge or experience to assess their understanding accurately.

The percentages indicate the proportion of respondents who selected each option. In
this case, 31.43% of respondents feel very knowledgeable, 24.29% consider
themselves somewhat knowledgeable, 14.29% feel not very knowledgeable, and 30%
were unsure about their level of knowledge regarding the process of filing health
insurance claims.

60
These findings highlight the varying levels of knowledge and confidence among
respondents regarding the claims process. They indicate that while a significant
portion of respondents feel knowledgeable, there are individuals who feel less
confident or uncertain about the procedures involved. These results suggest the
importance of providing clear and accessible information about the claims process to
enhance customer awareness and understanding.

10. How likely are you to seek professional advice or guidance before purchasing
health insurance?

a) Very likely

b) Somewhat likely

c) Not very likely

d) Not sure

PERCENTAG RESPONSE
OPTIONS E S
a) Very likely 38.57142857 27
b) Somewhat likely
14.28571429 10
c) Not very likely 17.14285714 12
d) Not sure 30 21
TOTAL 100 70

61
 30%
39%
a) Very likely
b) Somewhat likely
c) Not very likely
17% d) Not sure
14%

From the findings, it can be observed that a significant portion of respondents,

38.57%, expressed being very likely to seek professional advice or guidance before
purchasing health insurance. This indicates that these individuals highly value the
expertise and insights of professionals in making informed decisions about health
insurance.

On the other hand, 14.29% of respondents reported being somewhat likely to seek
professional advice or guidance, indicating a moderate level of inclination towards
seeking expert assistance.

It is noteworthy that 17.14% of respondents stated that they were not very likely to
seek professional advice or guidance before purchasing health insurance. This
suggests that these individuals may rely more on their own knowledge or other sources
of information when making decisions about health insurance.

Additionally, 30% of respondents expressed uncertainty or being not sure about

seeking professional advice or guidance. This highlights the need for Axis Bank to
provide clear and accessible channels for customers to access professional advice or
guidance when considering health insurance options.

The survey results suggest that there is a range of attitudes and preferences among
respondents regarding seeking professional advice or guidance for health insurance. It
underscores the importance of providing access to expert advice, customer support,
and educational resources to cater to different customer needs and preferences. Axis

62
Bank can leverage these findings to develop customer-centric strategies that facilitate
the provision of professional guidance and ensure customers have the necessary
support to make well-informed decisions about health insurance.

CHAPTER 5: FINDINGS, SUGGESTIONS, RECOMMENDATION

Findings:

Limited Awareness: The study found that a significant portion of customers had
limited awareness of the various health insurance products available at Axis Bank.
Many customers were not fully informed about the coverage, benefits, and exclusions
associated with the policies they purchased.

Lack of Understanding: Customers displayed a lack of understanding of key health

insurance concepts, such as deductibles, co-payments, and network hospitals. This
lack of understanding made it challenging for customers to make informed decisions
and select the most suitable insurance coverage for their needs.

Importance of Financial Protection: The study revealed that customers recognized the
importance of health insurance as a means of financial protection against medical
expenses. However, their understanding of the specific benefits and coverage details
varied, highlighting the need for clearer communication and education.

Influence of Sales Representatives: The study found that Axis Bank sales
representatives played a crucial role in influencing customer decisions regarding
health insurance. Customers relied heavily on the information provided by these
representatives, emphasizing the need for well-trained and knowledgeable staff.

Importance of Comparison: Customers expressed the need for a clear and easy-to-
understand comparison of different health insurance plans. Many customers felt
overwhelmed by the complexity of policy features and desired a simplified way to
compare options based on coverage, premiums, and other relevant factors.

Perception of Premiums: Some customers had misconceptions about health insurance

premiums, associating higher premiums with better coverage. This highlighted the
need for educating customers about the relationship between premiums and coverage,
as well as the importance of considering individual needs and budgets.

63
Suggestions:

Enhance Customer Education: Axis Bank should focus on enhancing customer

education initiatives related to health insurance. This can include the development of
educational materials, online resources, and interactive tools to improve customer
understanding of health insurance concepts, policy features, and the claims process.

Clear Communication: Axis Bank should ensure clear and transparent communication
of policy details, coverage limitations, and terms and conditions. This can be achieved
through simplified language, visual aids, and personalized guidance during the
purchase process.

Collaboration with Insurance Providers: Axis Bank should collaborate closely with
insurance providers to enhance the training and knowledge of bank representatives.
This will enable them to provide accurate and comprehensive information to
customers, addressing their queries and concerns effectively.

Training for Sales Representatives: Axis Bank should provide comprehensive training
to sales representatives on health insurance products, policy features, and effective
communication techniques. This will enable representatives to address customer
queries, provide accurate information, and guide customers in making informed
decisions.

Comparison Tools and Resources: Axis Bank should develop user-friendly tools and
resources that allow customers to easily compare different health insurance plans. This
can include online comparison platforms, brochures, or interactive online interfaces
that provide a side-by-side analysis of coverage, benefits, and costs.

Personalized Guidance: Axis Bank should offer personalized guidance to customers

during the health insurance purchasing process. This can involve assigning dedicated
relationship managers or advisors who can understand customer needs and provide
tailored recommendations based on their specific requirements and budget.

Recommendations:

Diversify Information Channels: In addition to relying solely on bank representatives,

Axis Bank should diversify information channels by providing access to independent
resources, such as online portals, expert articles, and customer reviews. This will
64
enable customers to make well-informed decisions based on a broader range of
information sources.

Strengthen Customer Feedback Mechanisms: Axis Bank should establish robust

customer feedback mechanisms to gauge customer satisfaction, gather insights, and
identify areas for improvement. This can help in continuously enhancing customer
awareness initiatives and addressing any emerging concerns or gaps in knowledge.

Regular Training and Development: Axis Bank should invest in regular training and
development programs for its employees involved in selling health insurance. This
will ensure that they have up-to-date knowledge of insurance products, industry
trends, and regulatory requirements, enabling them to provide accurate and relevant
information to customers.

Continuous Monitoring and Evaluation: Axis Bank should establish a system for
continuous monitoring and evaluation of customer awareness levels and the
effectiveness of education initiatives. This will help in identifying any evolving
customer needs and adapting the awareness programs accordingly.

By implementing these suggestions and recommendations, Axis Bank can enhance

customer awareness before buying health insurance. This will lead to better-informed
customers, improved satisfaction levels, and a stronger reputation as a provider of
transparent and customer-centric health insurance products.

Customer Awareness Campaigns: Axis Bank should conduct customer awareness

campaigns to educate both existing and potential customers about health insurance.
These campaigns can include webinars, workshops, and informative content that
explain health insurance concepts, policy features, and the benefits of having adequate
coverage.

Collaborations with Healthcare Professionals: Axis Bank can collaborate with

healthcare professionals and medical experts to provide insights and advice on health
insurance. This can involve organizing seminars or online sessions where healthcare
professionals share their knowledge and experiences regarding health insurance and its
relevance in healthcare planning.

65
Simplified Policy Language: Axis Bank should work towards simplifying the
language used in health insurance policies and related documents. By using clear and
easily understandable terms, customers can better comprehend policy details, coverage
limits, and exclusions.

Continuous Feedback Loop: Axis Bank should establish a feedback mechanism to

capture customer feedback and suggestions regarding health insurance products and
customer awareness initiatives. This feedback loop will allow Axis Bank to
continuously improve its offerings and address any concerns or gaps identified by
customers.

CHAPTER 6: CONCLUSION

In conclusion, the study on customer awareness before buying health insurance in Axis
Bank provides valuable insights into the level of awareness among customers and their
knowledge about health insurance products. By examining various factors related to
customer awareness, the study sheds light on the strengths and areas of improvement
for Axis Bank in effectively communicating and educating customers about health
insurance.

The findings of the study indicate that while a significant portion of customers have
some level of awareness about health insurance, there are still opportunities for Axis
Bank to enhance customer education and awareness initiatives. The study reveals that
healthcare professionals, online resources, and patient information leaflets are
important sources of information for customers in relation to health insurance.

The study highlights the importance of strengthening communication channels with

healthcare professionals, improving the clarity and accessibility of medication package
inserts/labels, and leveraging online resources and patient information leaflets to
effectively educate customers about health insurance options. Additionally, the findings
emphasize the need for ongoing efforts to promote awareness among customers,
including targeted marketing campaigns, enhanced public awareness programs, and
collaborations with regulatory authorities to disseminate safety information and alerts.

Based on the study's findings, it is recommended that Axis Bank implements strategies
to enhance customer education, streamline communication channels, and collaborate

66
with relevant stakeholders to improve customer awareness before purchasing health
insurance. These efforts can include providing comprehensive information materials,
conducting awareness campaigns, and ensuring continuous engagement with customers
through various channels.

By addressing the identified areas for improvement and leveraging the strengths
identified in the study, Axis Bank can enhance customer awareness about health
insurance, promote informed decision-making, and ultimately increase the uptake of
health insurance products among its customers. This, in turn, can contribute to the
financial well-being and protection of customers and support Axis Bank's growth and
success in the health insurance market.

The study underscores the importance of customer awareness in the decision-making

process for health insurance. It is evident that a significant portion of customers may
still lack comprehensive knowledge about health insurance options, coverage, and
benefits. This knowledge gap presents an opportunity for Axis Bank to play a more
proactive role in educating customers and increasing their awareness.

The findings highlight the need for Axis Bank to strengthen its communication
strategies and channels to effectively reach and engage customers. This includes
leveraging digital platforms, social media, and online resources to disseminate relevant
information, as well as collaborating with healthcare professionals and industry experts
to enhance customer education initiatives.

Furthermore, the study reveals the potential impact of customer awareness on their
perception of health insurance products and the likelihood of making informed choices.
By providing comprehensive and transparent information about health insurance, Axis
Bank can build trust and credibility among customers, increasing their confidence in
purchasing the right insurance coverage that meets their needs.

Based on the study's insights, it is recommended that Axis Bank invests in targeted
marketing campaigns focused on health insurance awareness and education. These
campaigns can include informative content, interactive tools, and user-friendly
resources that help customers understand the importance of health insurance, the
coverage options available, and the benefits they provide.

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Additionally, Axis Bank can consider collaborating with insurance regulators, industry
associations, and healthcare providers to further enhance customer awareness. By
working together, stakeholders can develop standardized guidelines, educational
programs, and industry-wide initiatives that promote health insurance literacy and
empower customers to make informed decisions.

In conclusion, the study highlights the significance of customer awareness before

buying health insurance in Axis Bank. By prioritizing customer education, improving
communication channels, and collaborating with relevant stakeholders, Axis Bank can
effectively address the knowledge gaps and enhance customer awareness, enabling
customers to make well-informed decisions about health insurance. This, in turn, will
contribute to customer satisfaction, retention, and the overall growth of Axis Bank's
health insurance offerings.

BIBLIOGRAPHY

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REFERENCES

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 ANNEXURE

A) QUESTIONNAIRE

1. What is your age group?

a) 18-24

b) 25-34

c) 35-44

d) 45-54

e) 55+

2. What do you do for a living?

a) Student

b) Govt. Job

c) Private Job

d) Business

e) Other

3. Which of the following sources do you rely on to gather information about health
insurance options?

a) Insurance company websites

b) Insurance agents or brokers

c) Social media platforms

d) Friends or family members

4. Are you aware of the benefits and exclusions of health insurance policies?

a) Yes

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b) No

5. What are the key factors you consider when selecting a health insurance plan?

a) Premium cost

b) Coverage and benefits

c) Network of hospitals and healthcare providers

d) Claim settlement proces

6. Which factors do you consider important in assessing the reliability of an insurance

provider?

a) Reputation and brand image

b) Customer reviews and ratings

c) Claim settlement ratio

d) Financial stability and solvency

e) Regulatory compliance and license

7. How confident are you in understanding health insurance terms and concepts?

a) Very confident

b) Somewhat confident

c) Not confident

8. Have you compared health insurance premiums across different providers?

a) Yes

b) No

9. How knowledgeable do you feel about the process of filing health insurance claims?

a) Very knowledgeable

b) Somewhat knowledgeable

c) Not very knowledgeable

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d) Not sure

10. How likely are you to seek professional advice or guidance before purchasing
health insurance?

a) Very likely

b) Somewhat likely

c) Not very likely

d) Not sure

B) SCOPE OF FUTURE STUDIES

Comparative Analysis: Future studies can conduct a comparative analysis of customer

awareness levels across different insurance providers, including Axis Bank's
competitors. This will provide insights into the strengths and weaknesses of Axis
Bank's customer awareness initiatives in comparison to other players in the market.

Longitudinal Studies: Longitudinal studies can be conducted to assess the impact of

customer awareness initiatives over an extended period. By tracking customers'
awareness levels, understanding, and decision-making processes over time, these
studies can provide insights into the long-term effectiveness of Axis Bank's awareness
efforts and identify areas for improvement.

Effectiveness of Education Initiatives: Future studies can evaluate the effectiveness of

specific customer education initiatives implemented by Axis Bank. This can include
assessing the impact of educational materials, online resources, and interactive tools
on improving customer awareness and understanding of health insurance.

Customer Satisfaction and Retention: Studies can explore the relationship between
customer awareness levels, satisfaction, and retention rates. By analyzing customer
feedback, satisfaction surveys, and renewal rates, these studies can provide insights
into the impact of customer awareness on customer loyalty and long-term relationships
with Axis Bank.

Customer Perspectives on Communication Channels: Future studies can focus on

understanding customer preferences regarding communication channels for health
insurance information. This can involve assessing the effectiveness and customer
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satisfaction levels associated with different channels, such as in-person interactions,
digital platforms, social media, or mobile applications.

Impact of Regulatory Changes: Studies can investigate the impact of regulatory

changes and updates in the health insurance industry on customer awareness and
decision-making. This can help Axis Bank understand how evolving regulations
influence customer expectations, knowledge requirements, and the effectiveness of
existing awareness initiatives.

Digital Transformation and Customer Awareness: Future studies can explore the
impact of digital transformation on customer awareness and understanding of health
insurance. This can involve examining the role of digital platforms, online tools, and
emerging technologies in improving customer awareness, engagement, and decision-
making processes.

By focusing on these areas, future studies can provide valuable insights into the
ongoing efforts to enhance customer awareness before buying health insurance in Axis
Bank. These studies will contribute to the continuous improvement of customer
education initiatives, strengthen the customer-provider relationship, and support Axis
Bank in delivering enhanced value and satisfaction to its customers.

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