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Axis Bank
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Directors Report Year End : Mar '15    « Mar 14
Dear Members,
 
 The Board of Directors have the pleasure of presenting the Twenty First
 Annual Report of the Bank together with the Audited Statement of
 Accounts, Auditors'' Report and the Report on business and operations of
 the Bank for the financial year ended 31st March 2015.
 
 FINANCIAL PERFORMANCE
 
 The financial highlights for the year under review are presented below:
 
                                                        (Rs. in crores)
 PARTICULARS                         2014-15         2013-14     GROWTH
 
 Deposits                         322,441.94      280,944.56     14.77%
 
 Out of which
 
 * Savings Bank Deposits           88,292.08       77,775.94     13.52%
 
 * Current Account Deposits        56,108.22       48,686.40     15.24%
 
 Advances                         281,083.03      230,066.76     22.17%
 
 Out of which
 
 * Retail Advances                111,932.27       88,028.38     27.15%
 
 * Non-retail Advances            169,150.76      142,038.38     19.09%
 
 Total Assets/Liabilities         461,932.39      383,244.89     20.53%
 
 Net Interest Income               14,224.14       11,951.64     19.01%
 
 Other Income                       8,365.04        7,405.22     12.96%
 
 Out of which
 
 * Fee Income                       6,778.98        5,985.44     13.26%
 
 * Trading Profit (1)               1,134.94          695.99     63.07%
 
 * Misc. Income                       451.12          723.79   (37.67%)
 
 Operating Expenses                 8,798.07        7,536.84     16.73%
 (excluding depreciation)
 
 Profit before Depreciation,       13,791.11       11,820.02     16.68%
 Provisions and Tax
 
 Depreciation                         405.67          363.93     11.47%
 
 Provision for Tax                  3,699.01        3,130.96     18.14%
 
 Other Provisions and               2,328.61        2,107.46     10.49%
 Write-offs
 
 Net Profit                           357.82        6,217.67     18.34%
 
 Appropriations:
 
 Transfer to Statutory Reserve      1,839.46        1,554.42     18.34%
 
 Transfer to Investment Reserve        25.49           50.03   (49.05%)
 
 Transfer to Capital Reserve           63.14           38.87     62.44%
 
 Transfer to/(from) Reserve Fund      (1.27)            1.05  (220.95%)
 
 Proposed Dividend                  1,308.96        1,101.12     18.88%
 
 Surplus carried over to            4,122.04        3,472.18     18.72%
 Balance Sheet
 
 (1) Excluding Merchant Exchange Profit
 
 KEY PERFORMANCE INDICATORS                  2014-15            2013-14
 
 Interest Income as a percentage               8.81%              8.78%
 of working funds*
 
 Non-interest Income as a percentage           2.08%              2.12%
 of working funds*
 
 Net Interest Margin                           3.92%              3.81%
 
 Return on Average Net Worth                  18.57%             18.23%
 
 Operating Profit as a percentage              3.33%              3.28%
 of working funds*
 
 Return on Average Assets                      1.83%              1.78%
 
 Profit per Employee**                 Rs.17.07 lacs      Rs.15.42 lacs
 
 Business (Deposits less inter-      Rs.13.71 crores    Rs.12.30 crores
 bank deposits   Advances)
 per employee**
 
 Net non-performing assets as a                0.44%              0.40%
 percentage of net customer
 assets***
 
 * Working funds represent average total assets
 
 ** Productivity ratios are based on average number of employees for the
 year *** Customer assets include advances and credit substitutes
 
 Previous year figures have been re-grouped wherever necessary
 
 The Bank continued to show a healthy growth in both business and
 earnings, with a net profit of Rs.7,357.82 crores for the year ended
 31st March 2015, registering a growth of 18.34% over the net profit of
 Rs.6,217.67 crores last year. The robust growth in earnings was
 achieved on the back of a balanced business growth across all banking
 segments indicative of a clear strategic focus of the Bank. The key
 return ratios continued to remain healthy, with Return on Equity (ROE)
 at 18.57% and Return on Assets (ROA) at 1.83%. During the year, the
 Basic Earnings Per Share (EPS) was Rs.31.18.
 
 The Bank''s total income increased by 15.24% to reach Rs.43,843.64
 crores during 2014-15, compared to ''38,046.38 crores last year.
 Operating revenue over the same period increased by 16.70% to
 Rs.22,589.18 crores driven by healthy growth in the Bank''s core income
 streams: net interest income (NII), fees and other income.  During the
 year, NII increased by 19.01% to Rs.14,224.14 crores from Rs.11,951.64
 crores last year and constituted 62.97% of the operating revenue. Fee,
 trading and other income increased by 12.96% to Rs.8,365.04 crores from
 Rs.7,405.22 crores last year. The operating expenses grew by 16.49% to
 Rs.9,203.74 crores from Rs.7,900.77 crores last year. As a result,
 operating profit increased by 16.84% to Rs.13,385.44 crores from
 Rs.11,456.09 crores reported last year.
 
 The robust growth in NII for the year 2014-15 was achieved on the back
 of an expansion in the Balance Sheet size and healthy growth in
 low-cost Current Account and Savings Bank (CASA) deposits. During the
 year, total earning assets, on a daily average basis, increased by
 15.75% to Rs.363,186 crores from Rs.313,775 crores last year. A steady
 growth in low-cost CASA, which on a daily average basis, increased by
 14.78% to Rs.107,328 crores from Rs.93,506 crores last year helped in
 containing the cost of funds. Overall, the cost of funds for the year
 was 6.21 % compared to 6.24% last year. During the year, the cost of
 deposits decreased to 6.31% from 6.43% last year, primarily due to a
 decrease in cost of term deposits by 16 basis points to 8.67% from
 8.83% last year. During this period, the yield on earning assets
 marginally improved to 9.63% from 9.59% last year. As a result, the Net
 Interest Margin (NIM) improved to 3.92% from 3.81% last year.
 
 Other income comprising fees, trading profit and miscellaneous income
 increased by 12.96% to Rs.8,365.04 crores in 2014-15 from Rs.7,405.22
 crores last year and constituted 37.03% of the operating revenue of the
 Bank. Fee income increased by 13.26% to Rs.6,778.98 crores from
 Rs.5,985.44 crores last year and remains very well diversified with
 38.39% from retail banking, 26.60% from corporate banking and balance
 contributed by treasury, business banking and SME segments. The Bank
 earns fee income from a diverse set of products and businesses such as
 client-based merchant foreign exchange trade, service charges on
 liability accounts, transaction banking (including cash management
 services), syndication and placement fees, processing fees from loans
 and commission on non-funded products (such as letters of credit and
 bank guarantees) and fee income from the distribution of third-party
 personnel investment products. Fee income continues to remain a
 significant part of the Bank''s earnings and constituted 30.01 % of its
 operating revenue. A key factor for the slower growth in fee income has
 been the slowdown in corporate banking fees due to lack of fresh new
 investments and projects being undertaken. During the year, proprietary
 trading profits increased by 63.07% to Rs.1,134.94 crores from
 Rs.695.99 crores last year. Miscellaneous income was lower at Rs.451.12
 crores compared to Rs.723.79 crores last year.
 
 As a result, the operating revenue of the Bank increased by 16.70% to
 Rs.22,589.18 crores from Rs.19,356.86 crores last year.  The core
 income streams (NII, fee and miscellaneous income) now constitute
 94.15% of the operating revenue, reflecting the stability and
 sustainability of the Bank''s earnings. The Bank continued to focus on
 reducing transaction costs besides ensuring smoothness in operations
 and increasing productivity. The operating expenses increased by 16.49%
 to Rs.9,203.74 crores from Rs.7,900.77 crores last year. The increase
 in operating expenses was largely due to the growth of the Bank''s
 network and other infrastructure required for supporting the existing
 and new businesses. The Cost to Income ratio of the Bank was 40.74%
 compared to 40.82% last year.
 
 During the year, the operating profit of the Bank increased by 16.84%
 to Rs.13,385.44 crores from Rs.11,456.09 crores last year. During this
 period, the Bank created total provisions (excluding provisions for
 tax) of Rs.2,328.61 crores compared to Rs.2,107.46 crores last year.
 The Bank provided Rs.1,788.61 crores towards non-performing assets
 compared to Rs.1,295.98 crores last year and Rs.423.88 crores towards
 provision for standard assets including unhedged foreign currency
 exposure compared to Rs.290.23 crores last year. During the year, there
 was a write-back of provisions against restructured assets of Rs.81.88
 crores compared to a charge of Rs.194.76 crores last year. During the
 year under review, the Bank has also created a contingent provision of
 Rs.220 crores against advances and other exposures as a prudent measure
 and as on 31st March 2015, the Bank had outstanding contingent
 provision of Rs.1,000 crores. During 2014-15, the Bank restructured
 loans of Rs.2,721.86 crores and net restructured assets ratio (net
 restructured assets as percentage of net customer assets) was 2.71%.
 The Bank continued to maintain a healthy asset-quality with a ratio of
 Gross NPAs to gross customer assets at 1.34%, and Net NPA ratio (Net
 NPAs as percentage of net customer assets) at 0.44%. With higher levels
 of provisions built over and above regulatory norms during the year,
 the Bank''s provision coverage stood at 77.73% after considering
 prudential write-offs.
 
 The healthy growth in business and earnings has resulted in an all-
 round improvement in various financial parameters and ratios during the
 year. Basic Earnings Per Share (EPS) was ''31.18 compared to ''26.51 last
 year, while the Diluted Earnings Per Share was Rs.30.85 compared to
 Rs.26.45 last year. Return on Equity (RoE) was 18.57% compared to
 18.23% last year, while Book Value Per Share was Rs.188.47 compared to
 Rs.162.69 last year. Return on Assets (RoA) was 1.83% compared to 1.78%
 last year. The Net Interest Margin (NIM) for the year was 3.92%
 compared to 3.81 % last year. Employee productivity has also improved
 with Profit per Employee increasing to Rs.17.07 lacs from Rs.15.42 lacs
 last year and Business per Employee increasing to Rs.13.71 crores from
 Rs.12.30 crores last year.
 
 The Bank displayed healthy growth in several key Balance Sheet
 parameters for the year ended 31st March 2015. The total assets
 increased by 20.53% to Rs.461,932 crores from Rs.383,245 crores on 31st
 March 2014. The total deposits of the Bank increased by 14.77% to
 Rs.322,442 crores against Rs.280,945 crores last year. Savings Bank
 deposits increased by 13.52% to Rs.88,292 crores, while Current Account
 deposits increased by 15.24% to Rs.56,108 crores. As on 31st March
 2015, low-cost CASA deposits increased by 14.18% to Rs.144,400 crores
 from Rs.126,462 crores last year, and constituted 44.78% of total
 deposits as compared to 45.01% last year. On a daily average basis,
 Savings Bank deposits increased by 16.82% to Rs.72,694 crores, while
 Current Account deposits increased by 10.72% to Rs.34,634 crores. The
 percentage share of CASA in total deposits, on a daily average basis,
 was at 39.53% compared to 38.89% last year. The Bank''s endeavour over
 the last few years has been to diversify its term deposit mix in favour
 of retail deposits. As on 31st March 2015, the retail term deposits
 grew 26.53% and stood at Rs.106,581 crores, constituting 59.86% of the
 total term deposits compared to 54.53% last year.  As on 31st March
 2015, domestic retail term deposits grew 27.75% and stood at Rs.106,049
 crores, constituting 61.27% of the total domestic term deposits
 compared to 58.97% last year. As on 31st March 2015, CASA and retail
 term deposits constituted 77.84% of total deposits. The domestic CASA
 and retail term deposits constituted 78.87% of total domestic deposits.
 In accordance with RBI''s guidelines on issuance of long term bonds for
 financing of infrastructure and affordable housing, the Bank
 successfully raised Rs.5,705 crores of long term Infrastructure bonds
 during the year.
 
 The slowdown in economic activity has been much more prolonged than
 envisaged earlier and is reflected in the non-food credit growth of
 13.2% for 2014-15. Total advances of the Bank as on 31st March 2015
 increased by 22.17% to Rs.281,083 crores from Rs.230,067 crores as on
 31st March 2014, due to a balanced growth across all segments.
 Corporate advances comprised 44.89% of total loans and increased by
 23.42% to Rs.126,184 crores, Retail loans comprised 39.82% of total
 loans and increased by 27.15% to Rs.111,932 crores, SME loans
 (excluding the non-retail agricultural loans) increased by 14.51% to
 Rs.40,651 crores, while total SME advances (including non-retail
 agricultural loans) grew by 7.96% to Rs.42,967 crores and constituted
 15.29% of total loans. During the year, the Bank re-organised the
 agricultural lending business and merged the retail portion of
 agricultural advances with the existing portfolio of retail loans,
 while non-retail agricultural loans have been merged with the SME
 segment. With the alignment of retail agricultural lending with retail
 lending, the Bank intends to serve rural customers for all their
 financial needs - both as agriculturists and as customers. This
 strategy also allows the Bank to fully leverage its distribution
 network. The retail loans portfolio continues to be focused on secured
 products, predominantly mortgages. However, as indicated in the earlier
 years, the Bank continued its strategic intent to further diversify its
 retail loans portfolio during the year. Secured loans accounted for 87%
 of the total retail loans. The total investments of the Bank increased
 by 16.55% to Rs.132,343 crores, of which investments in Government and
 approved securities, held mainly for SLR requirement, increased by
 18.15% to Rs.82,229 crores. Other investments, including corporate debt
 securities, increased by 14.03% to Rs.50,114 crores.
 
 The Bank continued to expand its distribution network, which remains an
 integral part of the Bank''s strategy for tapping low-cost CASA deposits
 , lending to retail, SME segments and the distribution of third- party
 products. During the year under review, the Bank added 187 branches,
 taking the total number of branches and extension counters (ECs)
 to 2,589, of which 1,324 branches/ECs are in semi-urban
 and rural areas and 1,265 branches in metropolitan and urban areas. As
 on 31st March 2015, the Bank has 435 branches in rural unbanked areas.
 In addition, the Bank has a network of 12,355 ATMs. The overseas
 operations of the Bank are spread over its seven international offices
 with branches at Singapore, Hong Kong, DIFC (Dubai International
 Financial Centre), Colombo and Shanghai and representative offices at
 Dubai and Abu Dhabi. The international operations of the Bank have
 generally catered to the needs of Indian corporates who have expanded
 their businesses overseas and have focused on corporate lending, trade
 finance, syndication, investment banking and liability businesses. As
 on 31st March 2015, the total assets of the Bank''s overseas branches
 stood at Rs.49,112 crores, constituting 10.63% of the Bank''s total
 assets.
 
 CAPITAL & RESERVES
 
 The Bank is well capitalised with an overall Capital Adequacy Ratio
 (CAR) of 15.09% as on 31st March 2015, computed under Basel III norms,
 which is well above the benchmark requirement of 9% stipulated by the
 Reserve Bank of India (RBI). Of this, the Common Equity Tier I CAR was
 12.07% (minimum regulatory requirement of 5.50%) against 12.62% last
 year and Tier I CAR was 12.07% (minimum regulatory requirement of
 7.00%) against 12.62% last year. The Tier II CAR was at 3.02% against
 3.45% last year.  During the year, the Bank raised capital of Rs.850
 crores by way of subordinated bonds (unsecured redeemable
 non-convertible subordinated debentures) qualifying as Tier II capital.
 The raising of this non-equity capital has helped the Bank continue its
 growth strategy and has strengthened its overall capital adequacy ratio
 
 During the year, a total of 1,708,232 equity shares of face value of
 Rs.10 each (before sub-division of equity shares) and 12,758,274 equity
 shares of Rs.2 each were allotted by the Bank to its eligible
 directors/employees and that of its subsidiary companies pursuant to
 exercise of options under its Employee Stock Option Schemes. The paidup
 equity share capital of the Bank rose to Rs.474.10 crores, as compared
 to Rs.469.84 crores last year.
 
 The shareholding pattern of the Bank as on 31st March 2015 was as
 under:
 
 Sr.  Name of Shareholders                          % of Paid-up Capital
 No.
 
 i.   Administrator of the Specified Undertaking                   11.59
 of the Unit Trust of India (SUUTI) 
 
 ii.  Life Insurance Corporation of India (LIC)                    12.61
 & its group entities(1) 
 
 iii. General Insurance Corporation and four                        3.85
 PSU insurance companies
 
 iv.  Overseas investors (including FIIs/ OCBs/                    46.90
 NRIs)
 
 v.  Foreign Direct Investment (GDR issue)                          3.72
 
 vi.  Other Indian financial institutions/mutual                    6.62
 funds/banks
 
 vii. Others                                                       14.71
 
 Total                                                            100.00
 
 (1) Includes 296,075,087 equity shares of Rs.2/- each, representing
 12.49% of the total issued and paid-up equity share capital of the
 Bank, held by LIC.
 
 The Bank''s shares are listed on The National Stock Exchange of India
 Limited (NSE) and BSE Limited (BSE). The GDRs issued by the Bank are
 listed on the London Stock Exchange (LSE). The Bonds issued by the Bank
 under the MTN programme are listed on the Singapore Stock Exchange
 (SSE). The listing fees relating to the Stock Exchanges for the current
 year have been paid.
 
 Sub-Division of the Bank''s Equity Shares
 
 The shareholders at the last Annual General Meeting of the Bank held on
 27th June 2014 had approved the sub-division of one equity share of the
 Bank having a face value of Rs.10 each into five equity shares of the
 face value of Rs.2 each. The sub-division of equity shares came into
 effect from 30th July 2014, being the record date fixed for the same.
 
 DIVIDEND
 
 The Bank''s Diluted Earnings Per Share (EPS) for 2014-15 has risen to
 Rs.30.85 from Rs.26.45 of equity share of Rs.2 each (adjusted for
 sub-division) for the last year. In view of the overall performance of
 the Bank and the objective of rewarding shareholders with cash
 dividends while retaining capital to maintain a healthy capital
 adequacy ratio to support future growth, the Board of Directors has
 recommended a higher dividend of Rs.4.60 per equity share of Rs.2 each
 for the year ended 31st March 2015, as compared to Rs.4.00 per equity
 share of Rs.2 each (adjusted for sub-division) declared last year. This
 dividend shall be subject to tax on dividend to be paid by the Bank.
 This increase reflects our confidence in the Bank''s ability to
 consistently grow earnings over time.
 
 BOARD OF DIRECTORS
 
 During the year, some changes in the composition of the Board of
 Directors have taken place. Shri R. N. Bhattacharyya, nominee of
 Specified Undertaking of the Unit Trust of India (SUUTI), resigned as
 Director of the Bank with effect from 28th June 2014. Shri Somnath
 Sengupta, Executive Director of the Bank had opted for early retirement
 and accordingly retired as such, with effect from 1st September 2014.
 Shri Sanjeev K. Gupta, President & Chief Financial Officer was inducted
 on the Board and took charge as the Executive Director (Corporate
 Centre) & CFO of the Bank, with effect from 4th September 2014.  Shri
 S. B. Mathur, attained the upper age limit of 70 years as prescribed
 under RBI guidelines and accordingly resigned as Director of the Bank,
 with effect from 30th September 2014. Shri S. Vishvanathan was
 appointed as an Additional Independent Director of the Bank, with
 effect from 11th February 2015. The Board places on record its
 appreciation for the valuable services rendered by Shri R. N.
 Bhattacharyya, Shri Somnath Sengupta and Shri S. B. Mathur, during
 their tenure as Director of the Bank.
 
 During the financial year 2014-15, the approval of shareholders, by way
 of Postal Ballot was taken on 10th March 2015 for appointment of the
 existing Independent Directors of the Bank.
 
 The said Independent Directors have given their declaration stating
 that they meet the criteria of independence as laid down under Section
 149 (6) of the Companies Act, 2013 and revised Clause 49 of the Listing
 Agreement. The appointment of the Independent Directors have been done 
 in accordance with the relevant provisions of the Companies Act, 2013 
 and Rules made thereunder. The details of the terms and conditions of 
 their appointment have been hosted on the website of the Bank in 
 compliance with revised Clause 49 of the Listing Agreement.
 
 In terms of Section 152 of the Companies Act, 2013, Smt. Usha Sangwan
 shall retire at the ensuing AGM and being eligible for re-appointment,
 offers herself for re-appointment.
 
 Apart from the above, no other Director was appointed or has resigned
 during the financial year 2014-15.
 
 Key Managerial Personnel
 
 Smt. Shikha Sharma, MD & CEO, Shri V. Srinivasan, Executive Director &
 Head (Corporate Banking), Shri Sanjeev K. Gupta, Executive Director
 (Corporate Centre) & Chief Financial Officer and Shri Sanjeev Kapoor,
 Company Secretary of the Bank are deemed to be Key Mangerial Personnel
 of the Bank as per the provisions of the Companies Act, 2013 and Rules
 made thereunder and that they were already in office before the
 commencement of the Companies Act, 2013.
 
 Meetings
 
 A calendar of Meetings is prepared and circulated in advance to the
 Directors. During the year, seven Board Meetings were convened and
 held, the details of which are given in the Report on Corporate
 Governance, which is forming a part of this report. The intervening gap
 between the said Board Meetings was within the period prescribed under
 the Companies Act, 2013 and revised Clause 49 of the Listing Agreement.
 
 Selection and Appointment of Directors
 
 The charter of Nomination and Remuneration Committee of the Board
 empowers it to review the structure, size, composition, diversity of
 the Board, evaluation of existing skills, defining gaps and making
 necessary recommendations to the Board.  The Board of the Bank is
 constituted in accordance with the provision of Section 10A of the
 Banking Regulation Act, 1949, Companies Act, 2013 and Rules made
 thereunder and revised Clause 49 of the Listing Agreement. The Bank has
 adhered to the process and methodology as prescribed by the Reserve
 Bank of India in respect of ''Fit & Proper'' criteria as applicable to
 Private Sector Banks. The same has been followed at the time of
 appointment and re-appointment of Directors of the Bank.
 
 Board Evaluation
 
 Pursuant to the provisions of the Companies Act, 2013 and revised
 Clause 49 of the Listing Agreement, the Board has carried out an annual
 evaluation of its performance, of the Directors individually as well as
 the evaluation of the working of its Committees. The manner in which
 the evaluation was carried out was explained in the Report on Corporate
 Governance, which is forming a part of this report.
 
 Audit Committee
 
 The composition and the functions of the Audit Committee of the Board
 of Directors of the Bank is disclosed in the Report on Corporate
 Governance, which is forming a part of this report.
 
 Remuneration Policy
 
 The Board has on the recommendation of the Nomination & Remuneration
 Committee of the Board of Directors of the Bank formulated and adopted
 a policy for the selection and appointment of its MD & CEO, Executive
 Directors, Senior Management and their remuneration. The details of the
 Remuneration Policy have been stated in the Report on Corporate
 Governance, which is forming a part of this report.
 
 WHISTLE BLOWER POLICY AND VIGIL MECHANISM
 
 The details of the Whistle Blower Policy and Vigil Mechanism have been
 explained in the Report on Corporate Governance, which is forming a
 part of this report and hosted on the website of the Bank.
 
 SUBSIDIARIES
 
 As on 31st March 2015, the Bank has eight unlisted subsidiaries: Axis
 Asset Management Company Ltd., Axis Bank UK Ltd., Axis Capital Ltd.,
 Axis Finance Ltd., Axis Mutual Fund Trustee Ltd., Axis Private Equity
 Ltd., Axis Securities Ltd. and Axis Trustee Services Ltd.
 
 i) Axis Asset Management Company Ltd. undertakes the activities of
 managing the mutual fund business.
 
 ii) Axis Bank UK Ltd. is the banking subsidiary of the Bank in the
 United Kingdom and undertakes the activities of banking.
 
 iii) Axis Capital Ltd. provides services relating to investment
 banking, equity capital markets, institutional stock broking, mergers
 and acquisition advisory, etc.
 
 iv) Axis Finance Ltd. is an NBFC and carries on the activities of loan
 against shares, margin funding, IPO financing, etc.
 
 v) Axis Mutual Fund Trustee Ltd. acts as the trustee for the mutual
 fund business.
 
 vi) Axis Private Equity Ltd. primarily carries on the activities of
 managing equity investments and provides venture capital support to
 businesses.
 
 vii) Axis Securities Ltd. is primarily in the business of marketing of
 credit cards and retail asset products and also provides retail broking
 services.
 
 viii) Axis Trustee Services Ltd. is engaged in trusteeship activities,
 acting as debenture trustee and as trustee to various securitisation
 trusts.
 
 In accordance with the provisions of Section 129(3) of the Companies
 Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014, the
 Bank has prepared its consolidated financial statement including all of
 its subsidiaries, which is forming part of this report. The financial
 position and performance of its subsidiaries are given in the statement
 containing salient features of the financial statements of the said
 subsidiaries, which forms part of the consolidated financial
 statements.
 
 In accordance with third proviso to Section 136(1) of the Companies
 Act, 2013, the Annual Report of the Bank, containing therein its
 standalone and the consolidated financial statements has been hosted on
 its website www.axisbank.com. Further, as per fourth proviso to the
 said section, the audited annual accounts of each of the said
 subsidiary companies of the Bank have also been hosted on the Bank''s
 website www.axisbank.com. Any shareholder who may be interested in
 obtaining a copy of the aforesaid documents may write to the Company
 Secretary at the Bank''s Registered Office. Further, please note that
 the said documents will be available for examination by the
 shareholders of the Bank at its Registered Office during business
 hours. The said documents have been hosted on the website of the
 concerned subsidiary companies of the Bank, in compliance with the said
 section.
 
 During the year, the Bank has divested its entire stake in its Joint
 Venture, Bussan Auto Finance India Private Ltd.
 
 RELATED PARTY TRANSACTIONS
 
 All related party transactions entered into during the financial year
 were on an arm''s length basis and in the ordinary course of the
 business of the Bank. Accordingly, Form AOC-2 is not applicable to the
 Bank. All related party transactions are placed before the Audit
 Committee of the Board of Directors for its approval. Prior omnibus
 approval of the Audit Committee of the Board of Directors is obtained
 for the transactions, which are of foreseen and repetitive nature. A
 statement giving details of all related party transactions, entered
 pursuant to the omnibus approval so granted, is placed before the Audit
 Committee of the Board of Directors for their review on a quarterly
 basis. The Bank has developed a Standard Operating Procedure for the
 purpose of identification and monitoring of such transactions. The
 policy on Related Party Transactions as approved by the Board is hosted
 on the Bank''s website. During the year under reference, the Bank has
 not entered into any transaction with any related party, which may be
 deemed to be material, in terms of the proviso to revised Clause 49 VII
 C of the Listing Agreement.
 
 EMPLOYEE STOCK OPTION PLAN (ESOP)
 
 The Bank has instituted an Employee Stock Option Scheme. The objective
 of the Scheme is to enhance employee motivation, enable employees to
 participate, whether directly or indirectly, in the long-term growth
 and financial success of the Bank, to act as a retention mechanism by
 enabling employee participation in the business as an active
 stakeholder to usher in an ''owner-manager'' culture. Under the Scheme
 240,087,000 (adjusted for sub-division) options can be granted to the
 eligible Directors/employees of the Bank and its subsidiaries including
 its Key Managerial Personnel. The Employee Stock Option Scheme has been
 formulated in accordance with the Securities and Exchange Board of
 India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
 Guidelines, 1999/Securities and Exchange Board of India (Share Based
 Employee Benefits) Regulations, 2014. The eligibility and number of
 options to be granted to eligible Directors/employees is determined on
 the basis of their work performance and is approved by the Board of
 Directors.
 
 During the period February 2001 to July 2013, the Bank''s shareholders
 approved plans for the issuance of stock options to employees on six
 occasions. Under the first two plans and upto the grants made on 29th
 April 2004, the option conversion price was set at the average daily
 high-low price of the Bank''s equity shares traded during the 52 weeks
 preceding the date of grant at the Stock Exchange which had the maximum
 trading volume of the Bank''s equity share during that period. Under
 the third plan and subsequent plans and with effect from the grants
 made by the Bank on 10th June 2005 and thereafter, the pricing formula
 has been changed to the latest available closing price of the equity
 shares of the Bank prevailing on the NSE (as the NSE recorded more
 trading volume than BSE), on the day prior to the grant date. Along
 with approving the sub-division of the Bank''s equity shares, the
 shareholders at the AGM held on 27th June 2014 also approved the
 consequent adjustments to the stock options granted to its eligible
 Directors/employees under its various schemes such that all stock
 options available for grant (including lapsed and forfeited options
 available for reissue) and those already granted but not exercised as
 on record date fixed for the purpose of sub-division were
 proportionately converted into options for shares of face value of
 Rs.2/- each and the grant price of all the outstanding stock options
 (vested, unvested and unexercised) on the said record date were
 proportionately adjusted by dividing the existing grant price by 5. The
 record date for this purpose was 30th July 2014.
 
 All the numbers given herein and in the Annexure I to this report
 pertaining to stock options are post sub-division of shares as stated
 above.
 
 The Nomination and Remuneration Committee of the Board of Directors and
 erstwhile HR and Remuneration Committee of the Board of Directors
 granted options under these plans on fourteen occasions aggregating to
 231,975,450 options. The options granted, which are non-transferable,
 vest at rates of 30%, 30% and 40% on each of three successive
 anniversaries following the respective grant, subject to standard
 vesting conditions and must be exercised within three/five years of the
 date of respective vesting, as the case may be. As of 31st March 2015,
 166,703,149 options had been exercised and 41,829,791 options were
 still in force.
 
 Other statutory disclosures as required under the SEBI (Employee Stock
 Options & Employee Share Purchase Scheme) Guidelines, 1999 has been
 given in the Annexure I to this report.
 
 CORPORATE GOVERNANCE
 
 The Bank is committed to achieve the highest standards of Corporate
 Governance and it aspires to benchmark itself with international best
 practices in this regard. The Corporate Governance practices followed
 by the Bank are enclosed as an Annexure to this report. The Corporate
 Governance framework of the Bank incorporates all the recommendations
 as set out in revised Clause 49 of the Listing Agreement.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 The Board of Directors hereby declares and confirms the following
 statements in terms of Section 134(3)(c) of the Companies Act, 2013:
 
 a.  That in the preparation of the annual accounts for the year ended
 31st March 2015, the applicable accounting standards had been followed
 along with proper explanation relating to material departures.
 
 b.  That such accounting policies as mentioned in Note 17 of the Notes
 to the Financial Statements have been selected and applied consistently
 and judgement and estimates have been made that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the Bank as at 31st March 2015 and of the profit of the Bank for the
 year ended on that date.
 
 c.  That proper and sufficient care has been taken for the maintenance
 of adequate accounting records in accordance with the provisions of the
 Companies Act, 2013 for safeguarding the assets of the Bank and for
 preventing and detecting fraud and other irregularities.
 
 d.  That the annual accounts have been prepared on a going concern
 basis.
 
 e.  That internal financial controls to be followed by the Bank, were
 in place and that the same were adequate and were operating
 effectively.
 
 f.  That proper system to ensure compliance with the provisions of all
 applicable laws was in place and the same were adequate and operating
 effectively.
 
 EXTRACT OF ANNUAL RETURN
 
 The details forming part of the extract of the Annual Return in Form
 MGT 9 is given in Annexure II to this report.
 
 STATUTORY DISCLOSURE
 
 Considering the nature of activities of the Bank, the provisions of
 Section 134(m) of the Companies Act, 2013 read with Rule 8 of the
 Companies (Accounts) Rules, 2014 relating to conservation of energy and
 technological absorption do not apply to the Bank. The Bank is however,
 constantly pursuing its goal of technological up-gradation in a cost-
 effective manner for delivering quality customer service.
 
 The information required pursuant to Section 197 read with Rule 5 of
 the Companies (Appointment and Remuneration of Managerial Personnel)
 Rules, 2014 in respect of employees of the Bank forms part of Annexure
 III to this Report. The Bank had 139 employees who were employed
 throughout the year and were in receipt of remuneration more than Rs.60
 lakhs per annum and 23 employees were employed for part of the year and
 were in receipt of remuneration of more than Rs.5 lakh per month. In
 terms of Section 136 of the Companies Act, 2013, the copy of the
 financial statements of the Bank, including the consolidated financial
 statements, the auditor''s report and relevant annexures to the said
 financial statements and reports are being sent to the Members and
 other persons entitled thereto, excluding the information in respect of
 the said employees containing the particulars as specified in Rule 5(2)
 of the said Rules, which is available for inspection by the Members at
 its Registered Office during business hours on working days of the Bank
 up to the date of the ensuing Annual General Meeting.  If any Member is
 interested in obtaining a copy thereof, he may write to the Company
 Secretary of the Bank at its Registered Office. The financial
 statements, reports etc. of the Bank have been hosted on the website of
 the Bank, www.axisbank.com.
 
 MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT
 
 The Management''s Discussion and Analysis Report for the year under
 review, as stipulated under revised Clause 49 of the Listing Agreement
 with the Stock Exchanges is given in Annexure IV to this report.
 
 BUSINESS RESPONSIBILITY REPORT
 
 The Securities and Exchange Board of India (SEBI) through its Circular
 CIR/CFD/DIL/8/2012 dated 13th August 2012 has mandated the inclusion of
 Business Responsibility (BR) Report as part of the Annual Report for
 Top 100 listed entities based on market capitalisation at BSE and NSE
 as on 31st March 2012. The Bank''s Business Responsibility Report has
 been hosted on the Bank''s website, www.axisbank.com. Any shareholder
 interested in obtaining a physical copy of the same may write to the
 Company Secretary at the Registered Office of the Bank.
 
 RISK MANAGEMENT POLICY
 
 Pursuant to revised Clause 49 of the Listing Agreement, the Bank
 constituted a Risk Management Committee of the Board of Directors of
 the Bank. The details of the said Committee and its terms of reference
 are set out in the Corporate Governance Report, which is forming a part
 of this report. The Bank has formulated and adopted a robust risk
 management framework.  Whilst the Board is responsible for framing,
 implementing and monitoring the said risk management framework, it has
 delegated its powers relating to monitoring and reviewing of risk
 associated with the business of the Bank to the said Committee. The
 details of the risk management framework and issues related thereto
 have been explained in the Management''s Discussion and Analysis Report
 which is annexed to this report.
 
 CORPORATE SOCIAL RESPONSIBILITY
 
 The Bank has constituted the Corporate Social Responsibility Committee
 (CSR) of the Board of Directors in accordance with the provisions of
 Section 135 of the Companies Act, 2013 read with The Companies
 (Corporate Social Responsibility) Rules, 2014. The brief outline of the
 CSR Policy, including overview of the program proposed to be
 undertaken, the composition of the CSR Committee, average net profits
 of the Bank for the past three financial years, prescribed CSR
 expenditure and details of amount spent on CSR activities during the
 year have been disclosed in Annexure V to this Report, as mandated
 under the said Rules.
 
 AUDITORS 
 
 Statutory Auditors
 
 M/s S. R. Batliboi & Co. LLP, Chartered Accountants, Statutory Auditors
 of the Bank (Membership No.301003E) will retire at the conclusion of
 the Twenty First Annual General Meeting of the Bank and are eligible
 for re-appointment, subject to the approval of Reserve Bank of India
 and ratification by the shareholders of the Bank. As recommended by the
 Audit Committee of the Board of Directors, the Board of Directors has
 proposed the ratification of re-appointment of M/s S. R. Batliboi & Co.
 LLP, Chartered Accountants as Statutory Auditors of the Bank for the
 financial year 2015-16 by the shareholders of the Bank at the ensuing
 Annual General Meeting. The shareholders are requested to ratify their
 re-appointment and the remuneration as decided by the Audit Committee
 of the Board of Directors.
 
 As required under revised Clause 41 I (h) of the Listing Agreement, the
 Statutory Auditors have confirmed that they have subjected themselves
 to the peer review process of the Institute of Chartered Accountants of
 India (ICAI) and that they hold a valid certificate issued by the Peer
 Review Board of ICAI.
 
 Secretarial Auditors
 
 Pursuant to the provisions of Section 204 of the Companies Act, 2013
 and the Companies (Appointment and Remuneration of Managerial
 Personnel) Rules, 2014, the Bank has appointed M/s Mehta & Mehta,
 Company Secretaries in Practice (Membership No. P1996MH007500) to
 conduct Secretarial Audit of the Bank. The Secretarial Audit Report is
 given in Annexure VI to this report.
 
 There are no qualifications, reservations or adverse remarks made by
 M/s S. R. Batliboi & Co. LLP, Chartered Accountants, Statutory Auditors
 of the Bank, in their Auditors'' report or by M/s Mehta & Mehta, Company
 Secretaries in Practice, Secretarial Auditors of the Bank in their
 Secretarial Audit Report.
 
 SIGNIFICANT AND MATERIAL ORDER PASSED BY REGULATORS OR COURTS OR
 TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND OPERATIONS OF THE BANK
 
 During the financial year 2014-15, no significant or material orders
 were passed by Regulators, Courts or Tribunals against the Bank, which
 could impact its going concern status and operations.
 
 ADEQUACY OF INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS
 
 The Board has inter alia reviewed the adequacy and effectiveness of the
 Bank''s internal financial controls relating to its financial
 statements.
 
 The Board has discussed with the Management of the Bank the major
 financial risk exposures and the steps taken by it to monitor and
 control such exposures, overseen and reviewed the functioning of the
 Whistle Blower Mechanism (which is a part of the Banks'' Fraud Risk
 Management Policy) and reviewed the findings in respect of
 investigations into frauds which were material in nature and the
 actions taken by the Bank in this regard.
 
 CEO & CFO CERTIFICATION
 
 Certificate issued by Smt. Shikha Sharma, Managing Director & CEO and
 Shri Sanjeev K. Gupta, Executive Director (Corporate Centre) and CFO of
 the Bank, in terms of revised Clause 49 (IX) of the Listing Agreement,
 for the year under review was placed before the Board of Directors at
 its meeting held on 29th April 2015.
 
 ACKNOWLEDGEMENTS
 
 The Board of Directors places on record its gratitude to the Reserve
 Bank of India, other government and regulatory authorities, financial
 institutions and correspondent banks for their strong support and
 guidance. The Board acknowledges the support of the shareholders and
 also places on record its sincere thanks to its valued clients and
 customers for their continued patronage.  The Board also expresses its
 deep sense of appreciation to all employees of the Bank for their
 strong work ethic, excellent performance, professionalism, teamwork,
 commitment and initiative, which has led to the Bank making commendable
 progress in today''s challenging environment.
 
                             For and on behalf of the Board of Directors
 
 Place : Mumbai                                             Sanjiv Misra
 Date : 29th April 2015                                         Chairman
Source : Dion Global Solutions Limited
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