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Axis Bank

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Directors Report Year End : Mar '16    « Mar 15
The Board of Directors have the pleasure of presenting the 22nd Annual
 Report of the Bank together with the Audited Statement of Accounts,
 Auditors'' Report and the Report on the business and operations of the
 Bank for the financial year ended 31st March 2016.
 
 Financial Performance
 
 The financial highlights for the year under review are presented below:
 
                                                      (Rs,in crores)
  
 Particulars                         2015-16       2014-15    Growth
 
 Deposits                         357,967.56    322,441.94    11.02%
 
 Out of which
 
 Savings Bank Deposits            105,793.13     88,292.08    19.82%
 
 Current Account Deposits          63,651.92     56,108.22    13.45%
 
 Advances                         338,773.72    281,083.03    20.52%
 
 Out of which
 
 - Retail Advances                138,520.90    111,932.27    23.75% 
 
 Non-retail Advances              200,252.82    169,150.76    18.39%
 
 Total Assets/Liabilities         525,467.62    461,932.39    13.75%
 
 Net Interest Income               16,832.97     14,224.14    18.34%
 
 Other Income                       9,371.46      8,365.04    12.03% 
 Out of which
 
 - Fee Income                       7,501.97      6,778.98    10.67%
 
 - Trading Profit(1)                1,246.91      1,134.94     9.87%
 
 - Misc. Income                       622.58        451.12    38.01% 
 
 Operating Expenses 
 (excluding depreciation)           9,656.91      8,798.07     9.76% 
 
 Profit before Depreciation/
 Provisions and Tax                16,547.52     13,791.11    19.99% 
 
 Depreciation                         443.91        405.67     9.43% 
 
 Provision for Tax                  4,170.09      3,699.01    12.74% 
 
 Other Provisions and 
 Write offs                         3,709.86      2,328.61    59.32% 
 
 Net Profit                         8,223.66      7,357.82    11.77% 
 
 Appropriations:
 
 Transfer to 
 Statutory Reserve                  2,055.92      1,839.46    11.77%
 
 Transfer (from)/to 
 Investment Reserve                   (41.81)        25.49
 
 Transfer to Capital 
 Reserve                               62.04         63.14    (1.74%)
 
 Transfer to Reserve Fund               1.74         (1.27)     -
 
 Proposed Dividend(2)                   2.81      1,308.96      -
 
 Surplus carried over 
 to Balance Sheet                   6,142.96      4,122.04      -
 
 (1) Excluding Merchant 
 Exchange Profit
 
 (2) According to the Companies (Accounting Standards) Amendment Rules/
 201 6, proposed dividend is not recognized as a liability as on 31st
 March 2016
 
 
 Key Performance Indicators               2015-16     2014-15
 
 Interest Income as a percentage 
 of working funds*                          8.59%       8.81%
 
 Non-interest Income as a 
 percentage of working funds*               1.96%       2.08%
 
 Net Interest Margin                        3.90%       3.92%
 
 Return on Average Net Worth               17.49%      18.57%
 
 Operating Profit as a 
 percentage of working funds*              3.38%        3.33%
 
 Return on Average Assets                  1.72%        1.83%
 
 Profit per Employee**            Rs,17.83 lacs  Rs,17.07 lacs
 
 Business (Deposits less 
 inter-bank deposits   
 Advances) per employee**       Rs,14.84 crores Rs,13.71 crores
 
 Net non-performing assets 
 as a percentage of net 
 customer assets***                      0.70%         0.44%
 
 * 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
 representing Non-SLR investments through primary market Previous year
 figures have been re-grouped wherever necessary
 
 This year has been a mix of opportunities and challenges for the Indian
 Banking sector. Despite the challenges the Bank continues to perform
 well, by leveraging upon its branch network and innovative electronic
 channels, a well-developed retail franchise and a number of key
 corporate and SME relationships. During the year, the Bank continued to
 expand its network, as we believe that both physical branches and
 digital channels will co-exist to create the superior customer
 experiences which continue to remain the corner stone of our vision and
 strategy. The Bank''s retail businesses grew steadily during the year
 and there was credible growth of both retail deposits and loans,
 supported by an expanding network that is critical to the retail
 franchise. Our corporate advances portfolio grew higher than industry
 growth rates as we continue to find attractive refinancing
 opportunities for highly rated corporate that are new relationship
 additions to the Bank''s franchise.
 
 The Bank continued to show a healthy growth in both business and
 earnings, with a net profit of Rs,8,223.66 crores for the year ended
 31st March 2016, registering a growth of 11.77% over the net profit of
 Rs,7,357.82 crores last year. The operating profit of the Bank
 increased by 20.31% to Rs,16,103.61 crores from Rs,13,385.44 crores
 last year. The Bank continued to focus on the quality of growth and
 displayed strong growth in key balance sheet parameters for the year
 ended 31st March 2016. The total assets increased by 13.75% to
 Rs,525,468 crores, total advances increased by 20.52% to Rs,338,774
 crores. The total deposits of the Bank increased by 11.02% to
 Rs,357,968 crores against Rs,322,442 crores last year. Savings Bank
 deposits increased by 19.82% to Rs,1 05,793 crores, while Current
 Account deposits increased by 13.45% to Rs,63,652 crores and together
 constituted 47% of total deposits as compared to 45% last year.
 
 The Bank continued to enhance its shareholder value by delivering
 healthy financial return ratios. Basic Earnings Per Share (EPS) was
 Rs,34.59 compared to Rs,31.18 last year, while the Diluted Earnings Per
 Share was Rs,34.40 compared to Rs,30.85 last year. Return on Equity
 (RoE) stood at 1 7.49% compared to 1 8.57% last year, and Return on
 Assets (RoA) stood at 1.72% compared to 1.83% last year. The Net
 Interest Margin (NIM) for the year was 3.90% compared to 3.92% last
 year. The ratio of Gross NPAs to gross customer assets stood at 1.67%,
 and Net NPA ratio (Net NPAs as percentage of net customer assets) was
 0.70%.  The Bank''s provision coverage stood at 72.27% after considering
 prudential write-offs.
 
 Capital
 
 During the year, 12,309,627 equity shares of Rs,2 each were allotted by
 the Bank to some of its Directors/Employees and that of its subsidiary
 companies, pursuant to exercise of options by them under the various
 Employee Stock Option Schemes of the Bank. Pursuant to said allotment,
 the total issued and paid-up equity share capital of the Bank increased
 to Rs,476.57 crores, as compared to Rs,474.10 crores as on 31st March
 2015.
 
 
 The shareholding pattern of the Bank as on 31st March 2016, was as
 under:
 
 Sr   Shareholder/ Category     No. of Shares held     % of Paid-up 
                                                       Capital
 No
 
      Promoters
 
 1    Administrator of the 
      Specified Undertaking 
      of the Unit Trust of 
      India (SUUTI)                 27,48,40,905        11.53
 
 2    Life Insurance 
      Corporation of 
      India (LIC)                   34,88,60,225        14.64
 
 3    General Insurance 
      Corporation of India           4,05,95,000         1.70
 
 4    The New India
      Assurance Company 
      Limited                        2,61,03,585         1.10
 
 5    National Insurance 
      Company Limited                  47,47,285         0.20
 
 6    The Oriental
      Insurance Company
      Limited                          63,30,020         0.27
 
 7    United India
      Insurance Company 
      Limited                          69,27,714         0.29 
      Foreign
      Investors
 
 8    Overseas Investors
      (including Flls/
      OCBs/NRIs)                    98,29,06,791        41.25
 
 9    Foreign Direct 
      Investment (GDR issue)         7,99,57,720         3.36 
      Domestic
      Financial
      Institutions
 
 10   Financial 
      Institutions/Mutual 
      Funds/Banks/NBFC              24,67,36,628        10.35
      Retail Investors
 
 11   Others                        36,48,25,953        15.31
 
      Total                        238,28,31,826       100.00
  
 The said equityshares are listed on the National Stock Exchange of
 India Limited (NSE) and BSE Limited (BSE). The Unsecured Redeemable Non
 Convertible Debentures issued by the Bank on a private placement basis
 are listed on NSE and BSE. The Global Depository Receipts (GDR) issued
 by the Bank are listed on the London Stock Exchange. The Bonds issued
 by the Bank under the MTN programme are listed on the Singapore Stock
 Exchange. The Bank has paid the listing fees to the said Stock
 Exchanges for the current financial year.
 
 Amendment to Articles of Association (AOA) of the Bank
 
 The Shareholders of the Bank had by means of a special resolution
 passed on 10th May 2016, through Postal Ballot approved the amendments
 to the relevant provisions of the Articles of Association (AOA) of the
 Bank. The new AOA of the Bank which has come into effect from 10th May
 201 6, is in compliance with the relevant provisions of the Companies
 Act, 201 3, Rules made there under, the Banking Regulation Act, 1949,
 the Guidelines issued by the Reserve Bank of India from time to time
 and the SEBI (Listing Obligations & Disclosure Requirements)
 Regulations, 2015 (Listing Regulations), including any statutory
 amendment(s), modification(s), variation or re-enactment thereof.
 
 In terms of the new AOA, SUUTI and LIC has the power to nominate one
 director each on the Board of the Bank and the Board would have the
 authority to appoint the Non-Executive Chairman of the Bank.
 
 Application to the Foreign Investment Promotion Board (FIPB) for
 increase in the foreign investment limits
 
 In terms of the Consolidated Foreign Direct Investment (FDI) Policy,
 the FIPB, Department of Economic Affairs, Ministry of Finance, New
 Delhi had granted its approval to the Bank to increase the overall
 foreign investment limit from 49% to 62% of its total paid up share
 capital, subject to the condition that the aggregate investments of
 Foreign Institutional Investors (Flls) in the Bank does not exceed 49%
 of its total paid up share capital, subject to compliance with other
 applicable laws.
 
 The Ministry of Commerce and Industry, Government of India vide Press
 Note No. 12 (201 5 Series) dated 24th November 201 5 reviewed and
 amended the said FDI Policy on various sectors including the Private
 Sector Banks. The permissible limits of foreign investment in Private
 Sector Banks was increased to 74% of their total paid up share capital
 on a fully fungible basis, subject to the limits prescribed in amended
 Clause 6.2.18.2.2.4 (i) of the revised FDI Policy.
 
 Accordingly, the Bank had sought the approval of the FIPB to increase
 the foreign investment limit from 62% to 74% of its total paid up share
 capital on a fully fungible basis, subject to the limits prescribed in
 amended Clause 6.2.18.2.2.4 (i) of the revised FDI Policy.
 
 As on 31th March 2016, the total foreign investment in the Bank was
 44.61% of its total paid up share capital. The staid increase in
 foreign investment limit would enable the Bank to enhance Shareholders
 value and provide flexibility to the Bank to raise long term capital
 from foreign investors, subject to compliance with the revised FDI
 Policy.
 
 
 The said application made by the Bank seeking to increase the foreign
 investment limit from 62% to 74% of its total paid up share capita on a
 fully fungible basis, has been recommended by the FIPB for the approval
 of the Cabinet Committee on Economic Affairs (CCEA).
 
 Dividend
 
 The Diluted Earnings Per Share (EPS) of the Bank for the financial year
 201 5-1 6 has risen to Rs,34.40 from Rs,30.85 per equity share of Rs,2
 each in the previous year. In view of the overall performance of the
 Bank and with the objective of rewarding the Shareholders of the Bank
 with cash dividends while retaining capital to maintain a healthy
 capital adequacy ratio to support future growth, the Board of Directors
 of the Bank at its Meeting held on 26th April 2016, recommended a
 dividend of Rs,5.00 per equity share of Rs,2 each for the financial
 year 2015-16, as compared to Rs,4.60 per equity share of f2 each, for
 the financial year 201 4-1 5. The sand increase reflects our confidence
 in the Bank''s ability to consistently grow earnings over time.
 
 Closure of Share Transfer Books and Record Date for Dividend
 
 The Register of Members and the Share Transfer Books of the Bank will
 be closed from Saturday, 9th July 201 6 to Friday, 22nd July 2016 (both
 days inclusive) for the purpose of the 22nd Annual General Meeting of
 the Shareholders of the Bank to be held on Friday, 22nd July 2016 and
 for determining the entitlement to dividend, if any, declared by the
 Bank for the financial year ended 31st March 2016.
 
 The Record Date for payment of the said dividend, if approved by the
 Members at the 22nd Annual General Meeting, has been fixed on Friday,
 8th July 2016. The said dividend shall be paid to those Members whose
 name appears on the Register of Members of the Bank/ the Statements of
 Beneficial Ownership as received from the Depositories, as at the close
 of business hours on Friday, 8th July 2016.
 
 Ratings of various Debt Instruments
 
 The Unsecured Redeemable Non Convertible Debentures issued by the Bank,
 on a private placement basis, during the financial year 201 5-1 6, were
 rated AAA by CRISIL, CARE and ICRA.
 
 The Bonds issued by the Bank under the MTN programme, during the
 financial year 201 5-1 6, were rated AAA by CRISIL, CARE and ICRA.
 
 Board of Directors
 
 During the year, the following changes took place in the composition of
 the Board of Directors of the Bank:
 
 Smt. Shikha Sharma was re-appointed as the Managing Director and CEO of
 the Bank for a further period of three years with effect from 1st June
 2015 up to 31st May 201 8, in terms of the approval granted by the
 Reserve Bank of India (RBI) and the Shareholders of the Bank at the
 last Annual General Meeting held on 24th July 2015.
 
 Smt. Ireena Vittal resigned as an Independent Director of the Bank,
 with effect from the close of business hours on 23rd August 2015. The
 Board places on record its appreciation for the contributions made by
 Smt. Ireena Vittal during her tenure as an Independent Director of the
 Bank.
 
 At the meeting of the Board of Directors held on 24th July 201 5, Shri
 V. Srinivasan was re-appointed as the Executive Director & Head
 (Corporate Banking) of the Bank for a period of 3 years, with effect
 from 15th October 2015 to 14th October 2018, subject to the approval of
 the RBI and the Shareholders of the Bank. Thereafter, at the meeting of
 the Board of Directors held on 27th October 2015, the Board
 re-designated Shri V. Srinivasan as the Deputy Managing Director of the
 Bank with effect from 1 5th October 2015, subject to the approval of
 the RBI and Shareholders of the Bank. However, in terms of the approval
 granted by the RBI, Shri V. Srinivasan took charge as the ''Deputy
 Managing Director'' of the Bank, for a period of 3 years, with effect
 from 21st December 2015. The approval of Shareholders of the Bank, will
 be obtained at the 22nd Annual General Meeting to be held on 22nd July
 201 6. In order to comply with the provisions of Section 1 52 of the
 Companies Act, 201 3, Shri V Srinivasan will retire by rotation at the
 22nd Annual General Meeting and being eligible has offered himself for
 re-appointment.
 
 Shri Rakesh Makhija was appointed as an Independent Director of the
 Bank, for a period of five consecutive years, with effect from 27th
 October 2015, subject to the approval of the Shareholders of the Bank
 at the 22nd Annual General Meeting of the Bank. During the said tenure,
 Shri Rakesh Makhija shall not be liable to retire by rotation.
 
 Smt. Ketaki Bhagwati was appointed as an Independent Director of the
 Bank, for a period of five consecutive years, with effect from 1 9th
 January 2016, subject to the approval of the Shareholders of the Bank
 at the 22nd Annual General Meeting of the Bank. During the said tenure,
 Smt. Ketaki Bhagwati shall not be liable to retire by rotation.
 
 Shri Prasad R. Menon was re-appointed as an Independent Director of the
 Bank for his second term, with effect from 23rd January 2016 up to 8th
 October 201 8 (both days inclusive). The approval of the Shareholders
 of the Bank was obtained through Postal Ballot on 22nd December 201 5.
 During the said tenure, Shri Prasad R. Menon shall not be liable to
 retire by rotation.
 
 Shri K. N. Prithviraj, (Nominee of SUUTI) ceased to be the
 Non-Executive Director of the Bank, with effect from the close of
 business hours on 8th January 201 6. The Board places on record its
 appreciation for the contributions made by Shri K. N. Prithviraj during
 his tenure as the Non-Executive Director of the Bank.
 
 Shri B. Babu Rao, (Nominee of SUUTI) was appointed as a Non-Executive
 Director of the Bank, liable to retire by rotation, with effect from
 19th January 2016, subject to the approval of the Shareholders of the
 Bank at the 22nd Annual General Meeting of the Bank.
 
 The tenure of Dr. Sanjiv Misra, (Nominee of SUUTI) as the Non-Executive
 Chairman of the Bank, ended on 7th March 201 6. In terms of SUUTI''s
 letter dated 8th March 201 6, the Board of Directors of the Bank
 re-appointed Dr. Sanjiv Misra as the Non-Executive Chairman of the
 Bank, for a period of three months, with effect from 8th March 201 6,
 subject to the approval of the RBI and the Shareholders of the Bank.
 However, in terms of the approval granted by the RBI, the said
 re-appointment was approved for a period of three months, with effect
 from 11th March 201 6. The approval of the Shareholders of the Bank was
 obtained through Postal Ballot on 1 0th May 2016.
 
 Shri Sanjeev Kumar Gupta, Executive Director (Corporate Centre) of the
 Bank retired from the services of the Bank, with effect from the close
 of business hours on 18th March 2016. The Board places on record its
 deep appreciation and gratitude for the valuable services rendered by
 Shri Sanjeev Kumar Gupta during his tenure as an Employee / Executive
 Director of the Bank.
 
 Apart from the above, no other Director was appointed or has resigned
 or has retired during the financial year 201 5-1 6.
 
 Pursuant to the amendments to the AOA of the Bank, the right of
 nomination available to SUUTI to nominate the Chairman of the Bank got
 rescinded. In view of the above, Dr. Sanjiv Misra resigned as the
 Non-Executive Chairman of the Bank (as a nominee of SUUTI), with effect
 from 11th May 2016.
 
 Thereafter, in terms of the new Article 90 of the AOA of the Bank, the
 Board of Directors at its meeting held on 12th May 2016 appointed Dr.
 Sanjiv Misra as an Independent Director and as the Non-Executive
 (Part-time) Chairman of the Bank, for a period of five consecutive
 years, with effect from 12th May 201 6, subject to the approval of the
 RBI and the Shareholders of the Bank at the 22nd Annual General Meeting
 of the Bank.
 
 Shri Rajiv Anand, Group Executive (Retail Banking) of the Bank was
 appointed as the Director of the Bank and as the Whole time Director
 designated as the ''Executive Director (Retail Banking)'' of the Bank,
 for a period of three years, with effect from 12th May 2016, subject to
 the approval of the RBI and the Shareholders of the Bank at the 22nd
 Annual General Meeting of the Bank. During the said tenure, Shri Rajiv
 Anand shall be liable to retire by rotation.
 
 Shri Rajesh Dahiya, Group Executive & Head (Corporate Centre) of the
 Bank was appointed as the Director of the Bank and as the Whole time
 Director designated as the ''Executive Director (Corporate Centre)'' of
 the Bank, for a period of three years, with effect from 12th May 201 6,
 subject to the approval of the RBI and the Shareholders of the Bank at
 the 22nd Annual General Meeting of the Bank.  During the said tenure,
 Shri Rajesh Dahiya shall be liable to retire by rotation.
 
 The above appointments were made after taking into consideration the
 experience, knowledge, skills and expertise that the said persons would
 bring to the Board and the requirements as prescribed under Section 10A
 of the Banking Regulation Act, 1949.
 
 The ordinary resolutions in respect of the Directors who are to be
 appointed/ re-appointed, as aforesaid, have been included in the Notice
 convening the 22nd Annual General Meeting of the Bank to be held on
 22nd July 2016. A brief profile of the said Directors have been annexed
 to the said Notice.
 
 Selection and Appointment of Directors
 
 The appointment of Directors of the Bank are done in accordance with
 the relevant provisions of the Companies Act, 201 3, the relevant Rules
 made there under, the Banking Regulation Act, 1 949, the Guidelines
 issued by the RBI, in this regard, from time to time and the Listing
 Regulations.
 
 The Bank adheres to the process and methodology prescribed by the RBI
 in respect of'' Fit & Proper ''criteria as applicable to Private Sector
 Banks, signing of deed of covenants which binds the Directors to
 discharge their responsibilities to the best of their abilities,
 individually and collectively in order to be eligible to be appointed
 as a Director of a Bank. The prescribed declarations given by the
 Directors other than members of the Nomination & Remuneration Committee
 (NRC) are placed before the NRC and the declarations given by the
 Members of the NRC are placed before the Board, for its review and
 noting. The said declarations from the Directors are obtained at the
 time of their appointment / re-appointment in compliance with the said
 laws. Assessment on whether the Directors fulfill the said criteria is
 also made by the NRC and the Board on an annual basis.
 
 The Members of the NRC reviews the structure, size, composition of the
 Board, the regional and industry experience, track record, expertise
 and other relevant information and documents of the directors before
 making appropriate recommendations to the Board with regard to their
 appointment, re-appointment, remuneration and assignment of duties
 (nomination to various Committees of the Board) designed to enhance the
 Board''s effectiveness. The NRC also identifies potential candidates
 from diverse backgrounds including but not limited to accountancy,
 agriculture and rural economy, banking, co-operation, economics,
 finance, law, small-scale industry, information technology, core
 industries, infrastructure sector, thus providing the Board with
 members who have special knowledge, practical experience and skills, to
 serve the business interest of the Bank.
 
 Declaration of Independence
 
 All the Independent Directors of the Bank have given their respective
 declarations stating that they meet the criteria of independence as
 laid down under the applicable laws and in the opinion of the Board,
 the Independent Directors meet the said criteria.
 
 Key Managerial Personnel
 
 Shri Jairam Sridharan was appointed as the Chief Financial Officer
 (CFO) of the Bank, with effect from 28th October 2015, in place of Shri
 Sanjeev Kumar Gupta, Executive Director (Corporate Centre) of the Bank
 who had stepped down as the CFO of the Bank. Currently, Shri Jairam
 Sridharan is designated as the ''Group Executive & CFO'' of the Bank.
 
 Shri Girish V. Koliyote was appointed as the Company Secretary of the
 Bank, with effect from 1st May 2015, in place of Shri Sanjeev Kapoor
 who had resigned as the Company Secretary of the Bank, with effect from
 the close of business hours on 30th April 2015.
 
 Board Evaluation
 
 The Board has conducted annual evaluation of the performance of all its
 Directors, Committees of the Board and that of its Non-Executive
 Chairman, in terms of the relevant provisions of the Companies Act, 201
 3, the Rules made there under and the Listing Regulations.
 
 The Bank had engaged the services of an external consultant to help it
 to conduct an impartial and independent Board evaluation, as aforesaid.
 On the basis of their findings, a process of evaluation was recommended
 to the Board for adoption. The manner in which the evaluation was
 conducted by the Bank has been explained in the Report on Corporate
 Governance, which is forming part of this report.
 
 Meetings
 
 The schedule of the meetings of the Board and the Committees thereof
 for the next financial year is circulated well in advance to all the
 Members of the Board, for their consideration and approval. During the
 year, 5 meetings of the Board of Directors of the Bank were held and
 the gap between the said meetings did not exceed the limit of 120 days,
 as prescribed under the relevant provisions of the Companies Act, 201
 3, the Rules made there under and the Listing Regulations.
 
 Audit Committee
 
 The composition, role and 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 Bank has formulated and adopted a Remuneration Policy for its
 Directors, Key Managerial Personnel and other Employees, in terms of
 Section 1 78 of the Companies Act, 201 3, the Rules made there under and
 the Listing Regulations. The details of the Remuneration Policy have
 been disclosed in the Report on Corporate Governance, which is forming
 part of this report.
 
 Whistle Blower Policy and Vigil Mechanism
 
 The details of the Whistle Blower Policy and Vigil Mechanism have been
 disclosed in the Report on Corporate Governance, which is forming part
 of this report.
 
 Subsidiaries
 
 As on 31st March 2016, the Bank has the following nine unlisted
 subsidiary companies:
 
 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.
 
 ii) 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 securitization
 trusts.
 
 ix) Axis Securities Europe Ltd. is engaged in financial advisory
 service company.
 
 During the financial year 2015-16, the Bank acquired the entire share
 capital of Axis Securities Europe Ltd., its step-down subsidiary
 company, at a consideration of fl 9.02 crores from Axis Capital Ltd., a
 wholly owned subsidiary of the Bank. Accordingly, Axis Securities
 Europe Ltd. became a wholly owned subsidiary company of the Bank, with
 effect from 19th August 2015.
 
 In accordance with the provisions of Section 129(3) of the Companies
 Act, 201 3 read with Rule 8 of Companies (Accounts) Rules, 2014 as
 amended, the Bank has prepared its consolidated financial statement
 including that of all of its subsidiary companies, which is forming
 part of this report. The financial position and performance of each of
 its subsidiary companies are given in the statement containing the
 salient features of the financial statements of the said subsidiary
 companies, which forms part as an annexure to this report.
 
 In accordance with third proviso to Section 1 36(1) of the Companies
 Act, 201 3, 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 physical copy of
 the aforesaid financial statements may write to the Company Secretary
 of the Bank at its Registered office. Further, please note that the
 said financial statements will be available for inspection by the
 Shareholders of the Bank at the Registered Office of the Bank during
 business hours from 11.00 a.m. to 1.00 p.m. on all working days except
 Saturdays, Sundays, Bank Holidays and National Holidays.
 
 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 AOC-2 is not applicable to the Bank.
 All related party transactions are placed before the Audit Committee of
 the Board of Directors (ACB) for its approval. Prior omnibus approval
 of the Audit Committee of the Board 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 ACB for their review on a
 quarterly basis. The Bank has developed a Standard Operating Procedure
 for the purpose of identifying and monitoring such transactions. The
 policy on Related Party Transactions as approved by the Board at its
 meeting held on 19th January 2016 has been 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 explanation to Regulation 23 of the Listing
 Regulations.
 
 The Ministry of Corporate Affairs (MCA) vide its notification dated
 25th May 201 5 had empowered the ACB to grant omnibus approval for
 related party transactions on an annual basis, in line with the Listing
 Regulations. Further, the MCA vide its notifications dated 14th
 December 2015 had provided that the Board of Directors should approve
 the criteria based on which the ACB could accord such omnibus approval.
 Accordingly, the criteria to be considered by ACB for granting such
 omnibus approval was approved by the Board of Directors of the Bank at
 its meeting held on 19th January 2016.
 
 Employee Stock Option Plan (ESOP)
 
 Since the financial year 2000-01, the Bank has formulated and adopted
 several Employee Stock Option Schemes (ESOS), in accordance with the
 Securities and Exchange Board of India (Employee Stock Option Scheme
 and Employee Stock Purchase Scheme) Guidelines, 1 999/ Securities and
 Exchange Board of India (Share Based Employee Benefits) Regulations,
 201 4, as amended, from time to time. The objective of the said ESOS is
 to enhance employee motivation, enable employees to participate,
 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 and to usher in
 an ''owner-manager'' culture.
 
 Under the said ESOS, up to 240,087,000 options can be granted to the
 eligible Directors / Employees of the Bank and that of its subsidiary
 companies. The eligibility and number of options to be granted to the
 eligible Directors / Employees is determined on the basis of their
 performance and such other criteria as may be approved by the NRC /
 Board of Directors of the Bank, from time to time.
 
 During the period from February 2001 to July 201 3, the Shareholders of
 the Bank had approved the grant of stock options to the eligible
 Directors / Employees of the Bank and that of its subsidiary companies
 as aforesaid on six occasions. Under the first two Schemes and in
 respect of the grants made up to 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 and subsequent Schemes
 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 Stock Exchange
 recording higher trading volume, on the day prior to the date of grant.
 
 Pursuant to the sub-division of the equity shares of the Bank, the
 Shareholders of the Bank at the 20th Annual General Meeting held on
 27th June 2014, also approved the consequent adjustments to the stock
 options granted to the eligible Directors / Employees of the Bank and
 that of its Subsidiary Companies 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
 vested/exercised as on record date fixed for the purpose of
 sub-division, were proportionately converted into options bearing
 equity shares of the face value of Rs,2 each of the Bank and the grant
 price of all the outstanding stock options (vested, unvested and
 unexercised) as on the said record date were proportionately adjusted
 by dividing the existing grant price by 5. The record date for the said
 sub-division was 30th July 2014.
 
 Since 24th February 2001 up to 1 0th September 201 5, the NRC / Board,
 had out of the 240,087,000 options, approved the grant of 239,1 19,950
 options in terms of the various Schemes. The said options are
 non-transferable and vest at rates of 30%, 30% and 40% on each of three
 successive anniversaries following the date of respective grant,
 subject to standard vesting conditions. The said options are required
 to be exercised by the concerned Directors / Employees of the Bank and
 that of its Subsidiary Companies, within a period of three / five
 years, from the date of its respective vesting.
 
 As of 31st March 2016, out of the said 239,119,950 options so granted,
 198,869,586 options had been vested and exercised, 15,670,500 options
 had been unvested and 24,579,864 options had been treated as
 lapsed/cancelled.
 
 Other statutory disclosures as required under Regulation 14 of the SEBI
 (Share Based Employee Benefits) Regulations, 2014 have been hosted on
 the website of the Bank, http://www.axisbank.com/download/other
 statutory disclosures.pdf.
 
 Corporate Governance
 
 The Listing Regulations which was notified by the Securities and
 Exchange Board of India on 2nd September 2015 has replaced the
 erstwhile Clause 49 of the Listing Agreement, with effect from 1st
 December 2015.
 
 The Bank is committed to achieve the highest standards of Corporate
 Governance and it constantly benchmarks itself with best practices in
 this regard. The Report on Corporate Governance for the financial year
 2015-2016 along with a Certificate from the Statutory Auditors of the
 Bank confirming compliance with the conditions relating to Corporate
 Governance as stipulated under Chapter IV of the Listing Regulations,
 is forming part of this report. The Corporate Governance framework of
 the Bank incorporates all the mandatory requirements set out in the
 Listing Regulations.
 
 Directors'' Responsibility Statement
 
 The Board of Directors of the Bank 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 2016, the applicable accounting standards had been followed
 along with proper explanation relating to material departures.
 
 b.  That such accounting policies as mentioned in Note 1 8 of the Notes
 to accounts of the Financial Statements have been selected and applied
 consistently and judgments 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 2016 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, 201 3 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
 
 Pursuant to Section 92 (3) of the Companies Act, 2013 and Rule 12 (1)
 of the Companies (Management and Administration) Rules, 2014, the
 extract of the Annual Return in Form MGT 9, is provided as an annexure
 to this report.
 
 Particulars of Employees
 
 The information required pursuant to Section 197 read with Rule 5 (1)
 of the Companies (Appointment and Remuneration of Managerial Personnel)
 Rules, 2014, in respect of employees of the Bank forms part as an
 annexure to this report.
 
 As on 31st March 2016, the Bank had 163 employees who were employed
 throughout the year and were in receipt of remuneration more than Rs,60
 lakhs per annum and 53 employees who 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 annexure 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 of the Bank up to the
 date of the ensuing Annual General Meeting. If any Member is interested
 in obtaining a copy thereof, may write to the Company Secretary of the
 Bank at its Registered Office. The financial statements and other
 reports of the Bank annexed thereto have been hosted on the website of
 the Bank, www.axisbank.com.
 
 Conservation of Energy, Technology Absorption, Foreign Exchange
 Earnings and Outgo
 
 The steps taken /impact on conservation of energy:
 
 The Bank has always considered energy and natural resource conservation
 as a focus area and has been consciously making efforts towards
 improving the energy performance year on year. Energy efficiency
 improvement initiatives have been implemented across all the plants and
 offices by undertaking various energy and resource conservation
 projects for Sustainable development.
 
 The Bank ensures strict compliance with all the statutory requirements
 and has taken several sustainable steps voluntarily to contribute
 toward better environment. Select few steps /impact are listed below:
 
 Implementation of solar energy of aggregate ~2.7 MW spread over select
 Branches/Offices.
 
 Implementing Energy Management System (EMS) to monitor and control
 energy consumption in select Branches.
 
 Conversion of conventional lighting to LED.
 
 Installed Compost Machine for converting food waste into manure at Axis
 House.
 
 Maintenance of unity power factor through 500 KVAR x 4 Nos of APFC
 panels in auto mode for optimum use of power at Axis House.
 
 Motion sensors installation for the workstations at Axis House.
 
 Recycle and Reuse of Food waste, Dry waste and Sewage at Axis House.
 
 Sewage Treatment Plant of 1 50 KL capacity recycles sewage water at
 Axis House every day.
 
 Use of water flow reducer to reduce the water consumption at Axis House
 and Gigaplex (Airoli.)
 
 Rain Water Harvesting at Axis House.
 
 Introduction of bio blocks in urinals at Select Large Facilities
 thereby saving flushing water.
 
 Management''s Discussion and Analysis Report
 
 The Management''s Discussion and Analysis Report for the year under
 review, as stipulated under Regulation 34(2)(e) of the Listing
 Regulations is given as an annexure to this report.
 
 
 Risk Management
 
 Pursuant to Regulation 21 of the Listing Regulations, the Bank has
 already constituted the Risk Management Committee of the Board of
 Directors. The details of the said Committee and its terms of reference
 are set out in the Report on Corporate Governance, which is forming
 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.
 
 Business Responsibility Report
 
 In terms of Regulation 34(2)(f) of the Listing Regulations, top 500
 listed entities based on their market capitalization as on 31st March
 every year are required to submit their Business Responsibility Report
 (BRR) as a part of the Annual Report. The Bank''s Business
 Responsibility Report describing the initiatives taken by the Bank from
 an environmental, social and governance perspective has been hosted on
 the website of the Bank, www.axisbank.com. Any Member interested in
 obtaining a copy of the BRR may write to the Company Secretary of the
 Bank at its Registered Office.
 
 Particulars of Loans, Guarantees and Investments
 
 The provisions relating to Section 1 34(3)(g) of the Companies Act, 201
 3 on particulars of loans, guarantees and investments are not
 applicable to a Banking Company and as such no disclosure are being
 made in this regard.
 
 Corporate Social Responsibility
 
 The Bank has constituted the Corporate Social Responsibility (CSR)
 Committee 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, as amended.
 
 The brief outline of the CSR Policy, including overview of the programs
 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 the amounts spent by the Bank on CSR
 activities during the year, have been disclosed as an annexure to this
 report.
 
 Statutory Auditors
 
 At the 20th Annual General Meeting of the Shareholders of the Bank held
 on 27th June 2014, M/s S. R. Batliboi & Co. LLP, Chartered Accountants,
 Statutory Auditors of the Bank (Membership No.301 003E), were appointed
 as the Statutory Auditors of the Bank to hold office as such from the
 conclusion of the Twentieth Annual General Meeting until the conclusion
 of the Twenty Fourth Annual General Meeting subject to the approval of
 the Reserve Bank of India each year, on such remuneration as may be
 approved by the ACB.
 
 In terms of the first proviso to Section 1 39 of the Companies Act, 201
 3, the appointment of the Statutory Auditors is required to be placed
 for ratification at every Annual General Meeting. Accordingly, the
 appointment of M/s. S. R. Batliboi & Co. LLP, Chartered Accountants, as
 Statutory Auditors of the Bank for the financial year 201 6-1 7, is
 placed for ratification by the Shareholders of the Bank at the 22nd
 Annual General Meeting.
 
 As recommended by the ACB, the Board of Directors has proposed the
 ratification of appointment of M/s. S. R. Batliboi & Co. LLP, Chartered
 Accountants, as Statutory Auditors of the Bank for the financial year
 201 6-1 7 for the approval of the Shareholders of the Bank at the 22nd
 Annual General Meeting. The Shareholders are requested to ratify the
 said appointment of the Statutory Auditors and payment of remuneration,
 as approved by the ACB.
 
 In this regard, the Bank has received a certificate from the Statutory
 Auditors to the effect that the ratification of their appointment, if
 made, would be in accordance with the provisions of Section 141 of the
 Companies Act, 2013.
 
 As required under Regulation 33(1)(d) of the Listing Regulations, 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.
 
 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 report.
 
 
 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. BNP & Associates,
 Company Secretaries, Mumbai as the Secretarial Auditor of the Bank to
 conduct secretarial audit.
 
 The secretarial audit of the Bank has been conducted on a concurrent
 basis in respect of the matters as set out in the said Rules and have
 been provided in the Secretarial Audit Report for the financial year
 201 5-1 6, which is given as an annexure to this report.
 
 There are no qualifications, reservations or adverse remarks made by
 M/s. BNP & Associates, Company Secretaries, Secretarial Auditor of the
 Bank in their 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 201 5-1 6, no significant or material orders
 were passed by any Regulator, Court or Tribunal 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 Bank''s Fraud Risk
 Management Policy) and the findings in respect of the investigations
 conducted on frauds, which were material in nature and the actions
 taken by the Management in this regard.
 
 CEO & CFO Certification
 
 Certificate issued by Smt. Shikha Sharma, Managing Director & CEO and
 Shri Jairam Sridharan, CFO of the Bank, for the financial year under
 review, was placed before the Board of Directors at its meeting held on
 26th April 2016, in terms of Regulation 17(8) of the Listing
 Regulations.
 
 Acknowledgements
 
 The Board of Directors places on record its gratitude to the RBI, FIPB,
 MCA, SEBI, other government and regulatory authorities, financial
 institutions, stock exchanges, registrar and share transfer agent,
 debenture trustees, depositories 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 the 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                                       Dr. Sanjiv Misra
 
 Date : 12th May 2016                                         Chairman
Source : Dion Global Solutions Limited
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