Dear Members,
 
 The Directors take immense pleasure in presenting their report on the
 financial results of the Bank along with the Audited Balance Sheet as
 on 31st March, 2011 and Profit and Loss account for the year ended 31st
 March, 2011.
 
 PERFORMANCE HIGHLIGHTS
 
 The performance of the Bank in key financial areas during the year
 under review in comparison with those of the last year is as under:
 
                                                       (Rs. in Crore)
 
 Particulars                              2010-11          2009-10
 
 Deposits                                   12914            10285
 
 Advances                                    9255             6833
 
 Investments                                 3616             3210
 
 Net Interest Income                          420              278
 
 Operating Profit                             361              256
 
 Net Profit                                   215              153
 
 You would be happy to observe that the performance on all areas has
 improved during the year and that the Bank has crossed yet another
 milestone of Rs.22000 crores of total business during the Financial
 Year 2010-11 as compared to Rs.17000 crores for the last year. The
 growth rate is healthy at 30%, as reflected by the enlarged Balance
 Sheet size of Rs.14592 crores.
 
 DEPOSITS
 
 The total deposits of the Bank stood impressively at Rs.12914 crores as
 on 31-03-2011 having grown by Rs.2629 crores or 26% over the last year.
 A welcome feature of the growth is the concurrent increase of the low
 cost deposits comprising Current Account & Savings Account (CASA) by
 12% to Rs.2528 crores. The cost of total deposits was also contained at
 6.94% during the year when compared to 7.73% that prevailed in the last
 year. Considering the beneficial saving in costs and other cross
 selling revenues arising from CASA, the Bank has initiated a series of
 measures to reach a significant share of CASA in total deposits in the
 next year.
 
 ADVANCES
 
 The robust GDP growth and the sustained drive of the Bank to tap
 business opportunities resulted in an impressive growth of 35% over the
 last year and the aggregate outstanding Gross Advance stood at Rs.9329
 crores as on 31.03.2011. Despite the pressures of a stiff and
 competitive market as well as a lower interest rates scenario-
 particularly during the first half of the last year, the Bank could
 maintain the yield on advances at 12.47% though at a slightly lower
 level than the rate of 13.04% in the year before.
 
 The quality of loan portfolio was always accorded prime focus, despite
 the fast growth witnessed in credit expansion. This coupled with the
 vigorous efforts to monitor the recovery of bad loans, yielded
 favourable results and the Bank maintained a healthy credit portfolio
 with a lower level of bad loans. As a result of relentless steps taken
 in recovery, the level of Gross Non-Performing Assets has been brought
 down to 1.21% from 1.36% of the Gross advances and the Net
 Non-Performing Assets got reduced to 0.52% from 0.58% to the Net
 advances. The Bank has also achieved a Provision Coverage Ratio of
 76.69% well above the regulatory prescription of minimum 70%.
 
 The Bank could comfortably cross the priority sector loan target of 40%
 by achieving 49%. Lending to agriculture sector constituted 17% of its
 adjusted net credit.
 
 INVESTMENTS/TREASURY OPERATIONS
 
 During the year under review, the gross investments increased from
 Rs.3218 crores to Rs.3625 crores. The investment in Government Bonds
 moved higher from Rs.2577.49 crores to Rs.2892.27 crores to maintain
 statutory reserve requirements on enlarged resources. While the yield
 on Govt. Bonds softened in the first half of the year, it moved up
 subsequently mainly driven by excess supply resulting from enhanced
 borrowings of the Government on one hand and on the other by the tight
 liquidity conditions witnessed in the second half of the year.  The
 bearish market conditions were not conducive to earn higher trading
 profits either from fixed income securities or equity shares.
 
 FOREX OPERATIONS
 
 In comparison with the steep fall against US dollar witnessed last
 year, the Rupee staged some recovery in the year and the bank could
 convert the narrow currency movements both in spot and forwards into
 reasonable profits.  For the year ended 31st March, 2011, your Bank''s
 turnover in Foreign Exchange Business stood at Rs.2413.85 Cr.
 
 FINANCIAL RESULTS
 
 Your Directors are pleased to give hereunder the highlights of the
 working results for the year ended 31st March 2011 vis-a-vis those of
 2009-10.
 
                                               (Rs. in crore)
 
                               For the Current      For the Previous
 
                                    Year ended            Year ended
 
 Particulars                  31st March, 2011      31st March, 2010
 
 Total Income                          1375.81               1100.11
 
 Total Expenses                        1014.78                844.32
 
 Operating Profit before Provisions 
 & Contingencies                        361.03                255.79
 
 Provisions & Contingencies             145.98                103.03
 
 Net Profit                             215.05                152.76
 
 Despite a fall of 57 basis points in the yield on advances,the bank''s
 total income was higher by 25% at Rs.1375.81 crores thanks to a good
 quantum of growth in business. The escalating cost emanating from rise
 in wages and other operating expenses led to a 20% increase in total
 expenditure which to some extent was mitigated by 79 basis points
 reduction in the interest cost on deposits.
 
 The Net Interest Income being the contribution arising directly from
 efficiency of core banking operations recorded a smart growth of 51%
 over the last year to reach Rs.420.03 crores. The cost to income ratio
 of the Bank lowered to 37% from 39% last year on the back of higher net
 interest income.
 
 The fee based income of the Bank increased by 44% from Rs 69.04 crores
 to Rs.99.22 crores. The Bank continues to maintain its top position in
 the Southern Zone in its bancassurance partnership with the Life
 Insurance Corporation of India.
 
 The Bank achieved an operating profit of Rs.361.03 crores against
 Rs.255.79 crores recorded in the previous year translating into a rise
 of 41%. The net profit too increased by 41% from Rs.152.76 crores to Rs
 215.05 crores. The return on average assets for the year was also
 higher at 1.67% when compared to 1.52% last year reflecting better
 utilization of assets.
 
 APPROPRIATIONS:
 
 The summary of net profit appropriations is as follows: 
 
                                                   (Rs. in crore)
 
                                     For the Current For the Previous
 
 Particulars                              Year ended       Year ended
 
                                    31st March, 2011 31st March, 2010
 
 Net Profit                                   215.05           152.76
 
 Balance of Profit brought forward              5.56             5.01
 
 Amount available for appropriations          220.61           157.77
 
 Transfers to
 
 - Statutory Reserve                           56.00            39.00
 
 - Capital Reserve                              0.00             5.73
 
 - General Reserve                             98.40            67.00
 
 - Special Reserve under IT Act,1961           20.50             5.50
 
 - Proposed Dividend                           34.43            30.00
 
 - Corporate Dividend Tax and Surcharge         5.72             4.98
 
 - Balance of profit carried forward            5.56             5.56 
 
 Total                                        220.61           157.77
 
 NETWORTH & CRAR
 
 The Bank''s paid-up Capital was Rs.40.50 Cr as on 31st March, 2011 and
 the Net worth improved from Rs.825.64 Cr as on 31.03.2010 to cross a
 significant milestone and reach Rs.1006.62 Cr as on 31.03.2011. The
 Capital Adequacy Ratio as at 31st March, 2011 stood at 12.75% as per
 BASEL-II norms well above the regulatory norms of 9%.
 
 DIVIDEND
 
 The Bank has been pursuing a constant philosophy of rewarding
 shareholders through rich dividend payments. At the same time it
 becomes absolutely imperative to retain a reasonable portion of profit
 in order to have a comfortable Capital Adequacy Ratio when higher
 volume of business is expected in the current growth phase of the Bank.
 Striking a proper balance between these two factors, your Directors
 have immense pleasure to recommend a dividend of 85% on the equity
 shares for the financial year 2010-2011 as against 75% paid out last
 year.
 
 BRANCH EXPANSION
 
 During the year under review, your Bank has expanded its network by
 opening new branches at the various centres, thus taking our network to
 246 branches as on 31.03.2011. During the current year 24 branches have
 been opened so far and 38 more new branches are proposed to be opened
 before the end of 2011.
 
 FINANCIAL INCLUSION PROGRAMME
 
 Financial inclusion programme is a Government of India''s Mission to
 provide banking services in the un-banked regions of the country.
 Towards this mission, RBI directed banks to provide banking services to
 73000 villages having more than 2000 population by March 2012 and
 simultaneously to cover villages having 1000 plus population.
 
 As for 42 villages allotted to our bank in Tamil Nadu, we have
 completed coverage of 22 villages by March 2011 in the first phase and
 efforts are on to cover the remaining villages by December 2011 well
 before the deadline of March 2012. The Scheme has been successfully
 implemented in our Bank with technology support from Tata Consultancy
 Services and the NGOs, who act as BCs.
 
 EMPLOYEES STOCK OPTION SCHEME
 
 The Shareholders of the Bank had approved the Employees Stock Option
 Scheme at the Extraordinary General Meeting held on 26.04.2008 to grant
 upto 5,00,00,000 stock options to the eligible employees both present
 and future. Of this, 2,02,50,000 options were granted to 1275 eligible
 employees at an exercise price of Rs.13 per share on 06.12.2008. Out of
 the above, 50,31,003 shares were exercised by the employees during this
 year.
 
 Further during the FY 2010-11, the bank had granted 3,46,000 options at
 Rs.32/- per option on 26.05.2010 and 28,00,000 options at Rs.47/- per
 option on 05.10.2010.
 
 Statutory disclosures regarding ESOS under Clause 12 of the SEBI
 guidelines are provided in Annexure - I attached to this Report.
 
 HUMAN RESOURCE DEVELOPMENT
 
 The human resource agenda of the Bank aims at employees empowerment and
 orienting them towards the realization of the Bank''s vision. During the
 year, some of the key HR issues that were in focus related to learning
 & skill development, management of performance, ensuring a good working
 environment in the organization. The employee engagement initiatives
 focused on providing opportunities to staff to meet their aspirations
 through internal job postings and periodic job rotations. The more
 competitive compensation structure would help in streamlining the
 performance linked rewards and incentives thus sending a clear message
 of meritocracy.
 
 Creation of a work force with a pool of best talent is a challenging
 task and more so maintaining the standard over a period of time. In
 tune with the future expansion, your bank is constantly upgrading and
 revisiting its manpower planning policy. In this endeavor we have
 recruited personnel taking into account the new business needs. The new
 recruits were given orientation programme which not only aimed at
 imparting knowledge to them but ensured their harmonious integration
 into the organization.
 
 The bank has also built a good training infrastructure which seeks to
 upgrade the operational efficiency (functional/behavioral skill levels)
 across all grades through a combination of both in house and external
 programmes.
 
 As on 31st March, 2011, your Bank has 2836 employees comprising of 38
 executives, 847 officers, 1544 clerks and 407 sub-ordinate staff.
 
 AUTOMATION
 
 As one of the key plans for business growth and customer acquisition,
 the bank continued to enlarge its distribution network. Widening
 geographical reach is critical for extending service delivery and for
 tapping growth opportunities in newer markets, especially in the areas
 of low cost CASA deposits, lending to borrowers in the retail segment,
 agriculture and cross selling of financial related products. The
 distribution network now covers 246 branches as on 31st March 2011. Of
 these 119 branches are in semi-urban and rural areas and 127 branches
 are in Metropolitan and Urban areas covering a total of 13 states in
 India. To enhance reach of customers and to ensure availability of
 banking services to customers at all times, the bank has been
 aggressively pursuing a policy of installing more off-site ATMs. As on
 31.03.2011, the ATM network of bank is 231 of which, 183 are Onsite
 while the balance of 47 are Offsite ATMs. The Bank is determined to
 install more number of ATMs during the current financial year for
 operational convenience of the customer and to ensure availability of
 alternative channels for delivery of products.
 
 BOARD OF DIRECTORS
 
 Shri. S. Balasubramanian has demitted his office of Managing Director &
 CEO of the Bank on 30.04.2011. Reserve Bank of India, on the
 recommendation of the Board of Directors conveyed its approval for the
 appointment of Shri.  S. Balasubramanian as the Non Executive Part-time
 Chairman of the Bank for a period of three years effective from the
 date of assuming his office . He has assumed office of Non Executive
 Part-time Chairman of the Bank on 06.05.2011.
 
 Further Reserve Bank of India, on the recommendation of the Board of
 Directors conveyed its approval for the appointment of Dr. N. Kamakodi
 as Managing Director and Chief Executive Officer of the Bank for a
 period of three years effective from 01.05.2011. He has assumed office
 of Managing Director and Chief Executive Officer of the Bank on
 01.05.2011.
 
 Prof. V. Kamakoti has been co-opted as additional director at the
 meeting of the Board of Directors held on 27.04.2011 pursuant to
 section 260 of the Companies Act, 1956. Your Bank has received notice
 from a member pursuant to section 257 of the Companies Act, 1956
 signifying his intention to propose the candidature of Prof. V.
 Kamakoti as Director.
 
 Shri. P. Vaidyananthan demitted his office of Non Executive Chairman of
 the Bank on 26.04.2011 and also tendered his resignation from the
 directorship of the Bank.
 
 Shri. V. Jayaraman & Shri. M. Naganathan and Shri. N. Sankaran has
 tendered their resignation from the directorship of the Bank on
 03.09.2010 and 26.04.2011 respectively on attaining the age ceiling in
 terms of Ganguly Committee recommendation.
 
 The Board wishes to place on record its deep sense of appreciation for
 their invaluable and immeasurable contribution to the growth and
 development of the Bank during their association with the Bank.
 
 Justice S.R. Singaravelu, Shri. C.R. Muralidharan and Shri. R.G.
 Chandramogan, directors retiring by rotation at the ensuing Annual
 General Meeting are eligible and offer themselves for re-appointment.
 
 AUDITORS
 
 M/s. Jagannathan & Sarabeswaran, Chartered Accountants, Chennai, the
 present Statutory Central Auditors, retire at the conclusion of this
 Annual General Meeting and they, being eligible, offer themselves for
 re- appointment. The Bank has received a certificate from the Statutory
 Central Auditors to the effect that the re- appointment, if made, will
 be in accordance with the limits prescribed under Section 224 (1B) of
 the Companies Act, 1956. The Board of Directors place on record their
 appreciation of the professional services rendered by M/s.  Jagannathan
 & Sarabeswaran as the Statutory Auditors of the Bank.
 
 CONSERVATION OF ENERGY, ABSORPTION OF TECHNOLOGY, FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 All efforts are being made to reduce energy consumption to the maximum
 extent possible.
 
 Being a Banking Company, the required technology is deployed keeping in
 view the nature of activities.
 
 Your Bank, being a Banking company and an Authorised Dealer in foreign
 exchange, has been taking all steps to improve forex earnings by active
 consideration of need based credit limits of exporters and extending
 all facilities and services to NRIs and remitters of foreign exchange
 to our country. The bank has operationalised number of arrangements for
 remittances from abroad with Exchange Houses and Banks.
 
 CORPORATE GOVERNANCE
 
 The Bank is committed to achieving the highest standards of corporate
 governance. The corporate governance practices followed by the Bank are
 enclosed as an annexure to this report.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 In accordance with Section 217(2AA) of the Companies Act, 1956, the
 Board of Directors hereby declares and confirms that :- (i) The
 applicable accounting standards have been followed in the preparation
 of the annual accounts and proper explanations have been furnished,
 relating to material departures.
 
 (ii) Accounting policies have been selected, and applied consistently
 and reasonably, and prudent judgements and estimates have been made so
 as to give a true and fair view of the state of affairs of the Bank and
 of the Profit and Loss of the Bank for the financial year ended 31st
 March 2011.
 
 (iii) Proper and sufficient care for the maintenance of adequate
 accounting records in accordance with the provisions of the Companies
 (Amendment) Act, 2000, for safeguarding the assets of the bank and for
 preventing and detecting fraud and other irregularities.
 
 (iv) The annual accounts have been prepared on a going concern basis.
 
 (v) The Bank has in place a system to ensure compliance of all laws
 applicable to the Bank.
 
 ACKNOWLEDGEMENT
 
 The Board of Directors places on record its sincere appreciation and
 gratitude to RBI, NABARD, NHB, IDBI, SIDBI, EXIMBANK, ECGC, DICGC,
 SEBI, Stock Exchanges, Depositories, the Share Transfer Agents, Life
 Insurance Corporation of India, National Insurance Company Limited,
 Tata Consultancy Services, CCIL, CIBIL, Correspondent Banks, Exchange
 Houses, other government and regulatory authorities for their strong
 and continued support, guidance and co-operation.
 
 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, team work, commitment, and
 initiative which has enabled to make the Bank commendable progress
 during 2010-11 amidst stiff competition and challenges in the banking
 environment.
 
                                       FOR AND ON BEHALF OF THE BOARD
 
 Place : Chennai                                  S . Balasubramanian
 
 Date : 24.06.2011                                           Chairman