IndusInd Bank
BSE: 532187 | NSE: INDUSINDBK | ISIN: INE095A01012 | Banks - Private Sector
- Directors Report
- Chairman's Speech
- Auditors Report
- Notes To Accounts
- Accounting Policy
- Finished Products
- Raw Materials
| Directors Report | Year End : Mar '08 |
The Directors have pleasure in presenting the Fourteenth Annual Report covering business and operations of your Bank, together with the audited accounts for the year ended March 31, 2008. The financial performance for the year ended March 31, 2008 is summarized as under: (Rs. in crores) As on As on March 31, 2008 March 31, 2007 Deposits 19037.42 17644.80 Advances 12795.31 11084.20 Operating Profit (before depreciation and provisions and contingencies) 236.35 205.67 Net Profit 75.05 68.22 The business of your Bank grew both in deposits and advances during the year. The focus during the year was on improving earnings from core banking business and to augment the fee-based income, for which various initiatives have been taken by your Bank. The Operating Profit (before depreciation and provisions and contingencies) during the year under review improved to Rs.236.35 crores as against Rs.205.67 crores in the previous year. Your Banks Net Profit, after considering necessary provisions and contingencies and all expenses, was higher at Rs. 75.05 crores as against Rs. 68.22 crores in the previous year, an increase of 10.01%. Appropriations Your Directors recommend appropriation of profit as under: (Rs. in crores ) Operating Profit before Depreciation and Provisions and Contingencies 236.35 Less: Depreciation on Fixed Assets 40.16 Less: Provisions and Contingencies 121.14 Net Profit 75.05 Amount available for Appropriation 75.05 Transfer to Statutory Reserve 18.76 Transfer to Capital Reserve 2.24 Proposed Dividend 19.19 Tax on Dividend 3.26 Balance carried over to Balance Sheet 31.60 Total Appropriations 75.05 Dividend Your Directors recommend a dividend of 6% for the year ended March 31, 2008, i.e., Re.0.60 per equity share of Rs.10/- each. (Dividend for the year 2006-07 was 6%). The Bank will be liable to pay tax on the amount of dividend paid, while it will be tax-free in the hands of the shareholders. Future Outlook During the year 2007-08, your Bank continued its focus on strengthening its network and infrastructure, the benefits of which have started materialising. In the current year, while your Bank will endeavour to retain its leadership position in vehicle finance (wherein higher yield loans are replacing old loans of lower yields), its thrust will also be on higher growth in other business segments like Corporates and SMEs. Higher growth is being built at competitive prices, ensuring that assets are created at higher rates, so as to boost margins. On the liabilities side, the strategy continues to be to broadbase the retail deposit franchise, and thus reduce the overall cost of deposits. This task is being accomplished by leveraging on the expanded branch network, the pan-India marketing set-up, and alternate channels like ATMs, Internet Banking, etc. This strengthened infrastructure is being used for maximizing opportunities for cross-selling possible with the expanded customer base. For optimal realization of this potential, your Bank is introducing several new products and services in the various segments, including in the newly set up Transaction Banking segment, which will give impetus to Trade and Cash Management products as well as electronic services. Your Banks focus on fee-based income is starting to pay dividends. Moving forward, your Bank plans to upscale non-interest income through lucrative revenue streams like foreign exchange business, investment banking, high-end treasury products, distribution of third-party products like mutual funds and insurance, international remittances, bullion operations and transaction banking activities, including depository business, commodity market business, etc. Mr. Romesh Sobti assumed charge as Managing Director & CEO of your Bank on February 1, 2008. He has about 33 years experience in State-owned and multinational banks in India. Four other Top Management personnel, of proven merit and wide-ranging experience, joined the Bank along with Mr. Sobti. The new Management Team has since formulated an ambitious Business Plan for securing your Bank a position among the top three banks in the country in 3 years, measured by the criteria of Productivity, Profitability and Efficiency. Share Capital As at March 31, 2008, the paid up capital of your Bank consisted of 31,98,07,936 shares of Rs.10 each. There was no change in the paid up capital of the Bank during the year under review. Your Bank had opened for subscription on June 17, 2008, the issue of 3,51,92,064 Global Depository Receipts (GDRs) to be listed in the Luxembourg Stock Exchange, each GDR representing one equity share of the Bank of the face value of Rs. 10/-, fully paid. On the successful conclusion of the issue, your Banks Paid-up Capital has risen to Rs. 355.19 crores. Tier II Capital During the year, your Bank mobilised Rs. 50 crores through the issuance of 500 Unsecured, Non-Convertible, Redeemable, Subordinated Tier II Bonds of Rs. 10 lakhs each (Previous Year: Rs. 50 crores). These bonds qualify for classification as Tier II Capital. No fresh issuance of Unsecured, Non-Convertible, Redeemable, Non-Cumulative, Subordinated Upper Tier II instruments of 15 years maturity (Previous year: Rs. 208.90 crores) which qualify for classification as Upper Tier II Capital, was made, nor has your Bank redeemed any Unsecured, Non-convertible, Redeemable, Subordinated Tier II Bonds (Previous Year: Rs. 52 crores). Capital Adequacy The Capital to Risk-weighted Assets Ratio (CRAR) of your Bank as at March 31, 2008 was at a comfortable level of 11.91%, well above the regulatory minimum of 9%. Of this, Tier I CRAR was 6.70%. Rating Your Bank has received the highest rating A1+ for Certificate of Deposits from ICRA Ltd. and highest rating P1+ for Fixed Deposits (upto 1 year contracted maturity) from CRISIL Ltd. Your Banks Tier II bonds have also been rated LA+ and Upper Tier II bonds as LA by ICRA Ltd. while Fitch Ratings India Pvt. Ltd. has rated them A (ind) and A- (ind) respectively. Directors Mrs. Kanchan Chitale joined the Board on January 31, 2003. Consequent upon the appointment of M/s. M. P. Chitale & Co., Chartered Accountants as the Statutory Central Auditors of the Bank, Mrs. Kanchan Chitale, whose husband Mr. Uday Chitale is a Partner in that firm, had, on ethical grounds, tendered her resignation from the Board of Directors of the Bank vide her letter dated August 14, 2007. Your Directors wish to place on record their sincere appreciation for the valuable service rendered by Mrs. Kanchan Chitale during her tenure as Director of the Bank. Dr. Ram Buxani joined the Board on January 14, 2000. Dr. Buxani completed his term of eight years (continuous) as Director on January 14, 2008. Accordingly, Dr. Buxani ceased to be a Director on the Board with effect from that date. Your Directors wish to place on record their sincere appreciation for the valuable service rendered by Dr. Buxani during his tenure as Director of the Bank. Mr. S. Nagarajan, who joined the Bank as Joint Managing Director on August 28, 2004, submitted his resignation from the Board on December 22, 2007. Your Directors wish to place on record their sincere appreciation for the valuable service rendered by Mr. S. Nagarajan during his tenure as Joint Managing Director of the Bank. Mr. Bhaskar Ghose, who took over as Managing Director on June 16, 2001, laid down the office of Managing Director w.e.f. January 31, 2008. Your Directors wish to place on record their sincere appreciation for the services rendered by Mr. Bhaskar Ghose and for his stewardship of the Bank during turbulent times. Mr. Ashok Kini was appointed as an Additional Director by the Board at its meeting held on January 30, 2008, and will hold office as Additional Director upto the ensuing Annual General Meeting. Mr. Romesh Sobti was appointed as an Additional Director (to be designated as Managing Director & CEO) by the Board at its meeting held on December 7, 2007, and on receipt of the requisite approval from Reserve Bank of India, has taken charge as Managing Director & CEO on February 1, 2008 for a period of three years. Your Bank has received notices from members pursuant to Section 257 of the Companies Act, 1956 signifying their intention to propose the candidature of Mr. Ashok Kini and Mr. Romesh Sobti for the office of Director. Brief resumes of Mr. Ashok Kini and Mr. Romesh Sobti are furnished in the report on Corporate Governance. Mr. R. Sundararaman, Dr. T. T Ram Mohan and Mrs. Pallavi Shroff, Directors, retire by rotation, and being eligible, have offered themselves for re-appointment. Auditors M/s. M. P. Chitale & Co., Chartered Accountants, the Statutory Central Auditors of the Bank, who have audited the accounts of the Bank for the year 2007-08, will retire at the ensuing Annual General Meeting and are eligible for re-appointment. Members are requested to consider their re-appointment and authorise the Board to fix their remuneration. The appointment of the Statutory Auditors will be subject to the approval of Reserve Bank of India. The members are further requested to authorise the Board to appoint branch auditors of the Bank in consultation with the Statutory Auditors and to fix their remuneration. Auditors Report M/s. M. P. Chitale & Co., Chartered Accountants, the Statutory Central Auditors of the Bank, have audited the accounts of the Bank for the year 2007-08 and their Report is annexed. There are no qualifications in the Auditors Report. Statutory Disclosures Information, wherever required under the Banking Regulation Act, 1949, or the Companies Act, 1956 as applicable to a banking company, has been laid out in the schedules attached and forms part of the Balance Sheet and Profit and Loss Account. There are no material changes and commitments affecting the financial position of your Bank, which have occurred between the end of the financial year 2007-08 to which the Balance Sheet relates and the date of this Report. Considering the nature of activities as an entity in the financial services sector, the provisions of Section 217(1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption do not apply to your Bank. The Bank has, however, made optimum use of information technology in its operations. The Bank had 2869 employees as on March 31, 2008. The information required under Section 217(2A) of the Companies Act, 1956 and the rules made thereunder, are given in the annexure appended hereto and forms part of this Report. In terms of section 219(1 )(b)(iv) of the Companies Act, this Report and the Accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office of the Bank. Employee Stock Option Scheme Your Bank had instituted an Employee Stock Option Scheme to enable its employees, including Whole-time Directors, to participate in the future growth of the Bank. Under the scheme, options which upon exercise could give rise to the issue of a number of shares not exceeding in the aggregate 7% of the issued equity capital of your Bank from time to time, can be granted. The Scheme is in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The eligibility and number of options to be granted to an employee is determined on the basis of criteria laid down in the Scheme and is approved by the Compensation Committee of the Board of Directors. An aggregate of 1,00,00,000 options have been granted under the Scheme. Statutory disclosures as required by the revised SEBI Guidelines on ESOS are given in the Annexure to this Report. Corporate Governance Your Bank continues its endeavour to adopt the best prevalent Corporate Governance practices. A separate report on the status of implementation of Corporate Governance, as required under Clause 49 (as applicable from January 1, 2006) of the Listing Agreements with the relevant Stock Exchanges, is included in the section on Corporate Governance which forms part of this Report. M/s. Bhandari & Associates, Company Secretaries, have certified that the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreements with the Stock Exchanges have been complied with by the Bank. A copy of their Certificate is also attached to the Section on Corporate Governance. Directors Responsibility Statement Pursuant to the provisions of section 217(2AA) of the Companies Act, 1956, your Directors hereby certify and confirm that: (i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; (ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31, 2008 and of the profit of the Bank for the year ended on that date. (iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 and Banking Regulation Act, 1949 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and (iv) the annual accounts have been prepared on a going concern basis. Acknowledgement Your Directors place on record their appreciation for the contribution made by the employees during the year towards the growth of your Bank. The Directors are grateful to the shareholders of the Bank for their continued trust and confidence reposed in the Bank. The Directors are also grateful to the Reserve Bank of India, Stock Exchanges, the Ministry of Corporate Affairs, and Securities and Exchange Board of India for their guidance and support extended to the Bank. The Board thanks its valued customers for their support and confidence, and looks forward to the continuance of this mutually supportive relationship in future. For and on behalf of the Board of Directors R. Seshasayee Mumbai, June 24, 2008 Chairman |
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