IndusInd Bank

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