DIRECTORS' REPORT: 2016-17
The Board of Directors have the pleasure of presenting the 23rdAnnual 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 yearended 31st March 2017.
The financial highlights for the year under review are presented below:
| || || ||(Rs in crores) |
|Particulars ||2016-17 ||2015-16 ||Growth |
|Deposits ||414378.79 ||357967.56 ||15.76% |
|Out of which || || || |
| Savings Bank Deposits ||126048.29 ||105793.13 ||19.15% |
| CurrentAccountDeposits ||87001.75 ||63651.92 ||36.68% |
|Advances ||373069.35 ||338773.72 ||10.12% |
|Out of which || || || |
| Retail Advances ||167992.95 ||138520.90 ||21.28% |
| Non-retail Advances ||205076.40 ||200252.82 ||2.41% |
|Total Assets/Liabilities ||601467.67 ||539821.02 ||11.42% |
|Net Interest Income ||18093.12 ||16832.97 ||7.49% |
|Other Income ||11691.31 ||9371.46 ||24.75% |
|Out of which || || || |
| Fee Income ||7882.01 ||7501.97 ||5.07% |
| Trading Profit1'1' ||3400.34 ||1246.91 ||172.70% |
| Misc. Income ||408.96 ||622.58 ||(34.31%) |
|Operating Expenses (excluding depreciation) ||11691.11 ||9656.91 ||21.06% |
|Profit before Depreciation Provisions and Tax ||18093.32 ||16547.52 ||9.34% |
|Depreciation ||508.80 ||443.91 ||14.62% |
|Provision for Tax ||1788.28 ||4170.09 ||(57.12%) |
|Other Provisions and Write offs ||12116.96 ||3709.86 ||226.62% |
|Net Profit ||3679.28 ||8223.66 ||(55.26%) |
|Appropriations || || || |
|Transfer to Statutory Reserve ||919.82 ||2055.92 ||(55.26%) |
|Transfer (from)/to Investment Reserve ||(87.16) ||(41.81) ||- |
|Transferto Capital Reserve ||755.57 ||62.04 ||- |
|Transferto Reserve Fund ||1.75 ||1.74 ||0.57% |
|Dividend Paid ||1407.43 ||2.81 ||- |
|Surplus carried over to Balance Sheet ||681.87 ||6142.96 ||- |
(l) Excluding Merchant Exchange Profit
|Key Performance Indicators ||2016-17 ||2015-16 |
|Interest Income as a percentage ofworking funds* ||7.88% ||8.59% |
|Non-interest Income as a percentage ofworking funds* ||2.07% ||1.96% |
|Net Interest Margin ||3.67% ||3.90% |
|Return on Average Net Worth ||7.22% ||17.49% |
|Operating Profit as a percentage ofworking funds* ||3.11% ||3.38% |
|Return on Average Assets ||0.65% ||1.72% |
|Profit per Employee** ||Rs 6.68 lakhs ||Rs 17.83 lakhs |
|Business (Deposits less inter-bankdeposits + Advances) peremployee** ||Rs 14.00 crores ||Rs 14.84 crores |
|Net non-performing assets as a percentage of net customer assets*** ||2.11% ||0.70% |
Working funds represent average total assets
** Productivity ratios are based on average number of employees forthe year
*** Customer assets include advances and credit substitutes
Previous yearfigures have been re-grouped wherever necessary
During the year 12204283 equity shares of Rs each of the Bank wereallotted by the Bank to some of its Whole Time Directors / Employees and that of itssubsidiary companies pursuant to exercise of options by them under the various EmployeeStock Option Scheme(s) of the Bank. Pursuant to the said allotment the total issued andpaid-up equity share capital of the Bank as on 31st March 2017 increased to Rs79.01 crore as compared to Rs 76.57 crore as on 31st March 2016.
The shareholding pattern of the Bank as on 31st March 2017was as under:
|Sr. No. Category / Shareholder ||No. of Shares held ||% of Paid-up Capital |
|Promoters || || |
|1 Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI) ||274840905 ||11.48 |
|2 Life Insurance Corporation of India (LIC) ||331308553 ||13.83 |
|3 General Insurance Corporation of India ||39940000 ||1.67 |
|4 The New India Assurance Company Limited ||26103585 ||1.09 |
|5 National Insurance Company Limited ||3063797 ||0.13 |
|6 The Oriental Insurance Company Limited ||6330020 ||0.26 |
|7 United India Insurance Company Limited ||7215213 ||0.30 |
|Foreign Investors || || |
|8 Overseas Investors (including Flls/OCBs/NRIs) ||1162073406 ||48.51 |
|9 Foreign Direct Investment (GDR) ||108753075 ||4.54 |
|Domestic Financial Institutions || || |
|10 Financial Institutions/Mutual Funds/Banks/NBFC ||165797280 ||6.92 |
|11 Others ||269610275 ||11.27 |
|Total ||2395036109 ||100.00 |
The said equity shares of the Bank are listed on National StockExchange of India Limited (NSE) and BSE Limited (BSE). The Unsecured RedeemableNon-Convertible Subordinated Perpetual Debentures issued bythe Bank on a privateplacement basis are listed on NSE and the BSE. The Bonds issued by the Bank under the MTNprogramme are listed on the Singapore Stock Exchange and the Green Bonds issued by theBank are listed on the London Stock Exchange. The Global Depository Receipts (GDR) issuedby the Bank are listed on the London Stock Exchange.
The Bank has paid the listing fees to the said Stock Exchanges for thefinancial year 2016-17.
Approval granted by the Foreign Investment Promotion Board (FIPB) toincrease Foreign Investment Limits
The FIPB vide its letter no. FC II - 125 (2013)/183 (2013) dated 19thJuly 2016 granted its approval to the Bank for increasing Foreign Investment Limit from62% to 74% of its total issued and paid up share capital on a full fungibility basiswithout any sub-limits for investment by way of issue of equity shares and/or otherpermissible instruments to eligible non-resident investors including a QualifiedInstitution Placement (QIP) of equity shares and/or issue of American Depository Receipts(ADRs)/Global Depository Receipts (GDRs) and/or investment by Qualified Foreign Investors(QFIs)/Foreign Portfolio Investors (FPIs) under Portfolio Investment Scheme (PIS) issuedand permissible securities on Stock Exchange except NRI holding which shall be allowed upto 24% of the total issued and paid up share capital of the Bank. As on 31stMarch 2017 the total foreign shareholding in the Bank was 53.05% of its total issued andpaid up share capital.
The Diluted Earnings Per Share (EPS) of the Bank for the financial year2016-17 stood at Rs 15.34 per equity share of Rs /- each as compared to Rs 4.40 per equityshare of Rs /- each in the previous year. In view of the overall performance of the Bankand with the objective of rewarding the Shareholders of the Bank with cash dividends whileretaining capital to maintain a healthy capital adequacy ratio to support future growththe Board of Directors of the Bank at its meeting held on 26th April 2017recommended a dividend of Rs /- per equity share of Rs /- each for the financial year2016-17 in terms of the Dividend Distribution Policy of the Bank.
In terms of Regulation 43A of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ("Listing Regulations") the Bank hasformulated and adopted the Dividend Distribution Policy with the objective of providingclarity to its stakeholders on the profit distribution strategies of the Bank. The saidPolicy has been hosted on the website of the Bank at https://www.axisbank.com/shareholders-corner/corporate-aovernance/Compliance-Report.
Closure of Share Transfer Books and Record Date for Dividend
The Register of Members and the Share Transfer Books of the Bank willbe closed from Saturday 8th July 2017 to Wednesday 26th July 2017(both days inclusive) for the purpose of the 23rd Annual General Meeting of theShareholders of the Bank to be held on Wednesday 26th July 2017 and fordetermining the names of the Members who would be entitled to dividend if any declaredby the Bank for the financial year ended 31st March 2017.
The Record Date for payment of the said dividend if approved by theMembers at the 23rd Annual General Meeting has been fixed on Friday 7thJuly 2017. The said dividend shall be paid to those Members whose name appears on theRegister of Members of the Bank/ the Statements of Beneficial Ownership as received fromthe Depositories as at the close of business hours on Friday 7th July 2017.
Ratings of various Debt Instruments
The Unsecured Redeemable Non-Convertible Debentures issued by theBank on a private placement basis during the financial year 2016-17 were rated"AAA/Stable" by CRISIL and "AAA" by ICRA & CARE.
The Unsecured Redeemable Non-Convertible Subordinated Debenturesissued by the Bank on a private placement basis during the financial year 2016-17 wererated "AAA(hyb)" by ICRA Limited and "IND AAA" by India Ratings andResearch Private Limited.
The Unsecured Subordinated Perpetual Additional Tier 1 Basel IIICompliant Non-Convertible Debentures issued by the Bank on a private placement basisduring the financial year 2016-17 were rated "IND AA+" by India Ratings &Research Private Ltd. and "CRISIL AA(Stable)" by CRISIL Ltd.
The Bonds issued by the Bank under the MTN programme on a privateplacement basis during the financial year 2016-17 were rated "AAA" by CRISILCARE and ICRA.
The Green Bonds issued by the Bank on a private placement basis duringthe financial year 2016-17 are Asia's first certified Green Bonds and first ever GreenBonds issued by an Indian entity and listed on the London Stock Exchange. The Green Bondswere rated "Baa3" by Moody's "BBB-" byS&P and "BBB-" byFitch.
Board of Directors
In terms of Article 90 of the Articles of Association of the Bank theBoard of Directors of the Bank at its meeting held on 1 2th May 2016 appointedDr. Sanjiv Misra as an Independent Director and as the Non-Executive (Part Time) Chairmanof the Bank with effect from 12th May 2016 subject to the approval of the RBIand the Shareholders of the Bank. Thereafter RBI approved the appointment of Dr. SanjivMisra as the Non-Executive (Part Time) Chairman of the Bank for a period of 3 years witheffect from 18th July 2016 which was also approved by the Shareholders of theBank at the 22nd Annual General Meeting held on 22nd July 2016.
At the said meeting the Board of Directors of the Bank also appointedShri Rajiv Anand Group Executive (Retail Banking) of the Bank as a Director of the Bankand as the Whole Time Director designated as "Executive Director (RetailBanking)" of the Bank for a period of 3 years with effect from 12th May2016 subject to the approval of the RBI and the Shareholders of the Bank. The saidappointment was approved by the Shareholders of the Bank at the 22nd AnnualGeneral Meeting held on 22nd July 2016 and thereafter by the RBI for a periodof 3 years with effect from 4th August 2016.
At the said meeting the Board of Directors of the Bank also appointedShri Rajesh Dahiya Group Executive (Corporate Centre) as a Director of the Bank and asthe Whole Time Director designated as "Executive Director (Corporate Centre)" ofthe Bank for a period of 3 years with effect from 12th May 2016 subject tothe approval of the RBI and the Shareholders of the Bank. The said appointment wasapproved by the Shareholders of the Bank at the 22nd Annual General Meetingheld on 22nd July 2016 and thereafter by the RBI for a period of 3 years witheffect from 4th August 2016.
During the year no other changes took place in the composition of theBoard of Directors of the Bank. The composition of the Board of Directors of the Bank isin compliance with the applicable norms.
Selection and Appointment of Directors
The selection and appointment of Directors of the Bank is done inaccordance with the relevant provisions of the Companies Act 2013 the relevant Rulesmade thereunder the Banking Regulation Act 1949 the Guidelines issued by the RBI andthe Listing Regulations.
The Bank adheres to the process and methodology prescribed by the RBIin respect of 'Fit & Proper' criteria as applicable to Private Sector Banks signingof deed of covenants which binds the Directors to discharge their responsibilities to thebest of their abilities individually and collectively in order to be eligible to beappointed as a Director of a Bank. The prescribed declarations given by the Directorsother than members of the Nomination & Remuneration Committee (NRC) are placed beforethe NRC and the declarations given by the Members of the NRC are placed before the Boardfor its review and noting. The said declarations are obtained from all the Directors on anannual basis and also at the time of their appointment / re-appointment in compliancewith the said laws. An assessment on whether the Directors fulfil the said criteria isalso made by the NRC and the Board on an annual basis before considering theircandidature for re-appointment.
The NRC reviews the structure size composition of the Board theregional and industry experience track record expertise and other relevant informationand documents of the Directors before making appropriate recommendations to the Board withregard to their appointment re-appointment remuneration and assignment of duties (viz.nomination to various Committees of the Board) designed to enhance the Board'seffectiveness. The NRC also identifies potential candidates from diverse backgroundsincluding but not limited to accountancy agriculture and rural economy bankingco-operation economics finance law small-scale industry information technology coreindustries infrastructure sector payment and settlement systems human resource riskmanagement and business management thus providing the Board with members who have specialknowledge practical experience and skills to serve the diverse business interests of theBank.
Declaration of Independence
All the Independent Directors of the Bank have given their respectivedeclarations stating that they meet the criteria prescribed for independence under theapplicable laws and in the opinion of the Board all the Independent Directors meet thesaid criteria.
Key Managerial Personnel
Smt. Shikha Sharma Managing Director & CEO Shri Jairam SridharanChief Financial Officer and Shri Girish V Koliyote Company Secretary are the KeyManagerial Personnel of the Bank as defined under Section 2(51) of the Companies Act2013.
During the year there were no changes in the composition of the KeyManagerial Personnel of the Bank.
The Companies Act 2013 and the Listing Regulations containsprovisions on evaluation of the performance of the Board as a whole Individual Directorsincluding Independent Directors Non-Independent Directors Chairperson and the BoardCommittees.
The Bank had engaged the services of an external consultant to help itconduct an impartial and independent Board evaluation as aforesaid. On the basis of theirfindings a process of evaluation was recommended to the Board for adoption. The manner inwhich the evaluation has been conducted is explained in the Report on CorporateGovernance which is forming part of this report.
The schedule of the meetings of the Board and the Board Committees forthe ensuing financial year is circulated well in advance to the Members of the Board fortheir consideration and approval. During the year 7 meetings of the Board of Directors ofthe Bank were held and the gap between the said meetings did not exceed the limit of 120days as prescribed under the relevant provisions of the Companies Act 2013 the relevantRules made thereunder and the Listing Regulations.
The composition role and functions of the Audit Committee of the Boardof Directors of the Bank is disclosed in the Report on Corporate Governance which isforming a part of this report.
The Bank has formulated and adopted a Remuneration Policy for itsDirectors Key Managerial Personnel and other Employees in terms of the relevantprovisions of Section 178of the Companies Act 2013 the relevant Rules made thereunderand the Listing Regulations. The details of the Remuneration Policy have been disclosed inthe 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 beendisclosed in the Report on Corporate Governance which is forming part of this report.
As on 31st March 2017 the Bank has the following nineunlisted subsidiary companies:
i) Axis Asset Management Company Ltd. undertakes the activities ofmanaging the mutual fund business.
ii) Axis Bank UK Ltd. is the banking subsidiary of the Bank in theUnited Kingdom and undertakes the activities of banking.
iii) Axis Capital Ltd. provides services relating to investmentbanking equity capital markets institutional stock broking mergers and acquisitionadvisory etc.
iv) Axis Finance Ltd. is an NBFC and carries on the activities of loanagainst shares margin funding IPO financing etc.
v) Axis Mutual Fund Trustee Ltd. acts as the trustee forthe mutual fundbusiness.
vi) Axis Private Equity Ltd. primarily carries on the activities ofmanaging equity investments and provides venture capital support to businesses.
vii) Axis Securities Ltd. is primarily in the business of marketing ofcredit cards and retail asset products and also provides retail broking services.
viii) Axis Trustee Services Ltd. is engaged in trusteeship activitiesacting as debenture trustee and as trustee to various securitisation trusts.
ix) A.TREDS Limited is engaged in the business of discounting tradereceivables.
During the Financial Year 2016-17 the Bank incorporated a publiclimited company in the name and style of A.TREDS Limited as its subsidiary under therelevant provisions of Companies Act 2013 and the relevant rules made thereunder with anauthorised share capital of Rs 00000000 divided into 50000000 (five crore) equityshares of Rs 10/- each to undertake amongst others the business of setting up andoperating a Trade Receivables Discounting System. Further one of the subsidiary companyof the Bank Axis Securities Europe Limited engaged in the business of financial advisoryservices is under the process of winding up.
In accordance with the provisions of Section 129(3) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 as amended the Bankhas prepared its consolidated financial statements including that of all of the saidsubsidiary companies which is forming part of this report. The financial position andperformance of each of the said subsidiary companies are given in the statement containingthe salient features of the financial statements of the said subsidiary companies of theBank which is annexed to this report.
In accordance with third proviso to Section 136(1) of the CompaniesAct 2013 the Annual Report of the Bank containing therein its standalone and theconsolidated 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 ofthe said subsidiary companies of the Bank have been hosted on the Bank's websitewww.axisbank.com.
Any shareholder who may be interested in obtaining a physical copy ofthe aforesaid financial statements may write to the Company Secretary at the RegisteredOffice of the Bank. Further please note that the said financial statements will beavailable for inspection by the Members of the Bank at the Registered Office of the Bankduring business hours from 11.00 a.m. to 1.00 p.m. on all working days except SaturdaysSundays Bank Holidays and National Holidays.
Related Party Transactions
During the year the Bank has not entered into any materiallysignificant transactions with its Promoters Directors Management Subsidiaries orRelatives of the Directors which could lead to potential conflict of interest between theBank and these parties other than transactions entered into in the ordinary course of itsbusiness. Transactions entered into by the Bank with related parties in the normal courseof its business were placed before the Audit Committee of the Board. There were nomaterial individual transactions with related parties which were not in the normal courseof the business of the Bank nor were there any material transactions with related partiesor others which were not on arm's length basis. Accordingly AOC-2 is not applicable tothe Bank. A statement giving details of all related party transactions entered pursuantto the omnibus approval so granted is placed before the ACB for their review on aquarterly basis. The Bank has developed a Standard Operating Procedure for the purpose ofidentifying and monitoring such transactions. The policy on Related Party Transactions asreviewed and approved by the Board at its meeting held on 20th January 2016has been hosted on the Bank's website in terms of the Listing Regulations.
Employee Stock Option Plan (ESOP)
Since the financial year 2000-01 the Bank has formulated and adoptedseveral Employee Stock Option Schemes (ESOS) for the benefit of the eligibleDirectors/Employees of the Bank and that of its subsidiary companies in terms of theSecurities and Exchange Board of India (Employee Stock Option Scheme and Employee StockPurchase Scheme) Guidelines 1999/ Securities and Exchange Board of India (Share BasedEmployee Benefits) Regulations 2014 as amended from time to time. The objective of thesaid ESOS is to enhance employee motivation enable employees to participate directly orindirectly in the long-term growth and financial success of the Bank to act as aretention mechanism by enabling employee participation in the business of the Bank as itsactive stakeholder and to usher an 'owner-manager' culture.
In terms of the said ESOS as on date upto 240087000 options can begranted by the Bank to the eligible Directors / Employees of the Bank and that of itsSubsidiary Companies. The eligibility and number of options to be granted to such eligibleDirectors / Employees is determined on the basis of their performance and such othercriteria as approved by the NRC / Board of Directors of the Bank from time to time.
During the period from February 2001 to July 2013 the Shareholders ofthe Bank had approved the grant of stock options as aforesaid on six occasions. Underthe first two ESOS and in respect of the grant of stock options made by the Bank upto 29thApril 2004 the option conversion price was set at the average of the daily high-low priceof the Bank's equity shares traded during the 52 weeks preceding the date of approval ofgrant by the Board of Directors of the Bank / NRC prevailing on the Stock Exchange whichhad the maximum trading volume of the Bank's equity share during the said period.Thereafter under the third and subsequent ESOS and with effect from the said grants madeby the Bank on 10th June 2005 and thereafter the option conversion price waschanged to the latest available closing price of the equity shares prevailing on the StockExchange which recorded higher trading volume on the day prior to the date of approval ofgrant by the NRC / Board of Directors of the Bank as the case may be.
Pursuant to the sub-division of the equity shares of the Bank theShareholders of the Bank at the 20th Annual General Meeting held on 27thJune 2014 also approved the consequent adjustments to the stock options granted to theeligible Directors / Employees of the Bank and that of its Subsidiary Companies under itsvarious ESOS such that all stock options available for grant (including lapsed andforfeited options available for reissue) and those already granted but not vested/andvested but not exercised as on the record date fixed for the purpose of sub-division wereproportionately converted into options bearing equity shares of the face value of ' 2 eachof the Bank and the grant price of all the outstanding stock options (unvested vested andunexercised) as on the said record date for the sub-division were proportionately adjustedby dividing the existing grant price by 5. The record date for the said sub-division was30th July 2014.
Since 24th February 2001 upto 26th April 2016the NRC / Board had out of the said 240087000 options approved the grant of 246272950options (including 24579864 options which were lapsed / cancelled) to the eligibleDirectors / Employees of the Bank and that of its Subsidiary Companies in terms of thevarious ESOS. 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 subjectto standard vesting and other conditions as set out in the respective ESOS. The saidoptions are required to be exercised by the concerned Directors / Employees of the Bankand that of its Subsidiary Companies within a period of three / five years from the dateof its respective vesting and subject to the terms as set out in the respective ESOS.
As of 31st March 2017 out of the said 246272950 optionsso granted 207151583 options have been vested out of which 191217059 options havebeen exercised and the balance 15934524 options remain unexercised. Further 13776600options remained unvested and 25344767 options had been treated as lapsed/ cancelled.
Statutory disclosures in terms of Regulation 14 ofthe SEBI (Share BasedEmployee Benefits) Regulations 2014 have been uploaded on the website of the Bankhttps://www.axisbank.com/shareholders-corner/corporate-aovernance/compliance-report.
The Bank is committed to achieving and adhering to the higheststandards of Corporate Governance and it constantly benchmarks itself with best practicesin this regard. The Report on Corporate Governance for the financial year 2016-17 alongwith a Certificate issued by the Statutory Auditors of the Bank confirming compliance withthe mandatory requirements relating to Corporate Governance as stipulated under Chapter IVof the Listing Regulations is forming part of this report. The Corporate Governanceframework of the Bank incorporates all the mandatory requirements as set out in theListing Regulations.
Directors' Responsibility Statement
The Board of Directors ofthe Bank hereby declares and confirms thefollowing statements in terms of Section 134(3)(c) ofthe Companies Act 2013:
a. That in the preparation of the annual accounts for the year ended 31stMarch 2017 the applicable accounting standards had been followed along with properexplanation relating to material departures.
b. That such accounting policies as mentioned in Note 17 ofthe Notes toaccounts ofthe Financial Statements have been selected and applied consistently andjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Bank as at 31st March 2017and of the profit of the Bank for the year ended on that date.
c. That proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Bank and for preventing and detecting fraud andother irregularities.
d. That the annual accounts have been prepared on a going concernbasis.
e. That internal financial controls to be followed by the Bank were inplace and that the same were adequate and were operating effectively.
f. That proper system to ensure compliance with the provisions of allapplicable laws was in place and the same were adequate and operating effectively.
Extract of Annual Return
Pursuant to Section 92 (3) ofthe Companies Act 2013 and Rule 12 (1)ofthe Companies (Management and Administration) Rules 2014 as amended the extract oftheAnnual 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 asamended in respect of directors/employees of the Bank is provided as an annexure to thisreport.
As on 31st March 2017 the Bank had 31 employees who wereemployed throughout the year and were in receipt of remuneration of more than Rs 1.02crore per annum and 6 employees of the Bank who were employed for part of the year andwere in receipt of remuneration of more than Rs .50 lakhs per month.
In terms of Section 136 of the Companies Act 2013 the copy of thefinancial statements of the Bank including the consolidated financial statements theauditor's report and relevant annexures to the said financial statements and reports arebeing sent to the Members and other persons entitled thereto excluding the information inrespect of the said employees containing the particulars as specified in Rule 5 (2) of thesaid Rules which is available for inspection by the Members at its Registered Officeduring business hours of the Bank up to the date of the ensuing Annual General Meeting.Any Member interested in obtaining a copy thereof may write to the Company Secretary ofthe Bank at its Registered Office. The financial statements and other reports of the Bankannexed hereto have been hosted on the website of the Bank www.axisbank.com athttps://www.axisbank.com/shareholders-corner/financial-results-and-other-information/quarterlv-results.
Conservation of Energy Technology Absorption Foreign ExchangeEarnings and Outgo Conservation of Energy:
The Bank has always considered energy and natural resource conservationas a focus area and has been consciously making efforts towards improving the energyperformance year on year. Energy efficiency improvement initiatives have been implementedacross all the branches and offices by undertaking various energy and resourceconservation projects for Sustainable Development.
The Bank ensures strict compliance with all the statutory requirementsand has taken several sustainable steps voluntarily to contribute towards betterenvironment. Select few steps /impact are listed below:
Implementation of solar energy of aggregate 4.6 MW spreadover select Branches/Offices.
Implementing Energy Management System (EMS) to monitor andcontrol energy consumption in select Branches.
Conversion of conventional lighting to LED.
Installed Compost Machine for converting food waste into manureat Axis House.
Maintenance of unity power factor through 500 KVAR x 4 Nos ofAPFC 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 AxisHouse.
Sewage Treatment Plant of 150 KL capacity recycles sewage waterat Axis House every day.
Use of water flow reducer to reduce the water consumption atAxis House and Gigaplex (Airoli).
Rain Water Harvesting at Axis House.
Introduction of bio blocks in urinals at Select Large Facilitiesthereby saving flushing water.
The details pertaining to Technology Absorption have been explained inthe Management's Discussion and Analysis Report which is provided as an annexure to thisreport.
Foreign Exchange Earning and Outgo:
The provisions relating to Section 134(3)(m) of the Companies Act 2013on particulars relating to Foreign Exchange Earning and Outgo are not applicable to aBanking Company and as such no disclosure is being made in this regard.
Management's Discussion and Analysis Report
The Management's Discussion and Analysis Report for the year underreview as stipulated under Regulation 34(2)(e) of the Listing Regulations is provided asan annexure to this report.
Pursuant to Regulation 21 of the Listing Regulations the Bank hasalready constituted the Risk Management Committee of the Board of Directors. The detailsof the said Committee and its terms of reference are set out in the Report on CorporateGovernance 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 RiskManagement Framework it has delegated its powers relating to monitoring and reviewing ofrisks associated with the business of the Bank to the said Committee. The details of theRisk Management Framework and issues related thereto have been explained in theManagement's Discussion and Analysis Report which is provided as an annexure to thisreport.
Business Responsibility Report
In terms of Regulation 34(2)(f) of the Listing Regulations top 500listed entities based on their market capitalisation as on 31st March everyyear are required to submit their Business Responsibility Report (BRR) as a part of theAnnual Report. The Bank's Business Responsibility Report describing the initiatives takenby the Bank from an environmental social and governance perspective has been hosted onthe website of the Bank www.axisbank.com athttps://www.axisbank.com/shareholders-corner/shareholder's-information/business-responsibility-report. Any Member interested in obtaining a copy of the BRR maywrite to the Company Secretary of the Bank at its Registered Office.
Particulars of Loans Guarantees and Investments
The provisions relating to Section 134(3)(g) of the Companies Act 2013on particulars of loans guarantees and investments are not applicable to a BankingCompany and as such no disclosure is 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 ofthe Companies Act 2013 read with the Companies (Corporate Social Responsibility) Rules2014 as amended.
The brief outline of the CSR Policy including overview of the programsundertaken by the Bank the composition of the CSR Committee average net profits of theBank for the past three financial years prescribed CSR expenditure and details of theamounts spent by the Bank on CSR activities during the year under review have beenprovided as an annexure to this report.
Plan and Status of Ind AS Implementation
The Reserve Bank of India (RBI) issued a circular in February 2016requiring banks to implement Indian Accounting Standards (Ind AS) and prepare standaloneand consolidated Ind AS financial statements with effect from 1st April 2018.Banks are also required to report the comparative financial statements for the financialyear 201 7-18 to be published along with the financial statement for the year beginning 1stApril 2018.
In line with the RBI guidelines on Ind AS implementation the Bank hasformed a Steering Committee comprising members from the concerned functional areas headedby the Deputy Managing Director. A quarterly progress report on the status of Ind ASimplementation in the Bank is presented to the Audit Committee of the Board. During FY2016-17 the Bank has undertaken a preliminary diagnostic analysis of the GAAP differencesbetween Indian GAAP vis-a-vis Ind AS. The Bank has also submitted Proforma Ind ASfinancial statements for the six months ended 30th September 2016 to the RBI.
The Bank has identified and evaluated data gaps process and systemchanges required to implement Ind AS and is in the process of implementing necessarychanges in its IT system and other processes. Dry-run of accounting systems and end-to-endreporting process will be undertaken at the appropriate time during the year. The Bank hasbeen holding workshops and training for its staff which will continue in the currentyear.
The Bank is in the process of preparation of opening Ind AS financialsas on 1st April 2017 and is also examining impact of Ind AS on businessplanning budgeting taxation capital planning and on capital adequacy. The Bank willprepare quarterly Ind AS financials during the year 2017-18 for internal purpose whichwill be used later as comparative numbers for the financial year 2018-19.
At the 20th Annual General Meeting of the Shareholders ofthe Bank held on 27th June 2014 M/s S. R. Batliboi & Co. LLFf CharteredAccountants Statutory Auditors of the Bank (Membership No.301003E/E300005) wereappointed as the Statutory Auditors of the Bank to hold office as such from the conclusionof the 20th Annual General Meeting until the conclusion of the 24thAnnual General Meeting subject to the approval of the Reserve Bank of India andratification by the shareholders each year and on such remuneration as may be approved bythe Audit Committee of the Board (ACB).
In terms of the first proviso to Section 139 of the Companies Act2013 the appointment of the Statutory Auditors is required to be placed for ratificationat every Annual General Meeting. Accordingly the appointment of M/s. S. R. Batliboi &Co. LLFf Chartered Accountants as Statutory Auditors of the Bank for the financial year2017-18 is being placed for ratification by the Shareholders of the Bank at the 23rdAnnual General Meeting.
As recommended by the ACB the Board of Directors has proposed theappointment of M/s. S. R. Batliboi & Co. LLFf Chartered Accountants as the StatutoryAuditors of the Bank for the financial year 2017-18 and to hold office as such from theconclusion of the 23rd Annual General Meeting upto the conclusion of 24thAnnual General Meeting for the ratification by the Shareholders of the Bank at the 23rdAnnual General Meeting. The Shareholders are requested to ratify the said appointment ofthe Statutory Auditors and the payment of remuneration as approved by the ACB.
In this regard the Bank has received a certificate from the StatutoryAuditors to the effect that the ratification of their appointment if made would be inaccordance with the relevant provisions of Section 141 of the Companies Act 2013.
As required under Regulation 33(1)(d) of the Listing Regulations theStatutory Auditors have confirmed that they have subjected themselves to the peer reviewprocess of the Institute of Chartered Accountants of India (ICAI) and that they hold avalid certificate issued by the Peer Review Board of ICAI.
There are no qualifications reservations or adverse remarks made byM/s. S. R. Batliboi & Co. LLF) Chartered Accountants Statutory Auditors of the Bankin their report.
Pursuant to the provisions of Section 204 of the Companies Act 2013and the relevant provisions of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the Bank has appointed M/s. BNP & Associates CompanySecretaries Mumbai to act as the Secretarial Auditor of the Bank.
The secretarial audit of the Bank has been conducted on a quarterlybasis in respect of the matters as set out in the said Rules and set out in theSecretarial Audit Report for the financial year 2016-17 which is provided as an annexureto this report.
There are no qualifications reservations or adverse remarks made byM/s. BNP & Associates Company Secretaries Secretarial Auditor of the Bank in theirreport.
Significant and Material Order Passed by Regulators or Courts orTribunals Impacting the Going Concern Status and Operations of the Bank
During the financial year 2016-17 no significant or material orderswere passed by any Regulator Court or Tribunal against the Bank which could impact itsgoing concern status or operations.
Adequacy of Internal Financial Controls Related to Financial Statements
The Board has inter alia reviewed the adequacy and effectiveness of theBank's internal financial controls relating to its financial statements.
The Board has discussed with the Management of the Bank the majorfinancial risk exposures and the steps taken by it to monitor and control such exposuresoverseen and reviewed the functioning of the Whistle Blower Mechanism (which is a part ofthe Bank's Fraud Risk Management Policy) and the findings in respect of the investigationsconducted on frauds which were material in nature and the actions taken by the Managementin this regard.
CEO & CFO Certification
Certificate issued by Smt. Shikha Sharma Managing Director & CEOand Shri Jairam Sridharan CFO of the Bank for the financial year under review wasplaced before the Board of Directors at its meeting held on 26th April 2017 interms of Regulation 17(8) of the Listing Regulations.
The Board of Directors places on record its gratitude to the RBI FIPBMCA SEBI other Statutory and Regulatory Authorities Financial Institutions StockExchanges Registrar and Share Transfer Agent Debenture Trustees Depositories andCorrespondent Banks for their continued support and guidance.
The Board also places on record its appreciation to the shareholders ofthe Bank for their continued support and to its valued customers for their continuedpatronage.
The Board also expresses its deep sense of appreciation to all theemployees of the Bank for their strong work ethic excellent performance professionalismteamwork commitment and initiatives which has led to the Bank reinforcing its customercentric image and making commendable progress in today's challenging environment.
| ||For and on behalf of the Board of Directors |
|Place: Mumbai ||Dr. Sanjiv Misra |
|Date: 26th April 2017 ||Chairman |