Axis Bank Ltd.
|BSE: 532215||Sector: Financials|
|NSE: AXISBANK||ISIN Code: INE238A01034|
|BSE 15:36 | 30 Mar||368.15||
|NSE 15:32 | 30 Mar||368.15||
|Mkt Cap.(Rs cr)||103,879|
|Mkt Cap.(Rs cr)||103879.05|
Axis Bank Ltd. (AXISBANK) - Director Report
Company director report
The Board of Directors have the pleasure of presenting the 25thAnnual 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 2019.
The financial highlights for the year under review are presentedbelow:
(1) Excluding Merchant Exchange Profit
Key Performance Indicators
* Working funds represent average total assets
** Productivity ratios are based on average number of employees for theyear *** Customer assets include advances and credit substitutes Previous year figureshave been re-grouped wherever necessary
Capital & Reserves
During the year the Bank allotted 5105935 equity shares of '2/- eachof the Bank pursuant to exercise of stock options by some of the Whole TimeDirectors/Employees of the Bank and that of its subsidiary companies under the variousEmployee Stock Option Scheme(s).
Pursuant to the said allotments the total issued and paid-up equityshare capital of the Bank as on 31st March 2019 increased by '1.02 crore to'514.33 crore as compared to '513.31 crore as on 31st March 2018.
The category wise Shareholding Pattern of the Bank as on 31stMarch 2019 was as under:
The said equity shares of the Bank are listed on National StockExchange of India Ltd. (NSE) and BSE Ltd. (BSE). The Unsecured RedeemableNon-Convertible Subordinated Perpetual Debentures issued by the Bank on a privateplacement basis are listed on NSE and BSE. The Bonds issued by the Bank under the MTNprogramme on a private placement basis are listed on Singapore Stock Exchange and theGreen Bonds issued by the Bank are listed on London Stock Exchange. The Global DepositoryReceipts (GDR) issued by the Bank are listed on London Stock Exchange.
The Bank has paid the listing fees to the said Stock Exchanges for thefinancial year 2018-19.
In terms of Regulation 43A of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 ("ListingRegulations") the Bank has formulated and adopted a Dividend Distribution Policywith the objective of providing clarity to its stakeholders on the profit distributionstrategies of the Bank. During the year the said Policy has been reviewed by the Board ofDirectors of the Bank and hosted on the website of the Bank at
The Diluted Earnings Per Share (EPS) of the Bank for the financial year2018-19 stood at '18.09 per equity share of '2/- each as compared to '1.12 per equityshare of '2/- each in the previous financial year. In view of the overall performance ofthe Bank and with the objective of rewarding the Shareholders of the Bank with cashdividends while retaining capital to maintain a healthy capital adequacy ratio to supportfuture growth the Board of Directors of the Bank at its meeting held on 25thApril 2019 recommended a dividend of '1/- per equity share of '2/- each for the financialyear 2018-19 as compared to Nil Dividend for the financial year 2017-18 in terms of theDividend Distribution Policy of the Bank. The said increase in EPS reflects the Bank'sconfidence in its 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 willremain closed from Saturday 6th July 2019 to Saturday 20th July2019 (both days inclusive) for the purpose of the 25th Annual General Meetingof the Shareholders of the Bank to be held on Saturday 20th July 2019 and todetermine the names of the Members who would be entitled to dividend if any declared bythe Bank for the financial year ended 31st March 2019.
The Record Date for payment of the said dividend if approved by theMembers at the 25th Annual General Meeting has been fixed on Friday 5thJuly 2019. 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 5th July 2019.
Ratings of various Debt Instruments
The Senior Unsecured Redeemable Non-Convertible Debentures (Series 4)issued by the Bank on a private placement basis during the financial year 2018-19 wererated "CRISIL AAA" by CRISIL Ltd. and "ICRA AAA" by ICRA Ltd.
The Bonds issued by the Bank under the MTN programme on a privateplacement basis during the financial year 2018-19 were rated "BBB" by FitchRatings "BBB" by Standard & Poor's "Baa3" by Moody's.
The details of all credit ratings obtained by the Bank along with anyrevisions thereto during the financial year 2018-19 for all the debt instrumentsoutstanding as on 31st March 2019 is disclosed in the Corporate GovernanceReport forming part of this report.
Board of Directors
During the year the following changes took place in the composition ofthe Board of Directors ("the Board") of the Bank:
Shri Prasad Menon ceased to be an Independent Director of theBank with effect from the close of business hours on 8th October 2018 uponcompletion of the maximum permissible tenure of 8 (eight) continuous years under Section10A (2A) of the Banking Regulation Act 1949. The Board acknowledges the invaluablecontributions rendered by Shri Prasad Menon during his tenure as an Independent Directorof the Bank and places on record its deep appreciation for the insightful perspectives andsuggestions provided by him at the meetings of the Board/Committees of the Bank.
Pursuant to the recommendation of the Nomination andRemuneration Committee ("NRC") the Board at its meeting held on 2ndNovember 2018 approved the appointment of Shri Girish Paranjpe as an Independent Directorof the Bank for a period of 4 (four) consecutive years with effect from 2ndNovember 2018 upto 1st November 2022 (both days inclusive) subject to theapproval of the Shareholders of the Bank. The said appointment was approved by theShareholders of the Bank through Postal Ballot on 17th January 2019. During thesaid period Shri Girish Paranjpe shall not be liable to retire by rotation in terms ofthe provisions of Section149(13) of the Companies Act 2013.
Shri V. Srinivasan Deputy Managing Director of the Bank retiredfrom the services of the Bank and accordingly ceased to be the Whole Time Director(designated as the Deputy Managing Director) of the Bank with effect from the close ofbusiness hours on 20th December 2018.
During his tenure as the Deputy Managing Director of the Bank Shri V.Srinivasan facilitated the growth of the corporate lending and treasury businesses of theBank. The Board acknowledges the invaluable contributions rendered by Shri V. Srinivasanduring his tenure as the Deputy Managing Director of the Bank and places on record itsdeep appreciation for the insightful perspectives and suggestions provided by him duringthe deliberations at the meetings of the Board/ Committees of the Bank.
Smt. Shikha Sharma Managing Director & CEO of the Bankretired from the services of the Bank and accordingly ceased to be the Managing Director& CEO of the Bank with effect from the close of business hours on 31stDecember 2018.
During her tenure as the Managing Director & CEO the Bank turnedinto a full-fledged financial institution by offering services to both corporate andretail consumers. The seamless retailisation of the Bank achieved under her tenure wasremarkable and has led to a significant diversification of the Bank's balance sheet. TheBoard acknowledges the leadership and the invaluable contributions rendered by Smt. ShikhaSharma during her tenure as the Managing Director & CEO of the Bank and places onrecord its deep appreciation for the insightful perspectives and suggestions provided byher at the meetings of the Board/Committees of the Bank.
Pursuant to the recommendation of the NRC the Board at itsmeeting held on 9th July 2018 shortlisted the candidature of Shri AmitabhChaudhry for the post of the Managing Director & CEO of the Bank with effect from 1stJanuary 2019 and recommended the same for the approval of the Reserve Bank of India (RBI).
The RBI granted its approval to the appointment of Shri AmitabhChaudhry as the Managing Director & CEO of the Bank for a period of 3 (three) yearswith effect from 1st January 2019 upto 31st December 2021 (both daysinclusive) and to the terms and conditions relating to the said appointment includingremuneration.
In order to facilitate smooth transition and help Shri Amitabh Chaudhryfamiliarize with the business and operations of the Bank the Board at its meeting held on2nd November 2018 approved the appointment of Shri Amitabh Chaudhry as theManaging Director (Designate) in executive position of the Bank with effect from 19thNovember 2018 upto 31st December 2018 (both days inclusive).
Thereafter pursuant to the approval of the RBI and on therecommendation of the NRC the Board at its meeting held on 8th December 2018approved the appointment of Shri Amitabh Chaudhry as the Managing Director & CEO ofthe Bank for a period of 3 (three) years with effect from 1st January 2019 upto 31st December 2021 (both days inclusive) and the terms and conditionsrelating to the said appointment including remuneration. The said appointment of ShriAmitabh Chaudhry as the Managing Director & CEO of the Bank and the terms andconditions in respect thereof including remuneration was approved by the Shareholders ofthe Bank through Postal Ballot on 17th January 2019.
Pursuant to the outcome of the performance evaluation and therecommendation of the NRC the Board at its meeting held on 8th December 2018had approved the re-appointment of the following Independent Directors of the Bank fortheir second term subject to approval of the Shareholders of the Bank:
a) Prof. Samir K. Barua as an Independent Director of the Bank witheffect from 1st April 2019 upto 21st July 2019 (both daysinclusive);
b) Shri Som Mittal as an Independent Director of the Bank with effectfrom 1st April 2019 upto 21st October 2019 (both days inclusive);and
c) Shri Rohit Bhagat as an Independent Director of the Bank witheffect from 1st April 2019 upto 15th January 2021 (both daysinclusive).
The said re-appointment of Prof. Samir K. Barua Shri Som Mittal andShri Rohit Bhagat were approved by the Shareholders of the Bank through Postal Ballot on17th January 2019. During the said period Prof. Samir K. Barua Shri SomMittal and Shri Rohit Bhagat shall not be liable to retire by rotation in terms of theprovisions of Section 149(13) of the Companies Act 2013.
As part of the succession planning process of the Bank andpursuant to the recommendation of the NRC the Board at its meeting held on 8thDecember 2018 approved the re-designation of Shri Rajiv Anand as the Executive Director(Wholesale Banking) of the Bank with effect from 21st December 2018 upto 3rdAugust 2019 (both days inclusive) i.e. for the remainder of his existing term as theExecutive Director of the Bank.
In view of the vacancy that would be caused by the expiry oftenure of Dr. Sanjiv Misra the Non- Executive (Part-Time) Chairman of the Bank w.e.f.the close of business hours on 17th July 2019 as part of the successionplanning process of the Bank and pursuant to the recommendation of the NRC the Board atits meeting held on 12th March 2019 approved the appointment of Shri RakeshMakhija as the Non- Executive (Part-Time) Chairman of the Bank for a period of 3 (three)years with effect from 18th July 2019 upto 17th July 2022 (bothdays inclusive) subject to approval of the RBI and the Shareholders of the Bank.
In terms of Section 152 of the Companies Act 2013 Smt. UshaSangwan is liable to retire by rotation at the ensuing AGM and being eligible has offeredherself for re-appointment.
Pursuant to the recommendation of the NRC the Board at itsmeeting held on 22nd May 2019 approved the re-appointment of Shri Rajiv Anandas the Executive Director (Wholesale Banking) of the Bank for a further period of 3(three) years with effect from 4th August 2019 upto 3rd August 2022(both days inclusive) and the terms and conditions relating to the said reappointmentincluding remuneration subject to the approval of the RBI and the Shareholders of theBank. During the said period Shri Rajiv Anand shall be liable to retire by rotation.
Pursuant to the recommendation of the NRC the Board at itsmeeting held on 22nd May 2019 approved the re-appointment of Shri RajeshDahiya as the Executive Director (Corporate Centre) of the Bank for a further period of 3(three) years with effect from 4th August 2019 upto 3rd August 2022(both days inclusive) and the terms and conditions relating to the said reappointmentincluding remuneration subject to the approval of the RBI and the Shareholders of theBank. During the said period Shri Rajesh Dahiya shall be liable to retire by rotation.
Pursuant to the recommendation of the NRC the Board at itsmeeting held on 22nd May 2019 approved the appointment of Shri Pralay MondalGroup Executive (Retail Banking) as a Director of the Bank and as the Whole Time Directordesignated as "Executive Director (Retail Banking)" of the Bank for a period of3 (three) years with effect from 1st August 2019 upto 31st July2022 (both days inclusive) and the terms and conditions relating to the said appointmentincluding remuneration subject to the approval of the RBI and the Shareholders of theBank. During the said period Shri Pralay Mondal shall be liable to retire by rotation.
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.
The ordinary resolutions in respect of the appointment / re-appointmentof the Directors as aforesaid have been included in the Notice convening the 25thAnnual General Meeting of the Bank to be held on Saturday 20th July 2019. Thebrief profile and details of the remuneration last drawn by the said Directors have beenannexed to the said Notice.
Selection and Appointment of Directors & Other Key Officials
The selection and appointment of Directors and other Key officials ofthe Bank is done in accordance with the relevant provisions of the Companies Act 2013the relevant Rules made thereunder the Banking Regulation Act 1949 the Guidelinesissued by the RBI and the relevant provisions of the Listing Regulations relating toCorporate Governance (as amended) from time to time.
The Bank has formulated and adopted a Succession Planning Policy (thePolicy) for appointment of its Directors and other Key Officials. The objectives of thePolicy is to assess identify and nominate suitable candidates to fill vacancies that mayarise for positions of Directors and other Key Officials of the Bank to plan forsuccession of the said roles and any vacancies that may arise out of impending move orretirement or resignation or sudden exit or for any reason whatsoever in such rolesincumbent or named successors significant changes in role accountabilities substantivechanges in the business parameters and changes to the role holder or successor'saspiration.
The Policy also seeks to identify the competency requirements for thesaid positions identify potential candidates and develop required competencies throughplanned training development and learning initiatives and to ensure systematic andlong-term development of personnel for taking higher roles and responsibilities at thesenior management levels at the Bank or that of its subsidiary companies which may arisedue to impending move or retirement or resignation or sudden exit or for any reasonwhatsoever of the role incumbent or named successors.
The Bank adheres to the process and methodology prescribed by the RBIin respect of the 'Fit & Proper' criteria as applicable to Private Sector Bankssigning of deed of covenants which binds the Directors to discharge their responsibilitiesto the best of their abilities individually and collectively in order to be eligible tobe appointed/re-appointed as a Director of the Bank. The prescribed declarations given bythe Directors other than that of the Members of the NRC are placed before the NRC and thedeclarations given by the Members of the NRC are placed before the Board for its reviewand noting. The said declarations are obtained from all the Directors on an annual basisand also at the time of their appointment / re-appointment in compliance with the saidlaws. An assessment on whether the Directors fulfil the said criteria is also carried outby the NRC and the Board on an annual basis and before considering their candidature forre-appointment.
The NRC also 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 terms and conditions relating to the suchappointment/re-appointment including remuneration designed to enhance the Board'seffectiveness.
The NRC 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 or practical experience and requisite set of skills to serve the diversebusiness interests of the Bank.
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 the Board has confirmed its veracity and taken the same on record.
Key Managerial Personnel
At the meeting of the Board held on 8th December 2018 ShriAmitabh Chaudhry the Managing Director & CEO of the Bank was appointed as the KeyManagerial Personnel of the Bank with effect from 1st January 2019 underSection 203(1) of the Companies Act 2013.
In terms of Section 203(1) of the Companies Act 2013 Shri AmitabhChaudhry Managing Director & CEO Shri Jairam Sridharan Group Executive & ChiefFinancial Officer and Shri Girish V. Koliyote Company Secretary are the Key ManagerialPersonnel of the Bank.
Board Performance Evaluation
The Companies Act 2013 and the Listing Regulations relating toCorporate Governance contains provisions on evaluation of the performance of the Boardits Committees its individual Directors and its Chairperson.
The NRC is the nodal agency for conduct of said performance evaluation.The NRC has reviewed and approved the manner for effective evaluation of the performanceof the Board its Committees its individual Directors and its Chairperson and thecriteria for the said performance evaluation. The manner in which the said performanceevaluation has been conducted is explained in the Report on Corporate Governance whichforms part of this report.
The schedule in respect of the meetings of the Board / Committeesthereof to be held during the next financial year and for the ensuing Annual GeneralMeeting is circulated in advance to the Members of the Board. During the year 12 meetingsof the Board were held and the gap between the said meetings did not exceed the limit of120 days as prescribed under the relevant provisions of the Companies Act 2013 therelevant Rules made thereunder and the Listing Regulations relating to CorporateGovernance.
The composition role and functions of the Audit Committee of the Board(ACB) of the Bank is disclosed in the Report on Corporate Governance which forms part ofthis report.
The Bank has formulated and adopted a Comprehensive Remuneration Policyfor its Directors Key Managerial Personnel and other Employees in terms of the relevantprovisions of Section 178 of the Companies Act 2013 the relevant Rules made thereunderand the Listing Regulations relating to Corporate Governance. During the year the saidPolicy was reviewed by the Board of Directors of the Bank. The details of the saidRemuneration Policy have been disclosed in the Report on Corporate Governance which formspart of this report. The said Policy has been hosted on the website of the Bank at
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 forms part of this report.
As on 31st March 2019 the Bank has the following elevenunlisted subsidiary companies and one step down subsidiary;
i) Axis Asset Management Company Ltd. undertakes the activities ofmanaging the mutual fund business.
ii) Axis Mutual Fund Trustee Ltd. acts as the trustee for the mutualfund business.
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 ofcorporate and structural lending loan against property etc.
v) Axis Securities Ltd. is in the business of marketing of credit cardsand retail asset products (Discontinued its non - broking business w.e.f. 28thMarch 2019) and retail broking services.
vi) A.TREDS Ltd. is engaged in the business of facilitating financingof trade receivables.
vii) Axis Bank UK Ltd. is the banking subsidiary of the Bank in theUnited Kingdom and undertakes the activities of banking.
viii) Axis Trustee Services Ltd. is engaged in trusteeship activitiesacting as debenture trustee and as trustee to various securitisation trusts.
ix) Freecharge Payment Technologies Private Ltd is in the business ofproviding merchant acquiring services payment aggregation services payment supportservices and business correspondent to a Bank/Financial Institution distribution ofMutual Funds.
x) Accelyst Solutions Private Ltd. is in the business of providingOnline marketing and sales promotion solutions providing facilities to recharge onlineprepaid postpaid mobile phones connections DTH connections and data cards etcdistribution of mutual fund & insurance services.
xi) Axis Private Equity Ltd. primarily carries on the activities ofmanaging equity investments and provides venture capital support to businesses.
xii) Axis Capital USA LLC. is a wholly owned subsidiary of AxisCapital Limited incorporated in USA and provides financial services relating to equitycapital market institutional stock broking to institutional investors in USA.
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 its subsidiarycompanies which forms part of this report. The financial position and performance of eachof the said subsidiary companies are given in the statement containing the salientfeatures of the financial statements of the said subsidiary companies of the Bank whichis annexed to this report.
In accordance with the third proviso to Section 136(1) of the CompaniesAct 2013 the Annual Report of the Bank containing therein its standalone financialstatements and the consolidated financial statements and all other documents required tobe attached thereto have also been hosted on the website of the Bank www.axisbank.com.
Further in accordance with the fourth proviso to the said section theaudited annual accounts of each of the said subsidiary companies of the Bank have beenhosted on the website of the Bank at https://www.axisbank.com/shareholders-corner/shareholders-information/annual-reports.
Any shareholder interested in obtaining a physical copy of the saidfinancial statements may write to the Company Secretary at the Registered Office of theBank. Further please note that the said financial statements will also be available forinspection by the shareholders of the Bank and Trustees of Debenture holders at theRegistered Office of the Bank during business hours from 11.00 a.m. to 1.00 p.m. on allworking days except Saturdays Sundays 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/Management which could lead to potential conflict of interestbetween the Bank and these parties other than transactions entered into in the ordinarycourse of its business.
Transactions entered into by the Bank with related parties in thenormal course of its business were placed before the ACB. There are no materialtransactions entered into with related parties. There were no transactions with relatedparties which were not in the normal course of the business of the Bank nor were thereany transactions with related parties or others which were not on an arm's length basis.Accordingly Form AOC-2 is not applicable to the Bank. A statement giving details of allrelated party transactions entered pursuant to the omnibus approval so granted is placedbefore the ACB for their review. The Bank has developed a Standard Operating Procedure forthe purpose of identifying and monitoring such transactions. During the year the Policyon Related Party Transactions has been reviewed by the Board of Directors of the Bank andthe same has been hosted on the website of the Bank at
Employee Stock Option Plan (ESOP)
Since the financial year 2000-01 the Bank has formulated and adoptedEmployee Stock Option Schemes (ESOS) for the benefit of the eligible Employees/ManagingDirector & CEO and Whole Time Directors of the Bank and that of its subsidiarycompanies ("eligible Employees/Directors") in terms of the Securities andExchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines 1999 / the Securities and Exchange Board of India (Share Based EmployeeBenefits) Regulations 2014 as amended. The objective of the said ESOS is to enhanceemployee motivation enable employees to participate directly or indirectly in thelong-term growth and financial success of the Bank to act as a retention mechanism byenabling employee participation in the business of the Bank as its active stakeholder andto usher an 'owner- manager' culture.
During the year under review the Shareholders of the Bank by means ofa special resolution passed through Postal Ballot on 1 7th January 2019approved the creation issue and allotment of additional 25000000 stock optionsconvertible into 25000000 equity shares of '2/- each of the Bank to the eligibleEmployees/Directors.
In terms of the said ESOS as on date up to 265087000 stock optionsare available for grant by the Bank to the eligible Employees/Directors. The eligibilityand number of stock options to be granted to such eligible Employees/Directors isdetermined on the basis of the outcome of their performance evaluation 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 January 2019 the Shareholdersof the Bank had approved the grant of stock options as aforesaid on seven occasions.Under the first two ESOS of the Bank and in respect of the grant of stock options made bythe Bank upto 29th April 2004 the option conversion price was set at theaverage of the daily high-low price of the Bank's equity shares traded during the 52 weekspreceding the date of approval of grant by the Board / NRC prevailing on the StockExchange which had the maximum trading volume of the Bank's equity share during the saidperiod. Thereafter under the third and subsequent ESOS of the Bank and with effect fromthe said grants made by the Bank on or after 10th June 2005 the stock optionconversion price was changed to the latest available closing price of the equity shares ofthe Bank prevailing on the Stock Exchange which recorded higher trading volume on theday prior to the date of approval of grant by the NRC.
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 Employees/Directors under the various ESOS of the Bank such that all stockoptions available for grant (including lapsed and forfeited options available for reissue)and those already granted but not vested and those vested but not exercised as on therecord date fixed for the purpose of sub-division were proportionately converted intooptions bearing equity shares of the face value of '2/- each of the Bank and the grantprice of all the outstanding stock options (unvested vested and unexercised) as on thesaid record date for the purpose of sub-division were proportionately adjusted by dividingthe existing grant price by 5. The record date for the said sub-division was 30thJuly 2014.
Since 24th February 2001 up to 27th March 2019the NRC / Board had out of the said 265087000 stock options approved the grant of270113700 stock options (including 26983897 stock options which had lapsed and wereforfeited) to the eligible Employees/Directors in terms of the various ESOS of the Bank.The said stock options are non-transferable and vest at the rates of 30% 30% and 40% oneach of three successive anniversaries following the date of respective grant subject tostandard vesting and other conditions as set out in the respective ESOS of the Bank. Thesaid stock options are required to be exercised by the concerned eligibleEmployees/Directors within a period of three / five years from the date of itsrespective vesting in terms of the respective ESOS of the Bank.
As of 31st March 2019 out of the said 270113700 stockoptions so granted 245477475 stock options have been vested out of which 202496929stock options have been exercised and the balance 17138224 stock options remainunexercised. Further 23494650 stock options remained unvested and 26983897 stockoptions had been treated as lapsed and forfeited.
There were no material changes in the ESOS of the Bank during thefinancial year 2018-19 and the same is in compliance with the relevant provisions of theSEBI (Share Based Employee Benefits) Regulations 2014 as amended.
Statutory disclosures as mandated under Regulation 14 of the SEBI(Share Based Employee Benefits) Regulations 2014 as amended have been hosted on thewebsite of the Bank at https://www.axisbank.com/shareholders-corner/corporate-governance/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 2018-19 alongwith the Certificate issued by the Statutory Auditors of the Bank confirming compliancewith the mandatory requirements relating to Corporate Governance as stipulated underChapter IV of the Listing Regulations forms part of this report.
The Corporate Governance framework of the Bank incorporates all themandatory requirements as prescribed in the Listing Regulations. The Bank has also adoptedthe non-mandatory requirements as recommended in the Listing Regulations detailed in theReport on Corporate Governance which forms part of this report.
Information under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013
The Bank has complied with the provisions relating to the constitutionof Internal Complaints Committee under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. The information relating to complaintsreceived and redressed during the financial year 2018-19 is disclosed in the Report onCorporate Governance which forms part of this report.
Directors' Responsibility Statement
The Board of Directors of the Bank hereby declares and confirms thefollowing statements in terms of Section 134(3)(c) of the Companies Act 2013:
a) That in the preparation of the annual accounts for the financialyear ended 31st March 2019 the applicable accounting standards had beenfollowed along with proper explanation relating to material departures.
b) That such accounting policies as mentioned in Note no. 17 of theNotes to accounts of the Financial Statements have been selected and applied consistentlyand judgments 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 2019and 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.
In accordance with the Companies (Amendment) Act 2017 read withSection 134(3) of the Companies Act 2013 the Annual Return under Section 92 (3) of theCompanies Act 2013 can be accessed on the website of the Bank at https://www .axisbank.com/shareholders-corner/shareholders-information and the extract of the AnnualReturn 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 tothis report.
As on 31st March 2019 the Bank had 57 employees who wereemployed throughout the year and were in receipt of remuneration of more than '1.02 croreper annum and 19 employees of the Bank who were employed for part of the year and were inreceipt of remuneration of more than '8.50 lakh 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 76 employees of the Bank containing the particulars as specified inRule 5 (2) of the said Rules which is available for inspection by the Members at theRegistered Office of the Bank during business hours of the Bank up to the date of theensuing Annual General Meeting. Any Member interested in obtaining a copy thereof maywrite to the Company Secretary of the Bank at its Registered Office.
Conservation of Energy Technology Absorption Foreign ExchangeEarnings and Outgo
Conservation of Energy & Technology Absorption:
Energy and natural resource conservation have been focus areas for theBank and conscious efforts are being made towards improving energy performance year onyear.
For Sustainable Development Energy efficiency initiatives have beenimplemented across several branches and offices through energy and resource conservationprojects.
The Bank ensures strict compliance with all statutory requirements andvoluntarily undertakes several sustainable steps in order to contribute towards a betterenvironment.
Some of the steps undertaken and the impact perceived are listed below:
Implementation of Solar energy projects across select Branches/Offices aggregating ~7.05 MW. This includes 2.00 MW project at Sonalwadi SolapurMaharashtra.
Implementation of Centralised Energy Management System (CEMS) tomonitor and control energy consumption.
Conversion of conventional lighting to LED in 250 plus number ofLocations with premises size more than 4000 sq.ft. & implementation of LED lights inall new Branches/Offices.
Conversion of Food/Wet waste at Axis House Mumbai into manurethrough compost machine for use in landscaping/ gardening.
Maintenance of unity power factor through APFC panels in automode for optimum use of power at Axis House Mumbai and Noida.
Installation of Motion sensors for workstation and common arealighting at Axis House Mumbai.
Re-cycling of Dry waste at Axis House Mumbai into stationeryitems like notepads.
Daily re-cycling of 150 KL of water through Sewage TreatmentPlant at Axis House Mumbai.
Reduction of water consumption at Axis House Mumbai through useof aerators.
Rain Water Harvesting of ~2000 KL of water yearly at AxisHouse Mumbai.
Saving of water through use of Bio-blocks in urinals at SelectLarge Offices.
Installation of sensors in washbasins to optimise flow of waterat Select Large Offices.
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 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 hasconstituted a Risk Management Committee. The details of the said Committee and its termsof reference are set out in the Report on Corporate Governance which forms part of thisreport.
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 theirAnnual Report. The Bank's BRR describing the initiatives taken by the Bank from anEnvironmental Social and Governance perspective has been hosted on the website of theBank at
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 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 in accordance with the provisions of Section 135 of the CompaniesAct 2013 read with the Companies (Corporate Social Responsibility) Rules 2014 asamended.
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.
During the year the said Policy has been reviewed by the Board and thesame has been hosted on the website of the Bank at https://www.axisbank.com/csr.
Plan and Status of Ind AS Implementation
The RBI had issued a circular in February 2016 requiring banks toimplement Indian Accounting Standards (Ind AS) and prepare standalone and consolidated IndAS financial statements with effect from 1st April 2018. Banks were alsorequired to report the comparative financial statements for the financial year 2017-18 tobe published along with the financial statement for the year beginning 1stApril 2018. However the RBI in its press release issued on 5th April 2018deferred the applicability of Ind AS by one year (i.e. 1st April 2019) forScheduled Commercial Banks. Further RBI in a circular issued on 22nd March2019 has deferred the implementation of Ind AS till further notice.
In line with the RBI guidelines on Ind AS implementation the Bank hasa Steering Committee comprising members from the concerned functional areas headed by theExecutive Director (Wholesale Banking). A quarterly progress report on the status of IndAS implementation in the Bank is presented to the Audit Committee of the Board. During theFY 2016-17 the Bank had undertaken preliminary diagnostic analysis of the GAAPdifferences between Indian GAAP vis-a-vis Ind AS.
The Bank has also identified and evaluated data gaps processes andsystem changes required to implement Ind AS. The Bank is in the advanced stage ofimplementing necessary changes in its IT system and other processes. The Bank has beenholding workshops and training for its staff which will continue in the current year. TheBank has also submitted to RBI Proforma Ind AS financial statements for the six monthsended 30th September 2016 and three months ended 30th June 2017 andfor the first three quarters of FY 2018-19.
The Bank is also examining impact of Ind AS on business planningbudgeting taxation capital planning and on capital adequacy. The Bank is also in theprocess of preparation of proforma Ind-AS financial statements for the year ended 31stMarch 2019.
At the 24th Annual General Meeting of the Shareholders ofthe Bank held on 20th June 2018 M/s Haribhakti & Co. LLP CharteredAccountants Mumbai (Membership Number 1 03523'W/W1 00048) were appointed as theStatutory Auditors of the Bank to hold office as such from the conclusion of the 24thAnnual General Meeting until the conclusion of the 28th Annual General Meetingsubject to the approval of the Reserve Bank of India and on such remuneration as may beapproved by the ACB.
In terms of the relevant provisions of the Banking Regulation Act1949 the approval of the RBI is mandatory for appointment of Statutory Auditors of theBank every year. The Bank will obtain the requisite approval of RBI for the appointment ofM/s Haribhakti & Co. LLP as the Statutory Auditors of the Bank for the financial year2019-20.
In this regard the Bank has received a certificate from the saidStatutory Auditors to the effect that the appointment if made would be in accordancewith 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 Haribhakti & Co. LLP Chartered Accountants Statutory Auditors of the Bank intheir report. Further pursuant to Section 143(12) of the Companies Act 2013 theStatutory Auditors of the Bank have not reported any instances of frauds committed in theBank by its officers or employees.
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 appointed M/s BNP & Associates Company SecretariesMumbai as the Secretarial Auditor of the Bank for the financial year 2018-19. Thesecretarial audit of the Bank was conducted in respect of the matters prescribed in thesaid Rules and as set out in the Secretarial Audit Report for the financial year 201 8-19which is provided as an annexure to this report.
There are no qualifications reservations or adverse remarks made bythe Secretarial Auditor of the Bank in its report.
In terms of SEBI circular no CIR/CFD/CMD1/27/2019 dated 8thFebruary 2019 relating to Annual Secretarial Compliance Report the Bank appointed M/s.BNP & Associates Company Secretaries to conduct the audit of the SecretarialCompliance for the financial year 2018-19. The Bank will submit the Annual SecretarialCompliance Report to the Stock Exchanges within the prescribed time limit and host thesame on its website.
Significant and Material Order Passed by Regulators or Courts orTribunals Impacting the Going Concern Status and Operations of the Bank
During the financial year 2018-19 no significant or material order waspassed by any Regulator Court or Tribunal against the Bank which could impact its goingconcern 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 theManagement in this regard.
CEO & CFO Certification
Certificate issued by Shri Amitabh Chaudhry Managing Director &CEO and Shri Jairam Sridharan Group Executive & CFO of the Bank for the financialyear ended 31st March 2019 was placed before the Board of Directors at itsmeeting held on 25th April 2019 in terms of Regulation 17(8) of the ListingRegulations.
Material Changes and Commitments affecting the financial position ofthe Bank
There are no material changes and commitments which affected thefinancial position of the Bank which occurred between the end of the financial year ofthe Bank to which the financial statements relate and upto the date of this report.
Post adoption of the annual financial statements by the Board ofDirectors the Bank has classified an account in the sugar sector as non-performing perinstructions received from the RBI with retrospective effect from 1st February2016. As the Bank already held substantial provision against this account as on 31stMarch 2019 no further provisioning is required due to change in the status of theaccount.
The Board of Directors places on record its gratitude to the ReserveBank of India Ministry of Corporate Affairs Securities and Exchange Board of Indiaother Statutory and Regulatory Authorities Financial Institutions Stock ExchangesRegistrar and Share Transfer Agent Debenture Trustees Depositories and CorrespondentBanks 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 ethics excellent performanceprofessionalism teamwork commitment and initiatives which has led to the Bankreinforcing its customer centric image and making commendable progress in today'schallenging environment.