Axis Bank Ltd
Chairman Speech
TOUCHING AND TRANSFORMING LIVES
Dear Shareholders,
As we complete our 25th year of operations, I feel honoured
and proud to lead the Bank - a neighbourhood bank striving to serve a billion lives
everyday in a meaningful and humane manner. Trust and customer centricity have always been
the hallmark of the Bank's association with its customers.
The Bank has over these years stood by customers as a reliable friend
in need - by not only being approachable and available at all times, but also helping them
to meet their needs and life aspirations. I would like to thank all my predecessors over
the years - Ms. Shikha Sharma, Dr. P. J. Nayak and Mr. Supriya Gupta, for their vision and
contribution towards building this great institution.
It is the same feeling of warmth and friendliness that is reflected in
the Bank's culture; and was one of the first things that struck me when I joined the Bank
six months ago. I believe that our culture is one of the biggest unsung strengths of Axis
Bank. This has been one of the key driving forces for us to build a great institution and
ensure that we survive tough times.
Over the last decade, the Bank has gone from strength to strength, and
in addition built a lot of hidden gems among its businesses. Let me spell out some of
them. The Bank has an extremely Strong Current Account and savings account (CASA) deposits
franchise and has grown its loan book over five times in the last ten years to '494,798
crores. Amongst the private sector banks, we currently have the third largest branch
network and the highest number of ATM machines in the country.
In the credit cards business, where we were not present some ten years
back, we are now a strong number four player and have been growing at a much faster pace
than the industry leaders in the last five years. We have the country's third largest
merchant acquiring business. In mobile banking, we feature amongst the top players in
terms of innovation. We are the largest issuer of foreign exchange cards in the country
and are a number three player on the UPI side of the business.
On the Wholesale Banking side, we have built deep relationships across
the spectrum with corporates, Small and Medium Enterprises (SMEs) and government clients.
Our SME business has been built into an enviable franchise with extremely healthy metrics.
We have one of the largest franchises amongst the private banks in dealing with the
government and its various arms. The Bank continues to remain at the top of the leader
board in the Debt Capital Market segment for the last thirteen years.
Similar achievements can also be witnessed for the Bank's subsidiaries,
even though we started our innings later than many of our peers. As a group, we are
engaged in businesses that are contiguous to banking, such as nonbanking finance, retail
broking, asset management, and institutional equities and investment banking. Axis Asset
Management Company set up in 2009 is now among the top ten mutual fund houses in India.
Our broking business,
Axis Direct, established in 2011, currently ranks amongst the top three
players in terms of active client base. Axis Capital continues to remain one of the best
equity capital market franchises in the country. Axis Finance is one of the fastest
growing Non-Banking Financial Companies (NBFCs) with some of the best returns in the
industry. Axis is the only Bank with two Fintech companies as subsidiaries, one in the
payments space and the other in the digital invoice discounting space. All these
businesses complement the parent Bank's strategy and allow us to offer our customers a
comprehensive offering under the umbrella of 'One Axis'.
However, I must also acknowledge that in the recent years, the Bank has
faced some headwinds, especially on the asset quality front due to corporate slippages.
The Bank's strategic bet on project lending to infrastructure sectors
like steel and power in the 2010-12 period turned out to be its Achilles' heel. There was
also an increase in operational risks in recent years. Though we have done exceedingly
well in some segments, we have not executed well on all fronts consistently. We are not
yet out of the woods, but we are cautiously optimistic about the future. We need to learn
from the mistakes of the past and ensure that they are never repeated again. We realise
changing ourselves will be arduous and time consuming but we also strongly believe we are
ready for the battle ahead and have the team in place to overcome any odds.
Over the last six months, I have spent time extensively with the
various business units across the Bank. I have also met many of our large corporate
customers. Based on these interactions, I do believe there is lot of potential for us to
grow and be among the top few players in each of our business segments and aspire for
larger market share.
I am pleased to state that we have taken some strong and positive
strides towards defining our priorities, the goals that we want to accomplish and how we
will get there. We intend to get our winning mind-set back, re-claim our growth momentum
and get our fair share of business from our customers. We also want to strengthen our core
technology platform and improve our execution.
To achieve these, we came out with an Execution Strategy 2022 for the
Bank earlier this calendar year. The strategy pivots around delivery of three important
vectors - Growth, Profitability and Sustainability.
At the same time, we have embarked and made rapid progress on the 'One
Axis' ideology for the Bank and its subsidiaries which, focusses on projecting the Bank's
various businesses and subsidiaries together as 'One' that can offer a comprehensive suite
of products, services and solutions to the customer. The focus for our subsidiaries would
be to attain size and scale, for which we would continue to invest in them over the next
few years.
As we embark on achieving the goals set in our 2022 vision, the
strategic direction of 'One Axis' will serve as a bedrock to drive brand synergies across
the Bank and all its subsidiaries. We will start by delivering a consistent brand identity
across our branches, subsidiaries and all our digital touchpoints. Over the next few
months, the messaging across our products and our verticals will also align with the above
strategic direction so that we create a force multiplier effect for the brand. More
importantly, we are an industry built on the foundation of trust and one of the best ways
to improve trust is to come across as consistent and unified in our language and approach
to our customers.
We now have the entire senior management team in place to execute the
strategy and convert our aspirations into reality over the next three years. We have
reoriented the organisational structure that would enable us to streamline and simplify
our functioning and bring in greater accountability, productivity and efficiencies. We
have also made considerable progress in building cost consciousness across the Bank, and
expect to improve our cost efficiency over the next few years.
We have incorporated the learnings from the last credit cycle to
improve our policies and processes. We have raised the bar further for the credit filters
applicable to new credit proposals and strengthened our early warning systems. As a Bank,
we are looking to move towards a more conservative view on provisioning, compliance and
risk. In retail, our provisioning norms are more conservative than the RBI prescribed
norms. On the wholesale side, we are increasing the level of provisions we hold against
some weak, yet standard stressed assets.
Moving on to financial performance, the profitability and the asset
quality metrics for the Bank in fiscal year 2019 improved materially after having
witnessed two consecutive challenging years. The Axis franchise delivered healthy
operating performance with core operating revenue growth of 21% and moderation in
operating expenses growth. The Bank continues to have a strong balance sheet with one of
the best provision coverage and capital adequacy ratios of 77% and 15.84%, respectively.
Our subsidiaries had another good year as they continued to gain scale and market share in
their respective segments.
On the wholesale side of our business, we have been focussing on
portfolio diversification, reduction in concentration to select sectors and project loans
and have further increased our focus on transaction banking and working capital business.
The performance of the corporate segment in fiscal 2019 improved as compared to the past
few years with steady decline in the low rated 'BB & below' outstanding pool,
significant decline in corporate slippages and stabilisation of corporate credit linked
fees.
We have reoriented the wholesale segment. The credit underwriting
function has been taken out from the businesses and has been made an independent function.
Product specialists and business relationship responsibilities have also been segregated
to ensure sharper focus on client coverage and product groups. We follow a risk adjusted
return philosophy in the wholesale bank and would focus on growing our midcorporate and
commercial banking book. In the commercial banking segment, we are focussing on building a
relationship based model with SME and current account business customers to drive growth
across both assets and liabilities.
The Bank's retail franchise continues to remain robust with a healthy
growth in loans, fees and retail deposits. Axis continues to remain a strong customer
centric bank and has shifted its deposit strategy to focus on getting higher CASA plus
retail term deposits from earlier focus on CASA. During the year, we added 347 branches to
take our domestic branch distribution network to 4,050 branches. For us, branch banking
continues to be an integral part of our growth strategy. The role of branches in deposit
mobilisation from new customers drives the Bank's acquisition strategy across products and
provides customer service and builds trust. However, the branch formats continue to get
smaller with enhanced productivity led by automation and digitisation of service
operations.
Our wealth management business, Burgundy with assets under management
of over '132,702 crores, has done exceedingly well over the last few years and now
features amongst the top wealth management businesses in the country.
We intend to expand the franchise and build a leadership position in
the space.
The Bank's ability to innovate and offer right product proposition to
its customers has helped the retail loan book to grow over five times in the last ten
years to reach '245,812 crores, with a 50% share in total advances. We have achieved
significant diversification within our retail portfolio mix with a strong risk management
architecture that has ensured that our asset quality in retail has been much better than
peer average. The Bank has always been ahead of the curve in terms of building its digital
capabilities and has made significant investments in technology and digital analytics to
underwrite, manage risk outcomes and optimise costs. During the year, the Bank
increasingly started offering pre-approved loans and stepped up the pace of digital
lending. The contribution of digital lending in personal loans increased to 43% from 22%
in the last one year.
Axis Bank continues to remain committed towards promoting a less-cash,
digital economy and enjoys strong market position across most digital payments spaces in
India. The Bank continues to engage in partnership driven innovations to provide its
customers with a differentiated payments experience and drive the Digital India mission.
During the year, the Bank's Kochi1 Card became the country's first inter-modal transit
card while the Raipur Smart Card project was also initiated to offer digital payment
solutions to the citizens of Raipur. The Bank also launched 'Axis Tap & Pay', a mobile
application for making contactless payment at merchant terminals, as well as India's first
of its kind in-home 'Smart bill pay' initiative that allows users to pay their utility
bills by scanning a QR code.
The Bank has traditionally used Savings Accounts as a product to start
its relationship with customers and then build on it by cross-selling other products and
services. Though that has not changed substantially over the last ten years, we are
increasingly looking beyond deposit base for customers. We are now looking to leverage
other platform businesses of the Group for cross-sell opportunities.
We plan to invest significantly in setting up a Digital Bank. Our idea
here is to have a full team with all the requisite banking as well as digital expertise
and skill sets required to rethink traditional banking processes. It will start afresh,
end-to-end customer journeys, which will be completely digital. This will, however, take
time to fructify and we will share our progress over the coming years.
The Bank continues to invest in enhancing employee capabilities and
provides career development opportunities to its employees. We have made sure that the
communication on GPS strategy and vision of creating 'One Axis' is consistent within the
internal organisation as well, and that everybody in the Bank knows what they have to do.
The organisation structure and the KPIs have been re-aligned to ensure direct
accountability, greater differentiation and focus on developing relationship-based
long-term business model instead of focussing on shorter term targets.
During the year, the Bank revamped its internal job posting process to
allow internal talent to take on leadership positions based on their merit irrespective of
age and tenure. The Bank also launched an internal portal to allow employees to seek
careers across departments and subsidiaries within the Axis Group.
Axis Bank has always believed that its long-term success depends on the
progress of communities and the people we serve. The Bank continues to play an active part
in extending credit to the economically active but under-banked rural population,
particularly women, through its retail microfinance initiative 'Axis Sahyog'. Axis Bank
Foundation, in its 13th year of operations, continues to work towards providing
sustainable livelihoods and creating value for the target communities through its various
integrated rural skill development and educational programmes.
During the year, 'Axis Dil Se' - the Bank's CSR initiative in
partnership with 17000 ft Foundation, 108 schools in Leh and Kargil districts of Ladakh
were adopted by 20 senior Axis Bank leaders for a period of three years - completed its
second phase. Under this initiative, the Bank installed 'Digi Labs' in schools, which
enabled access to the digitised curriculum both for the students and the teachers. Also
during the year, the Bank played an active role in providing disaster relief to over 400
flood affected families in four regions in Kerala.
The Bank won the 'Excellence' certificate in Corporate Social
Responsibility category at the prestigious CII ITC Sustainability Awards 2018 and was
included in the prestigious FTSE4Good Emerging Index for the second consecutive year in
2018 in recognition of its Environmental, Social and Governance (ESG) practices.
In recent years, driven in part by some unexpected negative surprises
at the Bank, we have dented the trust of investors. We need to win it back. The only way
to win
it back is to have a business model, which sustains and generates
credible financial outcomes quarter after quarter over a long period of time. Our
aspiration is to deliver around 18% Return On Equity (ROE) on a sustainable basis. The
reduction in credit cost to below our long-term averages, portfolio choices driven by a
risk-adjusted returns framework and improvement in operational efficiency would be the key
drivers for RoE improvement over the next three years. Though it seems a tall order, the
Bank has delivered ROEs in excess of 18% few years back and hence we aspire to do it again
- on a sustainable and consistent basis.
India continues to be a fast-growing economy with significant
opportunities and possibilities. From the perspective of the financial industry as a
whole, the liquidity issues faced by some of the nonbanking financial companies and
housing finance companies over the last year can create some friction going ahead, but it
presents opportunities for banks. The banking industry has seen return of credit growth
and pricing power on account of shift in credit demand from NBFCs and bond markets back to
banks. Banks with a healthy capital position, NBFCs with a robust parentage and financial
intermediaries with significant market share are well placed to grow profitably, at a
faster pace than their peers in their respective industries. In this context, 'One Axis'
franchise with its presence across business segments is uniquely positioned to leverage
this opportunity and grow at a faster pace. Great product mix, vast physical footprint,
cutting-edge digital capabilities, robust corporate governance practices and one of the
most valuable brands in India - all these combined open many possibilities for the Axis
franchise in the near future.
I believe that Axis Bank is a great franchise with great culture and
great set of people.
If we execute well, we have the potential to improve our market share
rankings without sacrificing anything whatsoever on our credit and risk management
practices. While delivery of growth and profitability is important, sustainability forms
the foundation of the Bank's strategy. We want to build sustainability in our business
performance and operations with disciplined execution and conservatism at the core.
However, one thing that still concerns me is the level of control and confidence we have
on operational risk parameters. Any large bank will have a vast number of systems and
processes and to reach the level of efficiency, control and monitoring that we have in
mind will take time, but we are at it relentlessly everyday, improving bit by bit. We also
need to ensure that the quality of our wholesale book improves materially over the next
few years. We cannot afford to repeat what we went through in the last few years. That
would also require a change in how we think about risk and how we proactively manage it.
Another area of work would be the tone from top on compliance. We cannot compromise on
doing things right and doing them right all the time, even at the cost of losing business.
We need to do a better job of saying no to businesses and deals.
I would like to take this opportunity to thank my colleagues for
believing in Axis and the vision of the Bank. I am also deeply grateful to all the
customers and shareholders for standing by us and showing their faith in us all these
years.
Warm Regards,
Amitabh Chaudhry
MD & CEO
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Axis Bank Ltd
Directors Reports
The Board of Directors have the pleasure of presenting the 25th
Annual 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 year
ended 31st March 2019.
Financial Performance
The financial highlights for the year under review, are presented
below:
|
|
|
(द in crore) |
Particulars |
2018-19 |
2017-18 |
Growth |
Deposits |
548,471 |
453,623 |
21% |
Savings Bank Deposits |
154,129 |
148,202 |
4% |
Current Account
Deposits |
89,265 |
95,650 |
(7%) |
Advances |
494,798 |
439,650 |
13% |
Retail Advances |
245,812 |
206,464 |
19% |
Non-retail Advances |
248,986 |
233,186 |
7% |
Total Assets/Liabilities |
800,997 |
691,330 |
16% |
Net Interest Income |
21,708 |
18,618 |
17% |
Other Income |
13,130 |
10,967 |
20% |
Fee Income |
10,127 |
8,867 |
14% |
Trading Profit(1) |
971 |
1,617 |
(40%) |
Misc. Income |
2,032 |
483 |
320% |
Operating Expenses |
15,833 |
13,990 |
13% |
Operating Profit |
19,005 |
15,595 |
22% |
Provision for Tax |
2,297 |
(154) |
- |
Other Provisions and Write
offs |
12,031 |
15,473 |
(22%) |
Net Profit |
4,677 |
276 |
- |
Balance in Profit and Loss
account brought forward from previous year |
23,043 |
24,448 |
(6%) |
Amount Available For
Appropriation |
27,720 |
24,724 |
12% |
Appropriations |
|
|
|
Transfer to Statutory
Reserve |
1,169 |
69 |
- |
Transfer (from)/to
Investment Reserve |
(103) |
103 |
- |
Transfer to Capital Reserve |
125 |
102 |
22% |
Transfer to Reserve Fund |
1 |
2 |
(50%) |
Dividend paid (includes tax
on dividend) |
- |
1,405 |
|
Transfer to Investment
Fluctuation reserve |
600 |
- |
|
Surplus carried over to
Balance Sheet |
25,928 |
23,043 |
12% |
(1) Excluding Merchant Exchange Profit
Key Performance Indicators
Key Performance Indicators |
2018-19 |
2017-18 |
Interest Income as a
percentage of working funds* |
7.38% |
7.15% |
Non-interest Income as a
percentage of working funds* |
1.76% |
1.71% |
Net Interest Margin |
3.43% |
3.44% |
Return on Average Net Worth |
8.09% |
0.53% |
Operating Profit as a
percentage of working funds* |
2.55% |
2.43% |
Return on Average Assets |
0.63% |
0.04% |
Profit per Employee** |
'7.61 lakhs |
'0.47 lakhs |
Business (Deposits less
inter-bank deposits + Advances) per employee** |
'16.53
crore |
'14.84
crore |
Net non-performing assets as
a percentage of net customer assets*** |
2.06% |
3.40% |
* Working funds represent average total assets
** Productivity ratios are based on average number of employees for the
year *** Customer assets include advances and credit substitutes Previous year figures
have been re-grouped wherever necessary
Capital & Reserves
During the year, the Bank allotted 51,05,935 equity shares of '2/- each
of the Bank, pursuant to exercise of stock options by some of the Whole Time
Directors/Employees of the Bank and that of its subsidiary companies, under the various
Employee Stock Option Scheme(s).
Pursuant to the said allotments, the total issued and paid-up equity
share 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 31st
March 2019, was 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) |
13,68,87,639 |
5.32 |
2 |
Life Insurance Corporation
of India (LIC) |
27,05,83,548 |
10.52 |
3 |
General Insurance
Corporation of India |
3,40,62,729 |
1.32 |
4 |
The New India Assurance
Company Limited |
2,05,91,585 |
0.80 |
5 |
National Insurance Company
Limited |
5,49,681 |
0.02 |
6 |
The Oriental Insurance
Company Limited |
49,97,520 |
0.19 |
7 |
United India Insurance
Company Limited |
3,24,076 |
0.01 |
|
FOREIGN INVESTORS |
|
|
8 |
Overseas Investors
(including FIIs/OCBs/NRIs) |
1,33,62,98,583 |
51.95 |
9 |
Foreign Direct Investment
(GDR) |
6,83,38,285 |
2.66 |
|
DOMESTIC FINANCIAL
INSTITUTIONS |
|
|
10 |
Financial Institutions /
Mutual Funds / Banks / NBFC / AIF |
44,42,47,174 |
17.27 |
11 |
Others |
25,47,64,051 |
9.94 |
|
Total |
2,57,16,44,871 |
100.00 |
The said equity shares of the Bank are listed on National Stock
Exchange of India Ltd. (NSE) and BSE Ltd. (BSE). The Unsecured, Redeemable,
Non-Convertible, Subordinated, Perpetual Debentures issued by the Bank, on a private
placement basis are listed on NSE and BSE. The Bonds issued by the Bank under the MTN
programme on a private placement basis are listed on Singapore Stock Exchange and the
Green Bonds issued by the Bank are listed on London Stock Exchange. The Global Depository
Receipts (GDR) issued by the Bank are listed on London Stock Exchange.
The Bank has paid the listing fees to the said Stock Exchanges, for the
financial year 2018-19.
Dividend
In terms of Regulation 43A of the Securities and Exchange Board of
India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing
Regulations"), the Bank has formulated and adopted a Dividend Distribution Policy
with the objective of providing clarity to its stakeholders on the profit distribution
strategies of the Bank. During the year, the said Policy has been reviewed by the Board of
Directors of the Bank and hosted on the website of the Bank at https://www.axisbank.com/
shareholders-corner/corporate-governance/Compliance-Report.
The Diluted Earnings Per Share (EPS) of the Bank for the financial year
2018-19 stood at '18.09 per equity share of '2/- each as compared to '1.12 per equity
share of '2/- each in the previous financial year. In view of the overall performance of
the Bank and with the objective of rewarding the Shareholders of the Bank with cash
dividends, while retaining capital to maintain a healthy capital adequacy ratio to support
future growth, the Board of Directors of the Bank at its meeting held on 25th
April 2019, recommended a dividend of '1/- per equity share of '2/- each for the financial
year 2018-19, as compared to Nil Dividend for the financial year 2017-18, in terms of the
Dividend Distribution Policy of the Bank. The said increase in EPS reflects the Bank's
confidence 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 will
remain closed from Saturday, 6th July 2019 to Saturday, 20th July
2019 (both days inclusive) for the purpose of the 25th Annual General Meeting
of the Shareholders of the Bank to be held on Saturday, 20th July 2019 and to
determine the names of the Members who would be entitled to dividend, if any, declared by
the Bank, for the financial year ended 31st March 2019.
The Record Date for payment of the said dividend, if approved by the
Members at the 25th Annual General Meeting, has been fixed on Friday, 5th
July 2019. The said dividend shall be paid to those Members whose name appears on the
Register of Members of the Bank/ the Statements of Beneficial Ownership as received from
the 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, were
rated "CRISIL AAA" by CRISIL Ltd. and "ICRA AAA" by ICRA Ltd.
The Bonds issued by the Bank under the MTN programme, on a private
placement basis, during the financial year 2018-19, were rated "BBB" by Fitch
Ratings, "BBB" by Standard & Poor's, "Baa3" by Moody's.
The details of all credit ratings obtained by the Bank along with any
revisions thereto, during the financial year 2018-19, for all the debt instruments
outstanding as on 31st March 2019, is disclosed in the Corporate Governance
Report, forming part of this report.
Board of Directors
During the year, the following changes took place in the composition of
the Board of Directors ("the Board") of the Bank:
Shri Prasad Menon ceased to be an Independent Director of the
Bank, with effect from the close of business hours on 8th October 2018, upon
completion of the maximum permissible tenure of 8 (eight) continuous years, under Section
10A (2A) of the Banking Regulation Act, 1949. The Board acknowledges the invaluable
contributions rendered by Shri Prasad Menon during his tenure as an Independent Director
of the Bank and places on record its deep appreciation for the insightful perspectives and
suggestions provided by him at the meetings of the Board/Committees of the Bank.
Pursuant to the recommendation of the Nomination and
Remuneration Committee ("NRC"), the Board at its meeting held on 2nd
November 2018, approved the appointment of Shri Girish Paranjpe as an Independent Director
of the Bank, for a period of 4 (four) consecutive years, with effect from 2nd
November 2018 upto 1st November 2022 (both days inclusive), subject to the
approval of the Shareholders of the Bank. The said appointment was approved by the
Shareholders of the Bank through Postal Ballot on 17th January 2019. During the
said period, Shri Girish Paranjpe shall not be liable to retire by rotation, in terms of
the provisions of Section149(13) of the Companies Act, 2013.
Shri V. Srinivasan, Deputy Managing Director of the Bank retired
from 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 of
business 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 the
Bank. The Board acknowledges the invaluable contributions rendered by Shri V. Srinivasan
during his tenure as the Deputy Managing Director of the Bank and places on record its
deep appreciation for the insightful perspectives and suggestions provided by him during
the deliberations at the meetings of the Board/ Committees of the Bank.
Smt. Shikha Sharma, Managing Director & CEO of the Bank
retired 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 31st
December 2018.
During her tenure as the Managing Director & CEO, the Bank turned
into a full-fledged financial institution by offering services to both corporate and
retail consumers. The seamless retailisation of the Bank, achieved under her tenure, was
remarkable and has led to a significant diversification of the Bank's balance sheet. The
Board acknowledges the leadership and the invaluable contributions rendered by Smt. Shikha
Sharma during her tenure as the Managing Director & CEO of the Bank and places on
record its deep appreciation for the insightful perspectives and suggestions provided by
her at the meetings of the Board/Committees of the Bank.
Pursuant to the recommendation of the NRC, the Board at its
meeting held on 9th July 2018, shortlisted the candidature of Shri Amitabh
Chaudhry for the post of the Managing Director & CEO of the Bank, with effect from 1st
January 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 Amitabh
Chaudhry as the Managing Director & CEO, of the Bank, for a period of 3 (three) years,
with effect from 1st January 2019 upto 31st December 2021 (both days
inclusive) and to the terms and conditions relating to the said appointment, including
remuneration.
In order to facilitate smooth transition and help Shri Amitabh Chaudhry
familiarize with the business and operations of the Bank, the Board at its meeting held on
2nd November 2018, approved the appointment of Shri Amitabh Chaudhry, as the
Managing Director (Designate), in executive position of the Bank, with effect from 19th
November 2018 upto 31st December 2018 (both days inclusive).
Thereafter, pursuant to the approval of the RBI and on the
recommendation of the NRC, the Board at its meeting held on 8th December 2018,
approved the appointment of Shri Amitabh Chaudhry as the Managing Director & CEO of
the Bank, for a period of 3 (three) years, with effect from 1st January 2019 up
to 31st December 2021 (both days inclusive) and the terms and conditions
relating to the said appointment, including remuneration. The said appointment of Shri
Amitabh Chaudhry as the Managing Director & CEO of the Bank and the terms and
conditions in respect thereof, including remuneration, was approved by the Shareholders of
the Bank, through Postal Ballot on 17th January 2019.
Pursuant to the outcome of the performance evaluation and the
recommendation of the NRC, the Board at its meeting held on 8th December 2018,
had approved the re-appointment of the following Independent Directors of the Bank, for
their second term, subject to approval of the Shareholders of the Bank:
a) Prof. Samir K. Barua as an Independent Director of the Bank, with
effect from 1st April 2019 upto 21st July 2019 (both days
inclusive);
b) Shri Som Mittal as an Independent Director of the Bank, with effect
from 1st April 2019 upto 21st October 2019 (both days inclusive);
and
c) Shri Rohit Bhagat as an Independent Director of the Bank, with
effect from 1st April 2019 upto 15th January 2021 (both days
inclusive).
The said re-appointment of Prof. Samir K. Barua, Shri Som Mittal and
Shri Rohit Bhagat were approved by the Shareholders of the Bank, through Postal Ballot on
17th January 2019. During the said period, Prof. Samir K. Barua, Shri Som
Mittal and Shri Rohit Bhagat shall not be liable to retire by rotation, in terms of the
provisions of Section 149(13) of the Companies Act, 2013.
As part of the succession planning process of the Bank and
pursuant to the recommendation of the NRC, the Board at its meeting held on 8th
December 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 3rd
August 2019 (both days inclusive) i.e. for the remainder of his existing term as the
Executive Director of the Bank.
In view of the vacancy that would be caused by the expiry of
tenure 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 succession
planning process of the Bank and pursuant to the recommendation of the NRC, the Board at
its meeting held on 12th March 2019 approved the appointment of Shri Rakesh
Makhija 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 (both
days inclusive), subject to approval of the RBI and the Shareholders of the Bank.
In terms of Section 152 of the Companies Act, 2013, Smt. Usha
Sangwan is liable to retire by rotation at the ensuing AGM and being eligible has offered
herself for re-appointment.
Pursuant to the recommendation of the NRC, the Board at its
meeting held on 22nd May 2019, approved the re-appointment of Shri Rajiv Anand
as 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 reappointment,
including remuneration, subject to the approval of the RBI and the Shareholders of the
Bank. During the said period, Shri Rajiv Anand, shall be liable to retire by rotation.
Pursuant to the recommendation of the NRC, the Board at its
meeting held on 22nd May 2019, approved the re-appointment of Shri Rajesh
Dahiya 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 reappointment,
including remuneration, subject to the approval of the RBI and the Shareholders of the
Bank. During the said period, Shri Rajesh Dahiya shall be liable to retire by rotation.
Pursuant to the recommendation of the NRC, the Board at its
meeting held on 22nd May 2019, approved the appointment of Shri Pralay Mondal,
Group Executive (Retail Banking) as a Director of the Bank and as the Whole Time Director
designated as "Executive Director (Retail Banking)" of the Bank, for a period of
3 (three) years, with effect from 1st August 2019 upto 31st July
2022 (both days inclusive) and the terms and conditions relating to the said appointment,
including remuneration, subject to the approval of the RBI and the Shareholders of the
Bank. 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 the
Board of Directors of the Bank. The composition of the Board of Directors of the Bank is
in compliance with the applicable norms.
The ordinary resolutions in respect of the appointment / re-appointment
of the Directors, as aforesaid, have been included in the Notice convening the 25th
Annual General Meeting of the Bank, to be held on Saturday, 20th July 2019. The
brief profile and details of the remuneration last drawn by the said Directors, have been
annexed to the said Notice.
Selection and Appointment of Directors & Other Key Officials
The selection and appointment of Directors and other Key officials of
the Bank is done in accordance with the relevant provisions of the Companies Act, 2013,
the relevant Rules made thereunder, the Banking Regulation Act, 1949, the Guidelines
issued by the RBI and the relevant provisions of the Listing Regulations relating to
Corporate Governance (as amended), from time to time.
The Bank has formulated and adopted a Succession Planning Policy (the
Policy), for appointment of its Directors and other Key Officials. The objectives of the
Policy is to assess, identify and nominate suitable candidates to fill vacancies that may
arise for positions of Directors and other Key Officials of the Bank, to plan for
succession of the said roles and any vacancies that may arise out of impending move or
retirement or resignation or sudden exit or for any reason whatsoever in such roles,
incumbent or named successors, significant changes in role accountabilities, substantive
changes in the business parameters and changes to the role holder or successor's
aspiration.
The Policy also seeks to identify the competency requirements for the
said positions, identify potential candidates and develop required competencies through
planned training, development and learning initiatives and to ensure systematic and
long-term development of personnel for taking higher roles and responsibilities at the
senior management levels at the Bank or that of its subsidiary companies, which may arise
due to impending move or retirement or resignation or sudden exit or for any reason
whatsoever, of the role, incumbent or named successors.
The Bank adheres to the process and methodology prescribed by the RBI
in respect of the 'Fit & Proper' criteria as applicable to Private Sector Banks,
signing of deed of covenants which binds the Directors to discharge their responsibilities
to the best of their abilities, individually and collectively in order to be eligible to
be appointed/re-appointed as a Director of the Bank. The prescribed declarations given by
the Directors other than that of the Members of the NRC are placed before the NRC and the
declarations given by the Members of the NRC are placed before the Board, for its review
and noting. The said declarations are obtained from all the Directors on an annual basis
and also at the time of their appointment / re-appointment, in compliance with the said
laws. An assessment on whether the Directors fulfil the said criteria is also carried out
by the NRC and the Board on an annual basis and before considering their candidature for
re-appointment.
The NRC also reviews the structure, size, composition of the Board, the
regional and industry experience, track record, expertise and other relevant information
and documents of the Directors before making appropriate recommendations to the Board with
regard to their appointment / re-appointment, terms and conditions relating to the such
appointment/re-appointment, including remuneration, designed to enhance the Board's
effectiveness.
The NRC identifies potential candidates from diverse backgrounds
including but not limited to accountancy, agriculture and rural economy, banking,
co-operation, economics, finance, law, small-scale industry, information technology, core
industries, infrastructure sector, payment and settlement systems, human resource, risk
management and business management, thus providing the Board with Members who have special
knowledge or practical experience and requisite set of skills, to serve the diverse
business interests of the Bank.
Declaration of Independence
All the Independent Directors of the Bank have given their respective
declarations stating that they meet the criteria prescribed for independence under the
applicable 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, Shri
Amitabh Chaudhry, the Managing Director & CEO of the Bank, was appointed as the Key
Managerial Personnel of the Bank, with effect from 1st January 2019, under
Section 203(1) of the Companies Act, 2013.
In terms of Section 203(1) of the Companies Act, 2013, Shri Amitabh
Chaudhry, Managing Director & CEO, Shri Jairam Sridharan, Group Executive & Chief
Financial Officer and Shri Girish V. Koliyote, Company Secretary are the Key Managerial
Personnel of the Bank.
Board Performance Evaluation
The Companies Act, 2013 and the Listing Regulations relating to
Corporate Governance contains provisions on evaluation of the performance of the Board,
its 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 performance
of the Board, its Committees, its individual Directors and its Chairperson and the
criteria for the said performance evaluation. The manner in which the said performance
evaluation has been conducted is explained in the Report on Corporate Governance, which
forms part of this report.
Meetings
The schedule in respect of the meetings of the Board / Committees
thereof to be held during the next financial year and for the ensuing Annual General
Meeting is circulated in advance to the Members of the Board. During the year, 12 meetings
of the Board were held and the gap between the said meetings did not exceed the limit of
120 days, as prescribed under the relevant provisions of the Companies Act, 2013, the
relevant Rules made thereunder and the Listing Regulations relating to Corporate
Governance.
Audit Committee
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 of
this report.
Remuneration Policy
The Bank has formulated and adopted a Comprehensive Remuneration Policy
for its Directors, Key Managerial Personnel and other Employees, in terms of the relevant
provisions of Section 178 of the Companies Act, 2013, the relevant Rules made thereunder
and the Listing Regulations relating to Corporate Governance. During the year, the said
Policy was reviewed by the Board of Directors of the Bank. The details of the said
Remuneration Policy have been disclosed in the Report on Corporate Governance, which forms
part of this report. The said Policy has been hosted on the website of the Bank at https://www.axisbank .
com/shareholders-corner/corporate-governance/Compliance-Report.
Whistle Blower Policy and Vigil Mechanism
The details of the Whistle Blower Policy and Vigil Mechanism have been
disclosed in the Report on Corporate Governance, which forms part of this report.
Subsidiaries
As on 31st March 2019, the Bank has the following eleven
unlisted subsidiary companies and one step down subsidiary;
i) Axis Asset Management Company Ltd. undertakes the activities of
managing the mutual fund business.
ii) Axis Mutual Fund Trustee Ltd. acts as the trustee for the mutual
fund business.
iii) Axis Capital Ltd. provides services relating to investment
banking, equity capital markets, institutional stock broking, mergers and acquisition
advisory etc.
iv) Axis Finance Ltd. is an NBFC and carries on the activities of
corporate and structural lending, loan against property etc.
v) Axis Securities Ltd. is in the business of marketing of credit cards
and retail asset products (Discontinued its non - broking business w.e.f. 28th
March 2019) and retail broking services.
vi) A.TREDS Ltd. is engaged in the business of facilitating financing
of trade receivables.
vii) Axis Bank UK Ltd. is the banking subsidiary of the Bank in the
United Kingdom and undertakes the activities of banking.
viii) Axis Trustee Services Ltd. is engaged in trusteeship activities,
acting as debenture trustee and as trustee to various securitisation trusts.
ix) Freecharge Payment Technologies Private Ltd is in the business of
providing merchant acquiring services, payment aggregation services, payment support
services, and business correspondent to a Bank/Financial Institution, distribution of
Mutual Funds.
x) Accelyst Solutions Private Ltd. is in the business of providing
Online marketing and sales promotion solutions, providing facilities to recharge online
prepaid, postpaid mobile phones connections, DTH connections and data cards etc,
distribution of mutual fund & insurance services.
xi) Axis Private Equity Ltd. primarily carries on the activities of
managing equity investments and provides venture capital support to businesses.
xii) Axis Capital USA, LLC. is a wholly owned subsidiary of Axis
Capital Limited incorporated in USA and provides financial services relating to equity
capital market, institutional stock broking to institutional investors in USA.
In accordance with the provisions of Section 129(3) of the Companies
Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, as amended, the Bank
has prepared its consolidated financial statements including that of all its subsidiary
companies, which forms part of this report. The financial position and performance of each
of the said subsidiary companies are given in the statement containing the salient
features of the financial statements of the said subsidiary companies of the Bank, which
is annexed to this report.
In accordance with the third proviso to Section 136(1) of the Companies
Act, 2013, the Annual Report of the Bank, containing therein its standalone financial
statements and the consolidated financial statements and all other documents required to
be 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, the
audited annual accounts of each of the said subsidiary companies of the Bank have been
hosted 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 said
financial statements may write to the Company Secretary at the Registered Office of the
Bank. Further, please note that the said financial statements will also be available for
inspection by the shareholders of the Bank and Trustees of Debenture holders at the
Registered Office of the Bank during business hours from 11.00 a.m. to 1.00 p.m. on all
working days except Saturdays, Sundays, Bank Holidays and National Holidays.
Related Party Transactions
During the year, the Bank has not entered into any materially
significant transactions with its Promoters, Directors, Management, Subsidiaries or
Relatives of the Directors/Management, which could lead to potential conflict of interest
between the Bank and these parties, other than transactions entered into in the ordinary
course of its business.
Transactions entered into by the Bank with related parties in the
normal course of its business were placed before the ACB. There are no material
transactions entered into with related parties. There were no transactions with related
parties, which were not in the normal course of the business of the Bank, nor were there
any 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 all
related party transactions, entered pursuant to the omnibus approval so granted, is placed
before the ACB for their review. The Bank has developed a Standard Operating Procedure for
the purpose of identifying and monitoring such transactions. During the year, the Policy
on Related Party Transactions has been reviewed by the Board of Directors of the Bank and
the same has been hosted on the website of the Bank at https://www.axisbank.com/shareholders-corner/corporate-governance/Compliance-Report ,
in terms of the Listing Regulations relating to Corporate Governance.
Employee Stock Option Plan (ESOP)
Since the financial year 2000-01, the Bank has formulated and adopted
Employee Stock Option Schemes (ESOS) for the benefit of the eligible Employees/Managing
Director & CEO and Whole Time Directors of the Bank and that of its subsidiary
companies ("eligible Employees/Directors"), in terms of the Securities and
Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 / the Securities and Exchange Board of India (Share Based Employee
Benefits) Regulations, 2014, as amended. The objective of the said ESOS is to enhance
employee motivation, enable employees to participate, directly or indirectly, in the
long-term growth and financial success of the Bank, to act as a retention mechanism by
enabling employee participation in the business of the Bank as its active stakeholder and
to usher an 'owner- manager' culture.
During the year under review, the Shareholders of the Bank, by means of
a special resolution, passed through Postal Ballot on 1 7th January 2019,
approved the creation, issue and allotment of additional 2,50,00,000 stock options
convertible into 2,50,00,000 equity shares of '2/- each of the Bank, to the eligible
Employees/Directors.
In terms of the said ESOS, as on date, up to 26,50,87,000 stock options
are available for grant by the Bank to the eligible Employees/Directors. The eligibility
and number of stock options to be granted to such eligible Employees/Directors is
determined on the basis of the outcome of their performance evaluation and such other
criteria 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 Shareholders
of 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 by
the Bank upto 29th April 2004, the option conversion price was set at the
average of the daily high-low price of the Bank's equity shares traded during the 52 weeks
preceding the date of approval of grant by the Board / NRC, prevailing on the Stock
Exchange which had the maximum trading volume of the Bank's equity share during the said
period. Thereafter, under the third and subsequent ESOS of the Bank and with effect from
the said grants made by the Bank on or after 10th June 2005, the stock option
conversion price was changed to the latest available closing price of the equity shares of
the Bank, prevailing on the Stock Exchange which recorded higher trading volume, on the
day prior to the date of approval of grant by the NRC.
Pursuant to the sub-division of the equity shares of the Bank, the
Shareholders of the Bank at the 20th Annual General Meeting held on 27th
June 2014, also approved the consequent adjustments to the stock options granted to the
eligible Employees/Directors, under the various ESOS of the Bank, such that all stock
options 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 the
record date fixed for the purpose of sub-division, were proportionately converted into
options bearing equity shares of the face value of '2/- each of the Bank and the grant
price of all the outstanding stock options (unvested, vested and unexercised) as on the
said record date for the purpose of sub-division were proportionately adjusted by dividing
the existing grant price by 5. The record date for the said sub-division was 30th
July 2014.
Since 24th February 2001 up to 27th March 2019,
the NRC / Board had out of the said 26,50,87,000 stock options, approved the grant of
27,01,13,700 stock options (including 2,69,83,897 stock options which had lapsed and were
forfeited) 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% on
each of three successive anniversaries following the date of respective grant, subject to
standard vesting and other conditions as set out in the respective ESOS of the Bank. The
said stock options are required to be exercised by the concerned eligible
Employees/Directors, within a period of three / five years, from the date of its
respective vesting, in terms of the respective ESOS of the Bank.
As of 31st March 2019, out of the said 27,01,13,700 stock
options so granted 24,54,77,475 stock options have been vested, out of which 20,24,96,929
stock options have been exercised and the balance 1,71,38,224 stock options remain
unexercised. Further 2,34,94,650 stock options remained unvested and 2,69,83,897 stock
options had been treated as lapsed and forfeited.
There were no material changes in the ESOS of the Bank during the
financial year 2018-19 and the same is in compliance with the relevant provisions of the
SEBI (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 the
website of the Bank at https://www.axisbank.com/shareholders-corner/corporate-
governance/compliance-report.
Corporate Governance
The Bank is committed to achieving and adhering to the highest
standards of Corporate Governance and it constantly benchmarks itself with best practices,
in this regard.
The Report on Corporate Governance for the financial year 2018-19 along
with the Certificate issued by the Statutory Auditors of the Bank confirming compliance
with the mandatory requirements relating to Corporate Governance as stipulated under
Chapter IV of the Listing Regulations, forms part of this report.
The Corporate Governance framework of the Bank incorporates all the
mandatory requirements as prescribed in the Listing Regulations. The Bank has also adopted
the non-mandatory requirements as recommended in the Listing Regulations, detailed in the
Report 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 constitution
of Internal Complaints Committee under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013. The information relating to complaints
received and redressed during the financial year 2018-19 is disclosed in the Report on
Corporate Governance, which forms part of this report.
Directors' Responsibility Statement
The Board of Directors of the Bank hereby declares and confirms the
following statements, in terms of Section 134(3)(c) of the Companies Act, 2013:
a) That in the preparation of the annual accounts for the financial
year ended 31st March 2019, the applicable accounting standards had been
followed along with proper explanation relating to material departures.
b) That such accounting policies as mentioned in Note no. 17 of the
Notes to accounts of the Financial Statements have been selected and applied consistently
and judgments and estimates have been made that are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Bank as at 31st March 2019
and of the profit of the Bank for the year ended on that date.
c) That proper and sufficient care has been taken for the maintenance
of adequate accounting records in accordance with the provisions of the Companies Act,
2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and
other irregularities.
d) That the annual accounts have been prepared on a going concern
basis.
e) That internal financial controls to be followed by the Bank, were in
place and that the same were adequate and were operating effectively.
f) That proper system to ensure compliance with the provisions of all
applicable laws was in place and the same were adequate and operating effectively.
Annual Return
In accordance with the Companies (Amendment) Act, 2017, read with
Section 134(3) of the Companies Act, 2013, the Annual Return, under Section 92 (3) of the
Companies 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 Annual
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, as
amended, in respect of Directors / Employees of the Bank, is provided as an annexure to
this report.
As on 31st March 2019, the Bank had 57 employees who were
employed throughout the year and were in receipt of remuneration of more than '1.02 crore
per annum and 19 employees of the Bank who were employed for part of the year and were in
receipt of remuneration of more than '8.50 lakh per month.
In terms of Section 136 of the Companies Act, 2013, the copy of the
financial statements of the Bank, including the consolidated financial statements, the
auditor's report and relevant annexures to the said financial statements and reports are
being sent to the Members and other persons entitled thereto, excluding the information in
respect of the said 76 employees of the Bank containing the particulars as specified in
Rule 5 (2) of the said Rules, which is available for inspection by the Members at the
Registered Office of the Bank during 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 of the Bank at its Registered Office.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo
Conservation of Energy & Technology Absorption:
Energy and natural resource conservation have been focus areas for the
Bank and conscious efforts are being made towards improving energy performance, year on
year.
For Sustainable Development, Energy efficiency initiatives have been
implemented across several branches and offices through energy and resource conservation
projects.
The Bank ensures strict compliance with all statutory requirements and
voluntarily undertakes several sustainable steps in order to contribute towards a better
environment.
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, Solapur,
Maharashtra.
Implementation of Centralised Energy Management System (CEMS) to
monitor and control energy consumption.
Conversion of conventional lighting to LED in 250 plus number of
Locations with premises size more than 4000 sq.ft. & implementation of LED lights in
all new Branches/Offices.
Conversion of Food/Wet waste at Axis House, Mumbai, into manure
through compost machine for use in landscaping/ gardening.
Maintenance of unity power factor through APFC panels in auto
mode for optimum use of power at Axis House Mumbai and Noida.
Installation of Motion sensors for workstation and common area
lighting at Axis House, Mumbai.
Re-cycling of Dry waste at Axis House, Mumbai, into stationery
items like notepads.
Daily re-cycling of 150 KL of water through Sewage Treatment
Plant at Axis House, Mumbai.
Reduction of water consumption at Axis House, Mumbai through use
of aerators.
Rain Water Harvesting of ~2000 KL of water yearly, at Axis
House, Mumbai.
Saving of water through use of Bio-blocks in urinals at Select
Large Offices.
Installation of sensors in washbasins to optimise flow of water
at Select Large Offices.
Foreign Exchange Earning and Outgo:
The provisions relating to Section 134(3)(m) of the Companies Act, 2013
on particulars relating to Foreign Exchange Earning and Outgo are not applicable to a
Banking 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 under
review, as stipulated under Regulation 34(2)(e) of the Listing Regulations, is provided as
an annexure to this report.
Risk Management
Pursuant to Regulation 21 of the Listing Regulations, the Bank has
constituted a Risk Management Committee. The details of the said Committee and its terms
of reference are set out in the Report on Corporate Governance, which forms 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 Risk
Management Framework, it has delegated its powers relating to monitoring and reviewing of
risks associated with the business of the Bank to the said Committee. The details of the
Risk Management Framework and issues related thereto have been explained in the
Management's Discussion and Analysis Report, which is provided as an annexure to this
report.
Business Responsibility Report
In terms of Regulation 34(2)(f) of the Listing Regulations, top 500
listed entities based on their market capitalisation as on 31st March every
year, are required to submit their Business Responsibility Report (BRR) as a part of their
Annual Report. The Bank's BRR describing the initiatives taken by the Bank from an
Environmental, Social and Governance perspective has been hosted on the website of the
Bank at https://www.axisbank.com/shareholders-corner/shareholders-information/business-responsibility-report .
Any Member interested in obtaining a copy of the BRR may write 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, 2013
on particulars of loans, guarantees and investments are not applicable to a Banking
Company, 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 Companies
Act, 2013, read with the Companies (Corporate Social Responsibility) Rules, 2014, as
amended.
The brief outline of the CSR Policy, including overview of the programs
undertaken by the Bank, the composition of the CSR Committee, average net profits of the
Bank for the past three financial years, prescribed CSR expenditure and details of the
amounts spent by the Bank on CSR activities during the year under review, have been
provided as an annexure to this report.
During the year, the said Policy has been reviewed by the Board and the
same 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 to
implement Indian Accounting Standards (Ind AS) and prepare standalone and consolidated Ind
AS financial statements with effect from 1st April 2018. Banks were also
required to report the comparative financial statements for the financial year 2017-18, to
be published along with the financial statement for the year beginning 1st
April 2018. However, the RBI in its press release issued on 5th April 2018
deferred the applicability of Ind AS by one year (i.e. 1st April 2019) for
Scheduled Commercial Banks. Further, RBI in a circular issued on 22nd March
2019 has deferred the implementation of Ind AS, till further notice.
In line with the RBI guidelines on Ind AS implementation, the Bank has
a Steering Committee comprising members from the concerned functional areas, headed by the
Executive Director (Wholesale Banking). A quarterly progress report on the status of Ind
AS implementation in the Bank is presented to the Audit Committee of the Board. During the
FY 2016-17, the Bank had undertaken preliminary diagnostic analysis of the GAAP
differences between Indian GAAP vis-a-vis Ind AS.
The Bank has also identified and evaluated data gaps, processes and
system changes required to implement Ind AS. The Bank is in the advanced stage of
implementing necessary changes in its IT system and other processes. The Bank has been
holding workshops and training for its staff, which will continue in the current year. The
Bank has also submitted to RBI Proforma Ind AS financial statements for the six months
ended 30th September 2016 and three months ended 30th June 2017 and
for the first three quarters of FY 2018-19.
The Bank is also examining impact of Ind AS on business planning,
budgeting, taxation, capital planning and on capital adequacy. The Bank is also in the
process of preparation of proforma Ind-AS financial statements, for the year ended 31st
March 2019.
Statutory Auditor
At the 24th Annual General Meeting of the Shareholders of
the Bank held on 20th June 2018, M/s Haribhakti & Co. LLP, Chartered
Accountants, Mumbai (Membership Number 1 03523'W/W1 00048), were appointed as the
Statutory Auditors of the Bank to hold office as such from the conclusion of the 24th
Annual General Meeting until the conclusion of the 28th Annual General Meeting,
subject to the approval of the Reserve Bank of India and on such remuneration, as may be
approved by the ACB.
In terms of the relevant provisions of the Banking Regulation Act,
1949, the approval of the RBI is mandatory for appointment of Statutory Auditors of the
Bank every year. The Bank will obtain the requisite approval of RBI for the appointment of
M/s Haribhakti & Co. LLP as the Statutory Auditors of the Bank, for the financial year
2019-20.
In this regard, the Bank has received a certificate from the said
Statutory Auditors to the effect that the appointment, if made, would be in accordance
with the relevant provisions of Section 141 of the Companies Act, 2013.
As required under Regulation 33(1)(d) of the Listing Regulations, the
Statutory Auditors have confirmed that they have subjected themselves to the peer review
process of the Institute of Chartered Accountants of India (ICAI) and that they hold a
valid certificate issued by the Peer Review Board of ICAI.
There are no qualifications, reservations or adverse remarks made by
M/s Haribhakti & Co. LLP, Chartered Accountants, Statutory Auditors of the Bank, in
their report. Further, pursuant to Section 143(12) of the Companies Act, 2013, the
Statutory Auditors of the Bank have not reported any instances of frauds committed in the
Bank by its officers or employees.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the relevant provisions of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Bank appointed M/s BNP & Associates, Company Secretaries,
Mumbai, as the Secretarial Auditor of the Bank, for the financial year 2018-19. The
secretarial audit of the Bank was conducted in respect of the matters prescribed in the
said Rules and as set out in the Secretarial Audit Report for the financial year 201 8-19,
which is provided as an annexure to this report.
There are no qualifications, reservations or adverse remarks made by
the Secretarial Auditor of the Bank, in its report.
In terms of SEBI circular no CIR/CFD/CMD1/27/2019 dated 8th
February 2019, relating to Annual Secretarial Compliance Report, the Bank appointed M/s.
BNP & Associates, Company Secretaries, to conduct the audit of the Secretarial
Compliance for the financial year 2018-19. The Bank will submit the Annual Secretarial
Compliance Report to the Stock Exchanges within the prescribed time limit and host the
same on its website.
Significant and Material Order Passed by Regulators or Courts or
Tribunals Impacting the Going Concern Status and Operations of the Bank
During the financial year 2018-19, no significant or material order was
passed by any Regulator, Court or Tribunal against the Bank, which could impact its going
concern status or operations.
Adequacy of Internal Financial Controls Related to Financial Statements
The Board has inter alia reviewed the adequacy and effectiveness of the
Bank's internal financial controls relating to its financial statements.
The Board has discussed with the Management of the Bank the major
financial risk exposures and the steps taken by it to monitor and control such exposures,
overseen and reviewed the functioning of the Whistle Blower Mechanism (which is a part of
the Bank's Fraud Risk Management Policy) and the findings in respect of the investigations
conducted on frauds, which were material in nature and the actions taken by the
Management, 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 financial
year ended 31st March 2019, was placed before the Board of Directors at its
meeting held on 25th April 2019, in terms of Regulation 17(8) of the Listing
Regulations.
Material Changes and Commitments affecting the financial position of
the Bank
There are no material changes and commitments which affected the
financial position of the Bank, which occurred between the end of the financial year of
the Bank to which the financial statements relate and upto the date of this report.
Post adoption of the annual financial statements by the Board of
Directors, the Bank has classified an account in the sugar sector as non-performing per
instructions received from the RBI, with retrospective effect from 1st February
2016. As the Bank already held substantial provision against this account as on 31st
March 2019, no further provisioning is required due to change in the status of the
account.
Acknowledgements
The Board of Directors places on record its gratitude to the Reserve
Bank of India, Ministry of Corporate Affairs, Securities and Exchange Board of India,
other Statutory and Regulatory Authorities, Financial Institutions, Stock Exchanges,
Registrar and Share Transfer Agent, Debenture Trustees, Depositories and Correspondent
Banks for their continued support and guidance.
The Board also places on record its appreciation to the Shareholders of
the Bank for their continued support and to its valued customers for their continued
patronage.
The Board also expresses its deep sense of appreciation to all the
employees of the Bank for their strong work ethics, excellent performance,
professionalism, teamwork, commitment and initiatives which has led to the Bank
reinforcing its customer centric image and making commendable progress in today's
challenging environment.
|
For and on behalf of the Board
of Directors |
Place: New Delhi |
Dr. Sanjiv Misra |
Date: 22nd May
2019 |
Chairman |
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