A SUMMER TRAINNING PROJECT REPORT ON

Promotion of Products being imported by Sleek Marketing Pvt. Ltd.(with spcl. Reference to Point of Care Products for the Year 2010-11.)

A report submitted to U.P.Technical University for the partial Fulfillment of MBA Degree 2010-12

Submitted to:Prof. Hari Prakash Director MBA GNIT

Submitted BY: Sachin Kumar MBA III Sem. Roll No:1027270089

Greater Noida Institute of Technology (Management Institute) Code: 272 7, Knowledge Park-II, Greater Noida (U.P)

2010-12

CERTIFICATE

This is to certify that the SUMMER TRAINNING Project Report entitled TOPIC being submitted by Sachin Kumar for the partial fulfillment of the requirement of degree by U.P.Technical University, is a record of an independent work done by the researcher(sachin Kr.) under my guidance and supervision.

Prof. Hari Praksh

Director-MBA Guide Greater Noida Institute of Technology Noida. (Management Institute)-Code: 272

Concerned Faculty GNIT, Greater

DECLARATION

I, Sachin Kumar hereby declare that the

project report entitled

Promotion of Products being imported by Sleek Marketing Pvt. Ltd.(with spcl. Ref. to Point of Care Product for the year 2010-11) being submitted to the U.P.TECHNICAL UNIVERSITY for the partial fulfillment of the requirement for the degree of Master of Business Administration; is my own endeavors and it has not been submitted earlier to any institution/university for any degree.

Place: Greater Noida Kumar

sachin

Date:

Roll No:

ACKNOWLEDGEMENT

I would like to convey my sincere gratefulness to all those who gave me the opportunity to complete this project. I acknowledge the huge importance of this research and especially of this project undertaken. At the outset I would take the opportunity to express my sincere thanks to Prof. Mahapatra for providing me the opportunity to undertake and accomplish this research work. Im highly obliged to Ms.Tulika Sharma, project mentor, for her kind guidance. I am also thankful to Mr. Shekhar Anand, Manager Marketing; Sleek Marketing Pvt. Ltd for his untiring help, valuable guidance and kind supervision which were the main stream to bring this work in present shape. I wish to thank them for their constant guidance and support in the successful completion of this project report.

CERTIFICATE

This is to certify that the Summer Training Project Report entitled Working Capital Management being submitted by Ms.RAKSHA has worked in the Axis Bank under the able guidance and supervision of Mr. Mohit Singh Operation Head inAxis Bank.in partial fulfillment of the requirement for the degree of the Master of Business Administration from U. P. Technical University, Lucknow is an independent original research work done by her under my supervision and guidance.

TABLE OF CONTENT

S.NO

CONTENT

PAGE NO

1.

EXCUTIVE SUMMERY

2.

INTRODUCTION

3.

LITERATURE REVIEW

4.

OBJECTIVE OF STUDY

5.

RESEARCH METHODOLOGY

6.

SWOT ANALYSIS

7.

DATA ANALYSIS & DATA INTERPRETATION

8.

FINDING

9.

CONCLUSION

10.

LIMITATION

11.

BIBLIOGRAPHY

12.

ANNEXURE

ACKNOWLEDGMENT

ACKNOWLEDGMENT

I have benefited a lot from project during the third trimester of our course of MBA,this project has been a rewarding knowledge. I have got into the various aspect of AXIS BANK.

I take this opportunity to acknowledge the invaluable assistance of those people who helped me in successful completion of this project report. I am very thankful to Mr. Mohit Singh for his cooperation and support and provided me all the necessary aspects by this summer internship has successfully completed. I also thank my college and my mentor Ms. BarnaliSarkar for steering my confidence and capability for giving me insight into training by giving me exposure to the arena of competitive and real world. Last but not the least, I express my thanks to all the person and friends who always encourage me and provided me support at all times. I am thanks to my friend who always helped & guided me.

NAME RAKSHA MITTAL COURSE: MBA, III SEM ROLL NO: 1027270081

PREFACE
This project has been prepared in partial fulfilment for the degree of Masters of Business Administration.

A project is a work plan devised through investigation and analysis to achieve a set object within a specified time period. A student is assigned a topic and required to prepare a report after making a study of working of any organization. I was assigned to prepare a project report on Working Capital Management of AXIS BANK. Financial Management has emerged as interesting and exiting areas for academic studies as well as for the practical financial managers. Financial Management covers the decision taken by individuals or a business firm, which have financial implications. In case of corporate form of organization where there is a separation of ownership and management, as well as in other forms, the financial implications of decisions are evaluated in terms of maximization of the value of the firm. So the decision process is oriented towards the objective of maximization of wealth of shareholders as reflected in the market price of the share. Working Capital or net current assets is the excess of current assets over current liabilities. In a different perspective we can say Working Capital as that part of current assets financed by long term funds. All organizations have to carry Working Capital in one form or the other. The efficient management of Working Capital is important from the point of view of both liquidity and profitability. Poor management of Working Capital means that firms are unnecessary tied up in idle assets, hence, reducing the liquidity and also

reducing the ability to invest in productive assets such as plant and machinery so affecting the profitability.

INTRODUCTION

AXIS BANK - BRIEF HISTORY

1.1Introduction of axis bank: Commercial banking services which includes merchant banking, direct finance infrastructure finance, venture capital fund, advisory, trusteeship, forex, treasury and other related financial services. As on 31-Mar-2009, the Group has 827 branches, extension counters and 3,595 automated teller machines (ATMs). Axis Bank was the first of the new private banks to have begun operations in 1994, after the Government of India allowed new private banks to be established. The Bank was promoted jointly by the Administrator of the specified undertaking of the Unit Trust of India (UTI - I), Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and other four PSU insurance companies, i.e.

National Insurance Company Ltd., The New India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance Company Ltd. The Bank today is capitalized to the extent of Rs. 359.76 crores with the public holding (other than promoters) at 57.79%.The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. The Bank has a very wide network of more than 853 branches and Extension Counters (as on

30th June 2009). The Bank has a network of over 3723 ATMs (as on 30th June 2009) providing 24 hrs a day banking convenience to its customers. This is one of the largest ATM networks in the country. The Bank has strengths in both retail and corporate banking and is committed to adopting the best industry practices internationally in order to achieve excellence highly promising credit card business. UTI Bank promoted by India's pioneer mutual fund Unit Trust of India along with LIC, GIC and its four subsidiaries. 1999: UTI Bank and Citibank have launched an international cobranded Credit card. UTI Bank and Citibank have come together to launch an international co-branded credit card under the MasterCard umbrella. UTI Bank Ltd has inaugurated an off site ATM at Ashok Nagar here, taking the total number of its off site ATMs to 13.m 2000: The Bank has announced the launch of Tele-Depository Services for Its depository clients. UTI Bank has launch of `iConnect', its Internet banking Product. UTI Bank has signed a memorandum of understanding with equitymaster.com for e-broking activities of the site. Infinity.com financial Securities Ltd., an e-broking outfit is Typing up with UTI Bank for a banking interface. Geojit Securities Ltd, the first company to start online trading services, has signed a MoU with UTI Bank to enable investors to buy\sell demat stocks through the company's website. India bulls have signed a memorandum

of understanding with UTI Bank. UTI Bank has entered into an agreement with Stock Holding Corporation of India for providing loans against shares to SCHCIL's customers and funding investors in public and rights issues. ICRA has upgraded the rating UTI Bank's Rs 500 crore certificate of deposit programmed to A1+. UTI Bank has tied up with L&T Trade.com for providing customized online trading solution for brokers. 2001: UTI Bank launched a private placement of non-convertible debentures to rise up to Rs 75 crores. UTI Bank has opened two offsite ATMs and one extension counter with an ATM in Mangalore, taking its total number of ATMs across the country to 355. UTI Bank has recorded a 62 per cent rise in net profit for the quarter ended September 30, 2001, at Rs 30.95 crore. For the second quarter ended September 30, 2000, the net profit was Rs 19.08 crore. The total income of the bank during the quarter was up 53 per cent at Rs 366.25 crore. 2002: UTI Bank Ltd has informed BSE that Shri B R Barwale has resigned as a Director of the Bank w.e.f. January 02, 2002. A C Shah, formerchairman of Bank of Baroda, also retired from the banks board in the third quarter of last year. His place continues to be vacant. M Damodaran took over as the director of the board after taking in the reins of UTI. B S Pandit has also joined the banks board subsequent to the retirement of K G Vassal. UTI

Bank Ltd has informed that Shri Paul Fletcher has been appointed as an Additional Director Nominee of CDC Financial Service (Mauritius) Ltd of the Bank.And Shri Donald Peck has been appointed as an Additional Director (nominee of South Asia Regional Fund) of the Bank. UTI Bank Ltd has informed that on laying down the office of Chairman of LIC on being appointed as Chairman of

SEBI, Shri G N Bajpai, Nominee Director of LIC has resigned as a Director of the Bank. 2002: B Paranjpe & Abid Hussain cease to be the Directors of UTI Bank.UTI Bank Ltd has informed that in the meeting of the Board of Directors following decisions were taken: Mr Yash Mahajan, Vice Chairman and Managing Director of Punjab Tractors Ltd were appointed as an Additional Director with immediate effect. Mr N C Singhal former Vice Chairman and Managing Director of SCICI was appointed as an Additional Director with immediate effect. ABN Amro, UTI Bank in pact to share ATM. UTI Bank Ltd has informed BSE that a meeting of the Board of Directors of the Bank is

scheduled to be held on October 24, 2002 to consider and take on record the unaudited half yearly/quarterly financial results of the Bank for the half year/Quarter ended September 30, 2002. UTI Bank Ltd has informed that Shri J M Trivedi has been appointed as an alternate director to Shri Donald Peck with effect from November 2, 2002. 2003: UTI Bank Ltd has informed BSE that at the meeting of the Board of Directors of the company held on January 16, 2003, Shri R N Bharadwaj, Managing Director of LIC has been appointed as an Additional Director of the Bank with immediate effect.- UTI Bank, the private sector bank has opened a branch at Nellore. The bank's Chairman and Managing Director, Dr P.J. Nayak, inaugurating the bank branch at GT Road on May 26. Speaking on the occasion, Dr Nayak said. This marks another step towards the extensive customer banking focus that we are providing across the country and reinforces our commitment to bring superior banking services, marked by convenience and closeness to customers. -UTI Bank Ltd. has informed the Exchange that at its meeting held on June 25, 2003 the BOD have decided the following: 1) To appoint Mr. A T Pannir Selvam, former CMD of Union Bank of India and Prof. Jayanth Varma of the Indian Institute of Management, Ahmedabad as additional directors of the Bank with immediate effect. Further, Mr. Pannir Selvam will be the nominee director of the Administrator of the specified undertaking of the Unit Trust of India (UTI-I) and Mr. Jayanth Varma will be an Independent Director. 2) To

issue Non-Convertible Unsecured Redeemable Debentures up to Rs.100 crs, in one or more tranches as the Bank's Tier - II capital. -UTI has been authorized to launch 16 ATMs on the Western Railway Stations of Mumbai Division. -UTI filed suit against financial institutions IFCI Ltd in the debt recovery tribunal at Mumbai to recover Rs.85cr in dues. -UTI bank made an entry to the Food Credit Programme; it has made an entry into the 59 cluster which includes private sector, public sector, old private sector and co- operative banks. -Shri Ajeet Prasad, Nominee of UTI has resigned as the director of the bank. -Banks Chairman and MD Dr. P. J. Nayak inaugurated a new branch at Nellore.-UTI bank allots shares under Employee Stock Option Scheme to its employees. -Unveils pre-paitravel card 'Visa Electron Travel Currency Card' -Allotment of 58923 equity shares of Rs 10 each under ESOP. -UTI Bank ties up with UK govt fund for contract farm in -Shri B S Pandit, nominee of the Administrator of the Specified Undertaking of the Unit Trust of India (UTI-I) has resigned as a director from the Bank wef November 12, 2003. -UTI Bank unveils new ATM in Sikkim. 2004:Comes out with Rs. 500 mn Unsecured Redeemable Non- Convertible Debenture Issue, issue fully subscribed -UTI Bank Ltd has informed that Shri Ajeet Prasad, Nominee of the Administrator of the Specified Undertaking of the Unit Trust of India (UTI - I) has been appointed as an Additional Director of the Bank w. e. f. January 20, 2004.-UTI Bank opens new branch in Udupi-UTI

Bank, Geojit in pact for trading platform in Qatar -UTI Bank ties up with Shriram Group Cos -Unveils premium payment facility through ATMs applicable to LIC UTI Bank customers Metal junction (MJ)- the online trading and procurement joint venture of Tata Steel and Steel Authority of India (SAIL)- has roped in UTI Bank to start off own equipment for Tata Steel. DIEBOLD Systems Private Ltd, a wholly owned subsidiary of Diebold Incorporated, has secured a major contract for the supply of ATMs an services to UTI Bank -HSBC completes acquisition of 14.6% stake in UTI Bank for .6 m -UTI Bank installs ATM in Thiruvananthapuram -Launches Remittance Card' in association with Remit2India, a Web site offering money transfer services 2005: - UTI Bank enters into a banc assurance partnership with Bajaj Allianz General for selling general insurance products through its branch network. -UTI Bank launches its first Satellite Retail Assets Centre (SRAC) in Karnataka at Mangalore. 2006: -UBL sets up branch in Jaipur -UTI Bank unveils priority banking lounge

ACHIEVEMENTS
AXIS bank one of the biggest banks in private sector in India.As on the year ended March 31, 2006 the Bank had a net worth of Rs. 2872.19Crore with the public holding (other than promoters) at 56.65%. Net Profit for the year was up 44.98% to Rs 485.08 crores. At the end of April 2008, the Bank has a very wide network of more than 671 branch offices and Extension Counters. The Bank has a network of over 2764 ATMs. The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai.

Type Traded as

Public

- BSE: 532215 LSE: AXBC NSE: AXISBANK Banking, Financial services 1994

Industry Founded Headquarters Key people

- Mumbai, India Adarsh Kishore, Chairman Shikha Sharma MD & CEO

Products - Credit cards, consumer banking, corporate banking, finance and insurance, investment banking, mortgage loans, private banking, private equity, wealth management Revenue
[1]

198.26 billion (US$4.02 billion) (2011) 33.88 billion (US$687.09 million) (2011) US$ 40.121 billion (2010) Employees 21,640 (2010)

Net income AUM

[1]

Website

axisbank.com

MISION OF THE BANK Customer Service and Product Innovation tuned to diverse needs of individual and corporate clientele Continuous technology up gradation while maintaining human values. Progressive globalization and achieving international standards. Efficiency and effectiveness built on ethical practices. Values Customer Satisfaction through providing quality service effectively and efficiently 1. Smile, it enhances your face value" is a service quality stressed on 2. 3. Periodic Customer Service Audits Maximization of Stakeholder

CURRENT SITUATION OF THE BANK Today, more than a century after those tentative first steps, AXIS BANK fairy tale is not only going strong but blazing new standards, and that minuscule initial investment has grown by leaps and bounds to crores of rupees in wealth for AXIS BANK shareholders. The companys offerings are spread across the spectrum with service. Having succeeded in garnering the trust of almost onethird of Indias one billion populations and a strong management at the helm means axis will continue to dream big on its path of innovation. And millions of customer will savour the results, happily ever after.

STRUCTURE OF ORGANISATION

Chairman & Managing Director

Surendra Singh

Director

N. C. Singhal

Director

T. PannirSelvam

Director

J. R. Varma

Director

R. H. Patil

Director

Rama Bijapurkar

Director

R. B. L. Vaish

Director

S. B. Mathur

Director

M. V. Subbiah

Director

Ramesh Ramanathan

Director

BOARD OF DIRECTORS

DIRECTORS' RESPONSIBILITY STATEMENT The Board of Directors hereby declares and confirms that: The applicable accounting standards have been followed in the preparation of the annual accounts and proper explanations have been furnished, relating to material departures. Accounting policies have been selected, and applied consistently and reasonably, and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Bank and of the Profit & Loss of the Bank for the financial year ended 31 March 2007.

Proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the provisions of the Companies (Amendment) Act, 2000, for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities.

The annual accounts have been prepared on a going concern basis.

STATUTORY DISCLOSURE Considering the nature of activities of the Bank, the provisions of Section 217(1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption do not apply to the Bank. The Bank has, however, used information technology extensively in its operations. The statement containing particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the rule made there under, is given in an Annexure appended hereto and forms part of this report. In terms of Section 219(1) (iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Bank.

AUDITORS

M/s S. R. Batliboi& Co., Chartered Accountants, statutory auditors of the Bank since 2006 retire on the conclusion of the Thirteenth Annual General Meeting and are eligible for re-appointment, subject to the approval of Reserve Bank of India, and of the shareholders. As recommended by the Audit Committee, the Board has proposed the appointment of S.R. Batliboi& Co., Chartered Accountants as statutory auditors for the financial year 2007-08. The shareholders are requested to consider their appointment.

PERFORMANCE OF THE ORGANISATION

Net interest income up 45.34% to Rs.1, 567.08 Crores Network of branches and extension counters increased from 450 to 561. Total number of ATMs went up from 1891 to2341. Net NPA ratio as a percentage of net customer assets down to0.61% from 0.75%. Capital Adequacy Ratio stood at11.57% as against the minimum regulatory norm of 9%. Proposed Dividend up from 35% to45%

Fee & Other income up 60.72 earning per share (Basic) increased from Rs. 17.45 to Rs.23.50. % to Rs. 824.39 Crores. Deposits up 46.55% to Rs. 58,785.60 Crores Advances up 65.26% to Rs. 36,876.48 Crores. Retail assets up 37.56% to Rs. 8,927.54 Crores. Demand deposits up 46.11% to Rs. 23,430.19 Crores. Profit after tax up 35.86% to Rs. 659.03 Crores.

Both business and earnings continued to display high growth in 2006-07. And the Bank earned a net profit of Rs. 659.03 crores against Rs. 485.08 crores in the previous year, registering a growth of 35.86%. The total income of the Bank increased by 53.95% to Rs. 5,570.52 crores from Rs. 3,618.42 crores last year, while the operating profit rose by 37.11% to Rs. 1,362.60 crores from Rs. 993.81crores last year.

OVERVIEW OF FINANCIAL AND BUSINESS PERFORMANCE

During the year 2006-07, the Bank has witnessed a strong growth in business volumes as well as profits, with the net profit increasing by 35.86% to Rs. 659.03 crores from Rs. 485.08 crores the previous year. The total income of the Bank rose by 53.95% to Rs. 5,570.52 crores from Rs. 3,618.42 crores the previous year. During the same period, the operating revenue increased by 42.55% to Rs. 2,577.19 crores, while operating profit increased by 37.11% to Rs. 1,362.60 crores. On 31 March 2007, the Bank's total assets increased by 47.31% to Rs.73, 257 crores. The total deposits of the Bank grew by 46.55% to Rs.58, 786 crores, while the total advances grew by 65.26% to Rs. 36,876crores. The total demand deposits (savings bank and current account deposits) have increased by 46.11% to Rs. 23,430.19 crores, constituting39.86% of total deposits. The Bank has increased its market share of aggregate deposits in All Scheduled Commercial Banks (ASCB), which rose from 1.76% as on 31 March 2006 to 2.08% on 30 March 2007, While its share of advances rose from 1.50% to 1.78% during the same period. In the financial year 2006-07, the Bank's incremental market share of aggregate deposits in ASCB was 3.39% while its incremental share in advances was

2.75%. The solid performance of the Bank despite higher provisioning on standard assets, increase in risk weights on select asset classes, reduction on interest paid on CRR and a hardening of interest rates due to tightening of the overall liquidity situation underscores the efficacy of the business model adopted by the Bank. The Bank continued to enhance shareholder value and the diluted earnings per share for the year 2006-07 increased to Rs. 22.79 from Rs. 17.08 the previous year. As on 31 March 2007, the book value per share of the Bank has increased to Rs. 120.50 from Rs. 103.06 as on 31 March 2006. The Bank will continue to derive benefit from the infrastructure created Over the years and will continue to pursue a strategy of profitable growth through stronger corporate relationships and an accelerated retail customer expansion programmed driven by the Bank's multiple channels.

In 2007-08, the Bank's strategy. The Bank will continue to emphasize growth opportunities through higher Levels of customer satisfaction and loyalty, and deepening relationships with existing customers. It seeks to maintain and enhance a strong retail and corporate franchise, strengthen the structures and delivery channels for increasing SME and agricultural businesses, exploit crosssell opportunities, offer private banking for high-net worth customers,

consolidate new business initiatives such as Credit Cards, Wealth Management and Banc assurance for Life Insurance, and encase opportunities through overseas offices for cross-border trade finance, syndication of debt and NRI business development .The Bank will continue to focus on high-quality earnings growth through an emphasis on core income streams such as NII and fee-based income and on maintaining a high standard of asset quality by providing emphasis on rigorous risk-management practices. The Bank will continue to use Technology extensively to maintain competitive advantage and continue to up-grade the technology platform to provide leverage for bringing in higher cost efficiencies.

Performance Summary
FINANCIAL PERFORMANCE

The financial highlights for the year under review are presented below:

(Rs. in crores)

PARTICULARS

2010-11

2009-10

Growth

Deposits

189,237.80 141,300.22

33.93%

Out of which

- Savings Bank Deposits

40,850.31

33,861.80

20.64%

- Current Account Deposits 36,917.09 32,167.74 14.76%

Advances

142,407.83 104,340.95

36.48%

Out of which

Retail Advances

27,759.23

20,820.73

33.32%

Non-retail Advances 114,648.60 83,520.22 37.27%

Total Assets/Liabilities 242,713.37 180,647.85 34.36%

Net Interest Income 6,562.995,00 4.49 31.14%

Other Income

4,632.13

3,945.78

17.39%

Out of which

- Trading Profit

496.97

822.38 (39.57%)

. Fee & other income

4,135.16

3,123.40

32.39%

Operating Expenses excl. depreciation 4,489.8 43,475.40 29.19%

Profit before depreciation, provisions and tax 6,705.28 5,474.87 22.47%

Depreciation

289.59

234.32

23.59%

Provision for Tax

1,747.17

1,336.83

30.70%

Other Provisions & Write offs 1,280.03 1,389.19 (7.86%)

Net Profit

3,388.49

2,514.53

34.76%

Appropriations:

Transfer to Statutory Reserve 847.126 28.63 34.76%

Transfer to/(from) Investment Reserve (14.94) 14.88 -

Transfer to Capital Reserve

4.76

223.92 (97.87%)

Transfer to General Reserve

338.85

0.31

Proposed Dividend

670.36

567.45

18.14%

Surplus carried over to Balance Sheet 1,542.34 1,079.34 42.90%

(1) Excluding Merchant Exchange Profit

KEY PERFORMANCE INDICATORS

Interest Income as a percentage of working funds* 7.49%

2010-11 2009-10
7.73%

Non-Interest Income as a percentage of working funds* 2.29% 2.62%

Net Interest Margin

3.65%

3.75%

Return on Average Net Worth

20.13%

19.89%

Operating Profit as a percentage of working funds* 3.17%

3.48%

Return on Average Assets

1.68%

1.67%

Profit per employee**

14.35 lacs 11.63 lacs

Business (Deposits less inter-bank deposits + Advances) per employee** crores 13.66 crores 1.11

Net non performing assets as a percentage of net customer assets *** 0.26% 0.36%

- 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 regrouped wherever necessary.

In 2010-11 both business and earnings grew strongly with the Bank

reporting a net profit of Rs.3,388.49 crores for the year ended 31 March, 2011, rising 34.76% over the net profit of Rs.2,514.53 crores in the previous year. The solid growth of business across segments has been reflected in a set of robust financial indicators.

The Banks total income increased 26.97% to reach Rs.19,786.94 crores during 2010- 11, compared to Rs.15,583.80 crores last year. Operating revenue during this period increased 25.08% to Rs.11,195.12 crores while operating profit increased by 22.42% to Rs. 6,415.69 crores. The growth in revenues may be attributed to the performance of the Banks core income streams: net interest income (Nil), fee and other income. Nil increased by 31.14% to Rs.6,562.99 crores from ^5,004.49 crores last year, while fee and other income increased by 17.39% to Rs.4,632.13 crores from ^3,945.78 crores last year. Nil increased by 31.14% as a result of healthy growth of both assets and low-cost Current Account and Savings Bank (CASA) deposits, on a daily average basis. During the year, total earning assets, on a daily average basis, rose 34.70% to Rs.179,573 crores from Rs.133,309 crores last year. A 32.81 % growth of low-cost CASA deposits, on a daily average basis, from ^44,839 crores last year to Rs.59,551 crores, helped the Bank contain funding costs, which had risen in the last quarter of the year due to the hardening of interest rates on term deposits.

Other income comprising fees, trading profit and miscellaneous income also rose 17.39% to ^4,632.13 crores in 2010-11 from Rs.3,945.78 crores last year. Fee income constituted 33.86% of the operating revenue of the Bank and rose 29.59% to Rs.3,790.37 crores from Rs.2,924.96 crores last year. The Bank earns fee income from a diverse set of products and businesses such as client- based merchant foreign exchange trade, service charges from account maintenance, transaction banking including cash management services, syndication and placement fees, processing fees from loans and commission on non-funded products such as letters of credit and bank guarantees, inter-change fees on ATM-sharing arrangements and fee income from the distribution of third-party personal investment products. During the year, proprietary trading profits fell 39.57% to Rs.496.97 crores from Rs.822.38 crores last year, primarily due to adverse market conditions in the debt and equity markets. Miscellaneous income was buoyant, rising 73.75% mainly due to strong recoveries of loans and derivative receivables written-off in previous years. During the year, such recoveries amounted to Rs.325.22 crores compared to Rs.174.43 crores last year.

During the year, the operating revenue of the Bank increased 25.08% to Rs.11,195.12 crores from Rs.8,950.27 crores last year. The core income

streams (Nil, fee and miscellaneous income) constituted 95.56% of the operating revenue, reflecting the stability and sustainability of the Banks earnings. Operating expenses increased by 28.84% to ^4,779.43 crores from Rs.3,709.72 crores last year, on the back of the continuing growth of the Banks network and infrastructure required for supporting existing and new businesses. During the year, the Cost: Income ratio was 42.69% compared to 41.45% last year.

During the year, the operating profit of the Bank increased 22.42% to Rs.6,41 5.69 crores from Rs.5,240.55 crores last year. During this period, provisions (excluding provisions for tax) charged to the Profit & Loss account were Rs.1,280.03 crores compared to Rs.1,389.19 crores last year. Of this, provisions for loan losses were ^955.12 crores compared to Rs.1,357.04 crores last year, while the provision for standard assets was Rs.166.16 crores. The Bank accelerated its provisioning requirements in some portfolios as a measure of prudence, increasing the overall provision coverage. The Bank also provided Rs.15.06 crores compared to Rs.56.47 crores last year against restructured assets. During 2010-11, the Bank restructured loans of Rs.404 crores, significantly lower than Rs.1,633 crores last year. The Bank continued to maintain a generally healthy asset-quality with a ratio of Gross NPAs to gross customer assets of 1.01% compared to 1.13% last year and a Net NPA ratio

(percentage of Net NPAs as percentage of net customer assets) of 0.26% compared to 0.36% last year. With higher levels of provisions, built over and above regulatory norms during the year, the Bank has further improved its provision-coverage to 80.90% (after considering prudential write-offs) from 72.38% last year.

Due to a consistent trajectory of core earnings, there has been an all-round improvement in various financial metrics. The Return on Equity (RoE) improved to 20.13% from 19.89% last year. Basic Earnings Per Share (EPS) rose to Rs.82.95 from Rs.65.78 last year, while the Diluted Earnings Per Share was Rs.81.61 compared to Rs.64.31 last year. The Book Value Per Share increased from Rs.395.99 on 31 March, 2010 to Rs.462.77 on 31 March, 2011, while Return on Assets (RoA) improved to 1.68% from 1.67% last year. Employee productivity has also improved with Profit per Employee increasing to Rs.14.35 lacs from ^11.63 lacs last year and Business per Employee increasing to Rs.13.66 crores from Rs.11.11 crores last year. Hardening of interest rates on Term Deposits in the final quarter of the year pushed up the cost of funds, compressing the Net interest Margin by 10 basis points of the year to 3.65% from 3.75% last year. The quarterly NIMs during the year were as follows: 3.71% in Q1, 3.68% in Q2, 3.81% in Q3 and 3.44% in Q4.

The total assets of the Bank were Rs.242,713 crores, rising 34.36% from

Cost centric growth..

(Rs m)

9mFY07

% total

of

9mFY08

% total

of

Change

Advances Agriculture Retail SMEs

323,370 23,370 91,780 57,210 7.2% 28.4% 17.7%

486,320 36,790 7.6%

50.4% 57.4% 30.8% 57.5% 58.5% 34.6% 64.3% 17.1%

120,090 24.7% 90,080 18.5%

Large corporates 151,010 46.7% Deposits CASA Term deposits Credit ratio deposit 509,200 188,830 37.1% 320,370 62.9%

239,360 49.2% 685,510 310,320 45.3% 375,190 54.7%

63.5%

70.9%

Continuing with the trend seen in the past few quarters, Axis Bank's fee income registered a strong growth of 81% YoY during 3QFY08 and 71% YoY during 9mFY08. The proportion of fee income to total income remained stable at 30%. Although the trading profits grew by 65% YoY, the share of trading profits to operating revenue decreased marginally to 11% in 3QFY08 from 12% in 3QFY07. While the bank's net NPAs as a percentage of advances have shrunk to 0.4% in 3QFY08 against 0.7% in 3QFY07, the bank has also succeeded in arresting the incremental delinquencies (in absolute terms) this quarter. The provisions held together with accumulated write-offs as a proportion of gross NPAs amounted to 83.1% in 9mFY08. If the accumulated write-offs are excluded, then the provisions held as a proportion of gross NPAs amounted to 47.7%.

During 2QFY08, Axis Bank successfully raised US$ 218 m by way of a GDR offering, Rs 17 bn through a QIP and Rs 19 bn through a preferential allotment to promoters. This made the bank well equipped to sustain its growth in the medium term

Axis Bank 33.5% net profit growth

Axis Bank has recorded net profit growth of 33.5% to 1,020 crore in the fourth quarter ending 31st March 2011. The net interest income of the bank has remained almost flat at 1,701 crore (a fall of 2% sequentially) on account of the rising cost of funds. Statistics:

Axis Banks loan book grew 36.5% which is 21% more when compared at the industry level, but lower when compared to its previous quarter (previous quarter jump was 46%).

Banks loan group comprises mainly of large and mid-corporate credit, although retail lending is catching up fast.

Total deposits grew 34%, bringing down the credit-to-deposit ratio of the bank to 75% from 79% in the previous quarter.

Price to Earning (P/E) ratio is 18.

Concerns:

Bank is concerned majorly due to its rising cost of deposits. The banks interest on deposits on an average has risen by 125 bps at 5.7% on a yearon-year basis. This resulted in increase in interest expense of 79% on a Yo-Y basis. This led to a contraction in its net interest margin (NIM) a

key measure of profitability by almost 65 bps on a yearly basis at 3.4% for March 2011.

Axis Bank recorded a fall in NIM, as expected by most analysts. Additionally, the banks CASA also fell marginally this quarter, further accentuating the pressure on NIM.

The banks trading income also fell by 43% in the quarter on account of the rising bond yields. (As bond yields rise, bond prices fall and opportunities for making trading gains are then limited).

But the positive result was the improvement in the banks asset quality, with net non-performing assets (NPAs) improving by 30 bps to 2.3% in the quarter. A cleaner loan book will help the bank to report lower incremental provision coverage ratio, which is currently at 81% (after accumulated write-offs). This, in turn, will allow the bank to grow at a higher rate.

SAVING ACCOUNT INFORMATION

Definition: A deposit account at a bank or savings and loan which pays interest, but cannot be withdrawn by check writing . Types of Saving Account In Axis Banking

Zero Balance Savings Account At Axis Bank it has been constant endeavor to create products specifically catering to your needs. The account while offering a whole range of services also addresses your latent need of having an account without the hassle of maintaining an average quarterly balance. Features: - 1.No Average Quarterly Balance requirement 2. Free International Debit Card with an Accidental Insurance cover up to Rs 2 lakhs* (charges for the primary holder are waived) 3. Free mobile banking facility 4. Access through more than 825 branches and more than 3595 ATMs 5. At-Par cheque facility with the clearing limit of Rs 50,000 6.24x7 Telebanking & Internet banking 7. Free quarterly statements 8. Free monthly e-statement Conditions Apply:1. Initial funding of Rs. 5,500. 2. Account maintenance fee of Rs. 500 per annum Krishi Savings Account (Kheti Ho Khushahali ki)

Axis Bank offers a unique savings account which is easy to operate and allows you to transact immediately. This product has been specially designed keeping in mind the unique requirements of a farmer and true to its nature has been called the Krishi Savings Account. Some of the features of our new product are: Average Balance Requirement : This account is offered with the requirement of maintaining the half-yearly average balance of Rs 1000 only.

International Master Debit Card The Krishi Savings Account entitles you to an International Master Debit Card with which you can access your account anytime through the Axis Bank ATM network free of cost. This card comes with a cash withdrawal limit of Rs 25,000 per day. Free Accident Insurance cover of Rs 2 lacks. Anywhere Banking Being a Krishi account holder, you are entitled to access our wide network of more than 825 branches and 3595 ATMs across 440 cities. You can now easily carry out your transactions through any of the branches or ATMs. At Par Cheque Book Your Krishi Savings Account comes with the At-Par Cheque facility. This facility enables you to encash the cheques as local instruments at any of the 440 centers where the Bank has its presence, at no

extra cost. Moreover, you can also issue cheques at other centers upto the limit of Rs 50,000. Easy Access Savings Account (Banking made easy) A :Accessibility C :Convenience C :Comfort E :Earnings S :Speed S :Service Want a savings account that transcends geographical boundaries? Presenting, Axis Bank's Easy Access Savings Account. The account is an endeavor by the Bank to understand the consumers' needs and redefine banking to suit your requirements for a truly comfortable banking experience. Easy Access Savings Account gives you instant access to your money anywhere, anytime. Possessing a range of unmatched features, it has been devised to better suit the convenience of our eclectic client base. You can avail of all these services with a minimum

quarterly average balance of Rs. 5,000 metro or urban centers, Rs. 2,500 in semi urban centers and Rs. 1,000 in rural centers. metro or urban centers, Rs. 2,500 in semi urban centers and Rs. 1,000 in rural centers. At-par cheque ATM Network Anywhere Banking Telebanking iConnect Mobile Banking Quarterly account statement Quarterly interest @ 3.5 % per annum

Free monthlye-s ta tement. You can avail of all these services with a minimum quarterly average balance of Rs. 5,000 in metro or urban centers, Rs. 2,500 in semi urban centers and Rs. 1,000 in rural centers.

Corporate Salary Account: Our Corporate Salary Power Offering is designed to offer payroll solutions through in a 24 X 7 environment. We leverage on our extensive network of distribution channels spread across 450 centers through a network of more than 827 branches and 3595 ATMs besides our superior service delivery model and product features, as a strong differentiator, to provide value to the end user. Benefit to Employers: Efficient salary disbursal. Web Upload - Transfer salaries/reimbursements directly from your current account with Axis Bank to your employee's accounts using I Connect from your office. Single-instruction salary credit - Same day salary credits for all companies having Corporate Account with Axis Bank. Dedicated Relationship Manager at metro locations to understand the financial requirements of your employees. Benefit to Employees:

 No minimum balance criteria. Unparalleled Access - Anywhere banking facility through our network of Branches, ATM and Internet banking facility.

PRODUCTS & SERVICES OF THE ORGANISATION

Types of Deposit Accounts

While various deposit products offered by the Bank are assigned different names. The deposit products can be categorised broadly into the following types. "Demand deposits" means a deposit received by the Bank which is withdraw able on demand. "Savings deposits" means a form of demand deposit which is subject to restrictions as to the number of withdrawals as also the amounts of withdrawals permitted by the Bank during any specified period.

" Term Deposit" means a deposit received by the Bank for a fixed period withdraw able only after the expiry of the fixed period and include deposits such as Recurring/Reinvestment Income Certificate/ Encash 24/Short term Deposits/ Fixed Deposits/ Monthly Income Certificate/ Quarterly Income Certificate etc.

"Current Account" means a form of demand deposit wherefrom withdrawals are allowed any number of times depending upon the balance in the account or up to a particular agreed amount and will also include other deposit accounts which are neither Savings Deposit nor Term Deposit.

Account Opening and Operation of Deposit Accounts

The Bank before opening any deposit account will carry out due diligence as required under "Know Your Customer" (KYC) guidelines issued by RBI and or such other norms or procedures adopted by the Bank. In the Bank, the authority to open a Deposit Account is vested in the Branch Head. In very rare case clarifications are required to be sought from the higher authority. The account opening forms and other material would be provided to the

prospective depositor by the Bank. The same will contain details of information

to be furnished and documents to be produced for verification and or for record, it is expected of the Bank official opening the account. For deposit products like Savings Bank Account and Current Deposit

Account, the Bank will normally stipulate certain minimum balances to be maintained as part of terms and conditions governing operation of such account. For Saving Bank Account the Bank may also place restrictions on number of transactions, cash withdrawals, etc., for given period. Similarly, the Bank may specify charges for issue of cheques books, additional statement of accounts, duplicate pass book, folio charges, etc. All such details, regarding terms and conditions for operation of the accounts and schedule of charges for various services provided will be communicated to the prospective depositor while opening the account. Savings Bank Accounts can be opened for eligible person / persons and certain organizations / agencies (as advised by Reserve Bank of India (RBI) from time to time)

Current Accounts can be opened by individuals / proprietorship firms/ partnership firms / Private and Public Limited Companies / HUFs / Associations / Societies / Trusts, etc.

Term Deposits Accounts can be opened by individuals / proprietorship firms/ partnership firms / Private and Public Limited Companies / HUFs/ Associations / Societies / Trusts, etc.

The due diligence process, while opening a deposit account will involve

satisfying about the identity of the person, verification of address, satisfying about his occupation. Obtaining introduction of the prospective depositor from a person acceptable to the Bank or through self introduction by way of production of certain documentary evidence and obtaining recent photograph of the person/s opening / operating the account are part of due diligence process. In addition to the due diligence requirements, under KYC norms the Bank

is required by law to obtain Permanent Account Number (PAN) or General Index Register (GIR) Number or alternatively declaration in Form No. 60 or 61 as specified under the Income Tax Act / Rules. Deposit accounts can be opened by an individual in his own name (known as account in single name) or by more than one individual in their own names (known as Joint Account) . Savings Bank Account can also be opened by a minor jointly with natural guardian or with mother as the guardian (known as Minor's Account). Minors above the age of 12 will also be allowed to open and operate saving bank account independently. Operation of Joint Account - The Joint Account opened by more than one

individual can be operated by single individual or by more than one individual

jointly. The Savings Bank Account opened by minor jointly with natural guardian / guardian can be operated by natural guardian only. The joint account holders can give any of the following mandates for the

disposal of balance in the above accounts: Either or Survivor : If the account is held by two individuals say, A & B, the final balance along with interest, if applicable, will be paid to survivor on death of anyone of the account holders. Anyone or Survivor/s : If the account is held by more than two individuals

say, A, B and C, the final balance along with interest, if applicable, will be paid to the survivor on death of any two account holders. The above mandates will be applicable to or become operational only on or after the date of maturity of term deposits. This mandate can be modified by the consent of all the account holders. At the request of the depositor, the Bank will register mandate / power of

attorney given by him authorizing another person to operate the account on his behalf. The term deposit account holders at the time of placing their deposits can give instructions with regard to closure of deposit account or renewal of deposit for further period on the date of maturity. In absence of such mandate, the Bank

will seek instructions from the depositor/s as to the disposal of the deposit by sending intimation before 15 days of the maturity date of term deposit. Advertising and Marketing Axis will make sure that all advertising and promotional material is clear, fair, reasonable and not misleading. Axis will seek your specific consent for giving details of your name and address to any third party, including other entities in our group, for marketing purposes.

Axis would like to provide you with the entire range of financial services products, some of which are our own products while some others are the products of our group/associate/entities or companies with whom we have tieup arrangements. Axis will however tell you about our associate / group entities or companies having business tie-up arrangements with us and if you so desire, direct their staff / agents for marketing their products.

LITERATURE REVIEW REVIEW OF RELATED LITRATURE

The banking industry has come under increasing pessimism of late because of rising short and long-term interest rates. The banking industry's market capitalization made a substantial decline. Most investors are concerned with whether the industry can sustain continued profitability as a result of these factors. Banks have responded in recent years to these problems by diversifying away from interest sensitive products and services. But interest rates are the fundamental aspect of any financial services. Therefore, I believe the financial services industry will be deeply affected by rising interest rates. Banks have experienced good business factors over the past two years. Interest rates were low, credit quality was good, and inflation was low. These factors are usually predictive of the types of earnings banks should report. But good times can't continue because interest rate hikes because reduced lending activity, damaged credit quality, and reduced values of bond portfolios. Porter's Five Forces Analysis: 1. Rivalry among competing sellers: The banking industry is continuing to restructure and position itself for our changing economy as a result, many mega-mergers have occurred in recent years. Citicorp and Travelers Insurance agreed to merge in April 1998 at a value of $70 billion. Bank of America and Nation's Bank also agreed to merge shortly afterwards which became the largest bank in the United States. Bank mergers are usually consummated as a cost-cutting measure but also to compete with non-bank providers of financial services. Bank rivalries are very strong, and as

we've seen many of the largest banks are merging to increase their power. In fact, Charlotte, NC is practically owned by Bank of America and First Union. 2. Potential entry of new competitors: There is virtually no chance of a new entrant significantly affecting the major banks' market share. The only place that new entrants may have a chance in the industry is through Internet banking, because of its low cost. 3. Firms offering substitute products: This is not really an issue within the banking industry, because there aren't really any legal alternatives, except buying a safe and borrowing from a loan shark 4. Competitive pressures stemming from supplier and buyer bargaining power: I grouped these two categories together because in the banking industry the buyers are the suppliers and vice versa, so I might as well just discuss the situation as a whole. Interest rates are the single most important aspect of bank profitability they are the bargaining power. Most bank profits are derived from net interest income. This is interest income received on loans minus interest expense for borrowed funds. Interest rates determine the amount of money a bank can earn. Another measure is a banks' net interest margin which is a bank's net interest income divided by its average earning assets. This is a common measure of a bank's ability to squeeze profits from its loans. When interest rates fall, they have a positive effect on a bank. First, net interest margin can expand. Second, the value of a bank's fixed rate of investment portfolio is enhanced by declining rates, since a bond with a higher stated interest rate becomes more valuable as prevailing rates drop. Third, falling rates lower the cost of credit,

which stimulates loan demand and reduces delinquency rates. Opportunities: 1. Because of the increasing amount of technology Internet banking will begin to replace traditional banking, thus cutting personnel costs. 2. Incorporating investment banking into the banking industry, as some major companies are doing, lets the bank increase profits and promote economic growth while improving company image. Threats: 1. An increase in interest rates causing a decline in bank activity. 2. A collapse of the Fed leading to bank failures, a repeat of the crash of 1929. 3. A decline in the US economy leading to a fall in the value of the dollar, thus causing an instable economy. From there the US banking system would be less secure in terms of dollar values that many people would move their money overseas into a more stable economic situation. Similar to the situation in many South American countries. (a little far-fetched, but possible) Key Success Factors: Capability to use the internet for banking, investing, and general e-commerce Size of company, name recognition, innovative local marketing Best rates (loans, checking, savings, etc.) The capability to have the fastest and simplest banking through design, innovation, and location

MEANING OF WORKING CAPITAL MANAGEMENT

Working Capital is commonly defined as the difference between current assets and current liabilities. Efficient working capital management requires that firms should operate with some amount of working capital, the exact amount varying from firm to firm and depending, among other things on the nature of industry. Capital required for a business can be classified in two main categories viz. 1) Fixed capital, and 2) Working capital. Every business needs funds for two purposes-for establishments and to carry out its day-to-day operations. Long-term funds are required to create production facilities. Through purchase of fixed assets such as plants and machinery, land, building, furniture, etc.Investments in these assets represents that part of firms capital which is blocked on permanent or fixed basis and is called fixed capital. Funds are also needed for short-term purpose for the purchase of raw material, payment of wages and other day-to-day expenses, etc. These funds are known working Capital. In simple words, working capital refers to that part of the firms capital, which is required for financing short-term or current assets

such as cash, marketable securities, debtors and inventories. Funds thus invested in current assets keep revolving fast and are being constantly converted into cash and this cash flows out again in exchange for other current assets. Hence, it is also known as revolving or circulating capital or short-term capital. CLASSIFICATION OF WORKING CAPITAL Working Capital may be classified on two basis: a) On the basis of Concept: On the basis of concept, working capital can be classified as, 1. 2. Gross Working Capital Net Working Capital

b) On the basis of Time: On the basis of time, working capital can be classified as, 1. Permanent or Fixed Working Capital 2. Temporary or Variable Working Capital

Gross Working Capital: The Gross Working Capital is the Capital invested in the total current assets of the enterprises. Current assets are those assets, which can be converted into cash within a short period, normally an accounting year. Gross Working Capital = Total Current Assets

Net Working Capital: The term Net Working Capital refers to the excess of current assets over current liabilities, or say, Net Working Capital = Current Assets Current Liabilities Net Working Capital can be positive or negative. When the current assets exceed the current liabilities the working capital is positive and the negative working capital results when the current liabilities are more than the current assets. Current liabilities are those liabilities, which are intended to be paid in the ordinary course of business within a short period of normally one accounting year out of the current assets of the income of the business. The gross working capital concept is financial or going concern concept whereas net working capital is an accounting concept of working capital. Both the concepts have their own merits. The gross concept is sometime preferred to the concept of working capital for the following reasons: 1. 2. 3. 4. 5. It enables the enterprise to provide correct amount of working capital at correct time. Every management is more interested in total current assets with which it has to operate then the sources from where it is made available. It takes into consideration of the fact every increase in the funds of the enterprise would increase its working capital. The concept is also useful in determining the rate of return on investments in working capital. The net working capital concept, however, is also important for the following reasons:-

6. 7. 8. 9.

It is a qualitative concept, which indicates the firms ability to meet its operating expenses the short-term liabilities. It indicates the margin of protection available to short term creditors. It is an indicator of financial soundness of enterprise. It suggests the need of financing a part of working capital requirement out of the permanent sources of funds.

Permanent or Fixed Working Capital: Permanent or fixed capital is the minimum amount, which is required to ensure effective utilization of fixed facilities and for maintaining the circulation of current assets. Every firm has to maintain a minimum level of current assets is called permanent or fixed working capital as this part of working capital is permanently blocked in current assets. As the business, grow the requirement of working capital also increases due to increase in current assets. Temporary or Variable Working Capital: Temporary or variable working capital is the amount of working capital, which is required to meet the seasonal demands and some special exigencies. Variable working capital can further be classified as seasonal working capital and special working capital. The capital required to meet the seasonal need of the enterprise is called the seasonal working capital. Special working capital is that part of working capital which is required to meet special exigencies such as launching of extensive marketing campaign for conducting research etc. Temporary working capital differ from permanent working capital in the sense that it is required for short periods and cannot be permanently employed gainfully in business Calculate current assets to fixed asset ratio;A firm needs current and fixed assets to support a particular level of output. However, to support the same level of output the firm can have different levels of current assets. As the firms output and sales increases, the need for current

asset increases. Generally the current assets do not increase in direct proportion to output ; current assets may increase at a decreasing rate with input. This relationship is based upon the notion that it takes a greater proportional

investment in current assets when only a few units of output are produced than it does later on when the firm can use its current assets more efficiently.

The level of the current assets can be measured by relating current assets to fixed assets. There are three policies:1. conservative current assets policy: CA/FA is higher. It implies greater liquidity and lower risk. 2. aggressive current assets policy: CA/FA is lower .it implies higher risk and poor liquidity. 3. moderate current assets policy: CA/FA ratio falls in the middle of conservative and policies. aggressive

ESTIMATING WORKING CAPITAL NEEDS 1. Liquidity Vs. Profitability: Risk Return Trade Off.

The firm would make just enough investment in current assets if it were possible to estimate working capital needs exactly. Under perfect certainty, current assets holdings would be at the minimum level. A larger investment in current assets under certainty would mean a low rate of return of investment for the firm, as excess investment in current assets will not earn enough return. A small invest in current assets, on the other hand, would mean interrupted production and sales, because of frequent stock-cuts and inability to pay to creditors in time due to restrictive policy.

As it is not possible to estimate working capital needs accurately, the firm must decide about levels of current assets to be carried.

2.

The Cost Trade Off:

A different way of looking into the risk return trade off is in terms of the cost of maintaining a particular level of current assets. There are two types of cost involved:I. Cost of liquidity II. cost of illiquidity 1. --If the firms level of current assets is very high , it has excessive liquidity. Its return on assets will be low, as funds tied up in idle cash and stocks earn nothing and high level of debtors reduce profitability. Thus, the cost of liquidity increases with the level of current assets. 2. --the cost of illiquidity is the cost of holding insufficient current assets. The firm will not be in a position to honour its obligations if it carries to little cash. This may force the firm to borrow at high rates of interests. This will also adversely affect the credit-worthiness of the firm and it will face difficulties in obtaining funds in the future. All this may force the firm into insolvency. Similarly, the low levels of stock will result in loss of sales and customers may shift to competitors. Also, low level of debtors may be due to right credit policy, which would impair sales further. Thus the low level of current assets involves cost that increase as this level falls.

Policies for financing current assets

-Public deposits

LONG TERM FINANCING:

The sources of long term financing include ordinary shares capital, preference share capital debentures, long term borrowings from financial institutions and reserves and surplus. The manages its long term financing from capital reserve, share premium A/C, foreign project reserve, bonds redemption reserve and general reserve.

SHORT TERM FINANCING: The short term financing is obtained for a period less than one year. It is arranged in advance from banks and other suppliers of short-term finance include working capital funds from banks, public deposits, commercial paper, factoring of receivables etc. The Manages secured loans as:1. 2. Loans and advances from banks Other loans and advances: a)Debebtures/bonds b)Loans from State Govt. c)Loans from financial institutions(secured by pledge of PSU bonds and bills accepted guaranteed by banks)

3.

Interest accrued and due on loans 1. 2. from State Govt. from financial institutions bonds and other

The Manages unsecured loans as: 1) Public deposits 2) Short term loans and advances:

a)From banks b)Commercial papers c)Fromcampanies d)From financial institutions 3)Other loans and advances a)From banks b)From others -from govt. of India -from state govt. -from financial institutions -from foreign financial institution -post shipment credit exim bank -credit for assets taken on lease 4)Interestaccured and due on -Post shipment credit -Govt. credit -State Govt. loans

-Credits for assets taken on lease -Financial institutions and others -Foreign financial institutions

Spontaneous financing refers to the automatic sources of short term funds arising in the normal course of a business. Trade Credit and outstanding expenses are examples of spontaneous financing. A firm is expected to utilise these sources of finances to the fullest extent. The real choice of financing current assets, once the spontaneous sources of financing have been fully utilized, is between the long term and short term sources of finances.

What should be the mix of short and long term sources in financing current assets? Depending on the mix of short and long term financing, the approach followed by a company may be referred to as : 1. 2. 3. Matching Approach Conservative Approach Aggressive Approach

Matching approach The firm can adopt a financial plan which matches the expected life of assets with the expected life of the source of funds raised to finance assets. Thus, a ten year loan may be raised to finance a plant with an expected life of ten year; stock of goods to be sold in thirty days may be financed with a thirty day commercial paper or a bank loan. The justification for the exact matching is that, since the purpose of financing is to pay for assets, the source of financing and the asset should be relinquished simultaneously. Using long term financing for short term assets is expensive as funds will not be utilized for the full period. Similarly, financing long term assets with short term financing is costly as well as inconvenient as arrangement for the new short term financing will have to be made on a continuing basis. When the firm follows matching approach (also known as hedging approach) long term financing will be used to finance fixed assets and permanent current assets and short term financing to finance temporary or variable current assets. How ever, it should be realized that exact matching is not possible because of the uncertainty about the expected lives of assets. The firm fixed assets and permanent current assets are financed with long term funds and as the level of these assets in increases, the long term financing level also increases. The temporary or variable current assets are financed with short term funds and as their level increases, the level of short term financing

also increases. Under matching plan, no short term financing will be used if the firm has a fixed current assets need only.

Conservative approach
A firm in practice may adopt a conservative approach in financing its current and fixed assets. The financing policy of the firm is said to be conservative when it depends more on long term funds for financing needs. Under a conservative plan, the firm finances its permanent assets and also a part of temporary current assets with long term financing. In the period when the firm has no need for temporary current assets, the idle long term funds can be invested in the tradable securities to conserve liquidity. The conservative plan relies heavily on long term financing and, therefore, the firm has less risk of facing the problem of shortage of funds. The conservative financing policy is

shown below. Note that when the firm has no temporary current assets, the long term funds released can be invested in marketable securities to build up the liquidity position of the firm.

Aggressive Approach
A firm may be aggressive in financing its assets. An aggressive policy is said to be followed by the firm when it uses more short term financing than warranted by the matching plan. Under an aggressive policy, the firm finances a

part of its permanent current assets with short term financing. Some extremely aggressive firms may even finance a part of their fixed assets with short term financing. The relatively more use of short term financing makes the firm more risky. The aggressive financing is Illustrated in fig below.

NEEDS AND OBJECTIVES FOR WORKING CAPITAL

Every business needs some amount of working capital. The needs for working capital, arises due to time gap between production and realization of cash from sales. There is an operating cycle involved in sales and realization of cash. There are time gaps in purchase of raw material and production, production and sales, and realization of cash. Thus, working capital is needed for the following purposes: 1. For the purchase of raw material, component and spares.

2. 3.

To pay wages and salaries. To incur day- to- day expenses and overhead costs such as fuel, power and office expenses etc. 4. To meet the selling costs such as packing, advertising etc. 5. To provide credit facilities to the customers. 6. To maintain the inventories of raw material, work in progress, store, spares, and finished stock .For studying the need of working capital in a business, one has to study the business under varying circumstances such as new concern, as a growing and one, which has attained maturity. A new concern requires a lot of funds to meets its initial requirement such as promotion and formation etc. These expenses are called preliminary expenses and are capitalized. The amount needed for working capital depends upon the size of the company and the ambition of its promoters. Greater the size of the business unit, generally will be the requirement of the working capital. The requirement of the working capital goes on increasing with the growth and expansion of the business until its gains maturity. At maturity, the amount of working capital required is called normal working capital.

IMPORTANCE OF WORKING CAPITAL 1.Time devoted to working capital management:The largest portion of financial manager 's time is devoted to day to day internal operation the firm. This may be appropriately sum up under the heading "WORKING CAPITAL MANAGEMENT". 2.Investment in current assets :- current assets represent more than half of the total assets of a business firm. Because they represent largest investment and

because this investment tends to relatively volatile,current assets are worthy for the financial manager's careful attention. 3.Importance for small firm:current assets are similarly important for the financial manager's of small firm.Further small firm are relatively limited access to the long term markets,it must necessarily rely on the trade credit and short term bank loan , both of net effect on net working capital by increased current liabilities.

FACTORS DETERMINING THE WORKING CAPITAL

REQUIREMENT

1.

NATURE OF BUSINESS: -

The requirement of working capital is very limited in public utility undertaking such as Electricity, Water Supply and Railways because they offer cash sales only and supply services not products and no funds are tied up in inventories and receivables. On the other hand, the trading and financial firm requires less investment in fixed assets but have to invest large amounts in current assets. The manufacturing undertaking requires sizable amount of working capital along with fixed investments. 2. PRODUCTION POLICY: -

The determinationof working capital needs depends upon the production policy of the business. The demand for certain products is seasonal i.e.; such products are purchased in certain months of a year. For such industries, two types of production policy can be followed. Firstly they can produce the goods in the months of demand or secondly, they produce for the whole year. If the second alternative were followed, it would mean that until the time of demand finishes, product would have to be kept in stock. It would require additional working capital.

3.

LENGTH OF PRODUCTION CYCLE: -

The longer the manufacturing time, the raw material and other supplies have to be carried for a longer time in the process with progressive increment of labor and service costs before the final product is obtained. Therefore, working capital is directly proportional to the length of the manufacturing process. 4. RATE OF STOCK TURNOVER: -

There is an inverse co-relationship between the quantum of working capital and the velocity or speed with which the sales are affected. A firm having a higher rate of stock turnover will need lower amount of working capital as compared to a firm having a low rate of turnover. 1. CREDIT POLICY: Credit policy affects the working capital requirements in two ways: 1. 2. Terms of credit allowed by customer to the firm, Terms of credit available to the firm.

A concern that purchases its requirements on credit and sells its product/services on cash requires lesser amount of working capital and vice-versa.

2.

WORKING CAPITAL CYCLE: -

The speed with which the working cycle completes one cycle determines the requirements of working capital. Longer the cycle larger is the requirement of working capital.

DEBTORS

CASH

FINISHED GOODS

RAW MATERIAL

WORK IN PROGRESS

Each component of working capital (namely inventory, receivables and payables) has two dimensions ... TIME ......... and MONEY. When it comes to managing working capital - TIME IS MONEY. If you can get money to move faster around the cycle (e.g. collect monies due from debtors more quickly) or reduce the amount of money tied up (e.g. reduce inventory levels relative to sales), the business will generate more cash or it will need to borrow less money to fund working capital. As a consequence, you could reduce the cost of bank

interest or you'll have additional free money available to support additional sales growth or investment. Similarly.if you can negotiate improved terms with suppliers e.g. get longer credit or an increased credit limit, you effectively create free finance to help fund future sales 3. RATE OF GROWTH AND EXPANSION OF BUSINESS: -

The larger size businesses require more permanent and variable working capital in comparison to small business. If a company is growing, its working capital requirements will also go on increasing. Thus, the growing concerns require more working capital as compared to the stable industries.\ 4. SEASONAL VARIATION: -

Generally, during the busy season, a firm requires larger working capital than in the slack season.

5.

BUSINESS FLUCTUATION: -

In period of boom, when the business is prosperous, there is a need for larger amount of working capital due to rise in sales, rise in prices, optimistic expansion of business etc. On the contrary in time of depression, the business contracts, sales decline, difficulties are faced in collection from debtors and the firm may have a large amount of working capital idle.

10. EARNING CAPACITY AND DIVIDEND POLICY :Some firms have more earning capacity than other due to quality of their products, monopoly conditions, etc. Such firms may generate cash profits from operations and contribute to their working capital. The dividend policy also effects the requirement of working capital. A firm maintaining a steady high rate of cash dividend irrespective of its profit needs more working capital than the firm that retain larger part of its profits and does not pay so high rate of cash dividend. 6. PRICE LEVEL CHANGES: Price level changes also affect working capital needs. If the prices of different goods increase, to maintain same level of production, more working capital is needed. 7. AVAILABILITY OF RAW MATERIAL: Availability of raw material on the continuos basis affects the requirement of working capital. There are certain types of raw materials, which are not available regularly. In such a situation firm requires greater working capital to meet the requirements of production. Some raw materials are available in particular season only for example wool, cotton, oil seeds, etc. They have to keep greater working capital.

12.

MAGNITUDE OF PROFIT: -

Magnitude of profit is different for different businesses. Nature of product, control on the market and ability of managers etc. determine the quantum of profit. If the profit margin is high, it will help to arrange funds internally, which will also increase the working capital. 13. OTHER FACTOR: a) Operating efficiency b) Management ability

c) Irregularities of supply d) Import policy e) Asset structure f) Importance of labor

CAPITAL MANAGEMENT
The Bank strives for the continual enhancement of shareholder value. Its capital management framework helps to optimise the use of capital by ensuring the right composition of capital in relation to business growth and the efficient use of capital through an optimal mix of products and services. During the year, the Bank continued to attract investor interest from domestic and foreign institutional investors, with a sizeable increase in trading volume and price. During 2006-07, the Bank has raised capital aggregating Rs. 1,762.81 crores through Innovative Perpetual Debt Instrument (IPDI), eligible as Tier I

capital and Tier II capital in the form of Upper Tier II and subordinated bonds (unsecured redeemable nonconvertible debentures). Of this, the Bank has raised US Dollars 196 million (equivalent to Rs. 852.01 crores) by way of Hybrid Tier I capital and Upper Tier II capital from Singapore under the MTN Programme. This additional capital enabled the Bank to reinforce its growth strategy and shore up its capital adequacy ratio. Consequently, as on 31 March 2007, the Bank's capital adequacy ratio rose to 11.57% from 11.08% last year. The following table sets forth the risk-based capital, risk-weighted assets and capital adequacy ratios computed in accordance with the applicable RBI guidelines 20. The Bank has always focused on innovation and differentiation. In this direction, during the year, the Bank has opened specialised Priority Banking branches for the high networth customer segment. Priority Banking branches have been conceived as a single stop shop for affluent Customers, catering to all their banking and investment needs, and the Bank is the first to launch such a concept in India. These branches are exclusive boutique banking branches with a plush ambience catering to high networthindividuals, that takes the Priority Banking product to an experiential level, offering service in a discreet manner while maintaining comfort and confidentiality for the customers. During 2006-07, three such branches were opened in the cities of Pune, Mumbai and Kolkata, with plans to open more such branches at other urban centers in 2007-08.

The Bank is very sensitive to the privacy of its customers and does not engage in unsolicited tale-calling. In this regard, the Bank has taken proactive measures to seek positive customer consent on cross-selling initiatives. The Bank launched project 'Sampark', which involves meeting customers face-to-face at branch locations, or outside ATMs and seeking their written consent for crossselling initiatives. The project is an intensive logistical exercise and by endMarch 2007, 8 lacs customer consents have been acquired. This gives the Bank a fully compliant internal database for cross-sell initiatives such as for investment advisory services and insurance products. This will facilitate in boosting the fee income from cross-sell of various products. In its constant endeavor to provide convenience to its customers, the Bank has been aggressively developing its alternative banking channels, namely the ATM network, Internet Banking and Mobile Banking. These channels have received overwhelming response from its customers with registration and transaction figures increasing substantially over the previous year. During the year, the Bank added 450 ATMs, thereby taking the network size to 2,341 on 31 March 2007. The Bank offers access to its customers to over 19,000 ATMs across the country through bilateral and multilateral ATM sharing arrangements. Beginning 2001, the Bank had identified the ATM channel as a strong tool for customer acquisition and convenience. At 4.70 ATMs per branch, the Bank has the highest ATM to branch ratio in the country. The high ATM to branch ratio has been part of the growth strategy and has been a major factor in the high

growth of savings bank deposits accounts and balances. Continuing with its efforts in providing the utmost in convenience and safety to its customers, the Bank has promoted its mobile banking services to enable customers to access their accounts on their mobile phones. The service also sends out specific transaction alerts on the mobile phones of registered customers, informing the customer of the activity in the account, thereby giving an added level of safety to the customer. The mobile channel has found increasing acceptance among the Bank's customers. During the financial year, 40% of the incremental customers signed on for mobile banking services. With 1.10 million customers registered for mobile banking, the Bank has among the highest mobile registration penetration levels among bank customers. The Bank is uniquely poised to take advantage of the growth of mobile commerce in the country. On the Internet Banking front, the registered user base of the Bank rose from 1.89 million accounts as on 31 March 2006 to 3.35 million accounts as on 31 March 2007. To give the customers more reliable service, the Internet Banking platform was revamped in the current year. To counter phasing attacks on our customers, the Bank has; Introduced an added security measure whereby the customer has to enter certain additional details from his debit card number in addition to his Login Identification and password for conducting a financial transaction.

The Bank has set up a Call Centre, available 24/7, providing assistance in 11 languages. The Call Centre as of March 2007 handled over 20,000 calls per day. With 508 branches, 53 extension counters, 2,341 ATMs, 3.35 million internet banking customers and 1.10 million mobile registered customers, the Bank provides one of the best networks in the country with real time on-line access to it customers. CORPORATE BANKING Corporate Banking business of the Bank provides quality products to large and mid-sized clients. The products include credit, trade finance for domestic as well as international transactions, structured finance, and project finance and syndication services. The Bank continues to pursue a two-pronged strategy of widening the customer base as well as deepening existing client relationships. Careful choice of new customers based on appropriate risk-return guidelines forms the basis for the strategy of widening the customer base. The deepening of existing client relationships is achieved by a careful account strategy focusing on increasing the cross-sell of various corporate banking products, as also products from other divisions of the Bank including investment banking and retail products. During the year, large corporate advances grew by 76% to Rs. 16,346 crores from Rs. 9,286 crores in the previous year. The Bank took steps to focus on fee

income mainly from trade finance facilities and document handling. This method of fee generation is stable and sustaining. Given the Increasing overseas presence of the Bank, the trade finance business is set to grow significantly over the coming years. The Bank takes selective Exposure to project financing in areas of infrastructure as well as manufacturing projects set up by reputed industry groups. It constantly works to upgrade its skills in financial structuring to be able to continue providing value to its corporate customers. The overseas presence has enabled the Bank to leverage its existing relationships further by granting loans towards ECBs by Indian corporate as well as to enable acquisition financing. The Bank has also contributed towards financing infrastructure projects and other forms of project finance through its overseas branches. Channel finance also grew on the back of strong corporate demand. The centralised Channel Finance Hub continued to deliver seamless service to various channel finance customers. Syndication and underwriting of corporate debt also increased in volumes and resulted in rising fee income. Corporate Banking increased its focus on Risk Management and on improving portfolio quality. The identification, measurement, monitoring, management and pricing of client risk are the key activities that enable all corporate banking business. The Bank

has in place procedures and practices to ensure regular updating of risks taken by the Bank on various client accounts. Portfolio diversification remains the key for managing asset quality and preventing concentration risks. The credit risk in corporate banking is evaluated and managed by groups organized with an industry sector focus. The Bank also has a Risk Management Department, whose views are critical for decision-making with regard to credit exposures. Overall, the risk control mechanism adopted by the Bank has continued to serve the Bank well, as is observed in the ratio of net NPA to net customer assets being at 0.61%. Corporate Banking scrupulously adheres to all statutory, regulatory and related guidelines for all its businesses.

TREASURY The integrated Treasury manages the global funding of the balance sheet, domestic and foreign currency resources of the Bank, compliance with statutory reserve requirements, as well as optimizes on opportunities in the markets through managing proprietary positions in foreign exchange and interest rate markets. With the expansion of the Bank overseas, the Treasury will look to leverage on the network to widen product scope as well as increase revenue generation from opportunities in the global markets. The continued thrust on maximizing returns from customer relationships in the Treasury has resulted in growth of 51% in customer exchange turnover and 60% in revenues. The Treasury offered structured solutions to customers using foreign exchange and derivatives offerings, which has resulted in significant value addition to customer relationships. In its continued effort to offer top of the line payment solutions to customers, the Bank has offered Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) through 470 branches and extension counters across the country. Throughput in RTGS grew by 251% over the previous year. Despite a challenging interest rate environment, the Bank's holding in government

securities has been substantially protected from market risk as it is held as per specified guidelines of RBI. The portfolio gave a return of 7.64%. The Bank established a Medium Term Note (MTN) Programme for Euro One billion as a part of the funding plan for its overseas operations. During the year, the Bank raised USD 150 million as Upper Tier-II (the first hybrid capital issuance out of India) and USD 46 million as Hybrid Tier-I capital in terms of recent guidelines issued by RBI. The Bank also raised senior debt through the issuance of USD 250 million of three-year floating rate notes (FRN) under the MTN programme. The Asset Magazine published in Hong Kong voted the Bank's Upper Tier-II issue as Best Deal, India. While the Upper Tier-II issue was oversubscribed six times, the Floating Rate Note (FRN) issue was priced at the lowest coupon ever for an Indian bank debt issuance.

BUSINESS BANKING Business Banking has consistently focused on procuring low cost funds by offering a range of current account products and cash management solutions across all business segments covering corporate, institutions, Central and State Government Ministries and Undertakings as well as small business customers. Cross selling of transactional banking products to develop account relationships, aided by product innovation and a customer-centric approach have borne fruit in the form of growing current account deposit balances and increasing realisation of transaction banking fees. Sourcing of current account deposits is a focus area for growth. As of 31 March 2007, current account deposits grew by 41.83% to Rs. 11,304.31 crores from Rs. 7,970.08 crores in the previous year. On a daily average basis, current account deposits grew from a level of Rs. 4,428 crores for the year 2005-06 to Rs. 7,193 crores for the year 2006-07. During 2006-07, the Bank sourced 97,857 new current accounts as against 77,264 in the previous year. There was a greater focus on acquisition of high value current accounts, thus accelerating the pace of growth in current account deposit balances.

CMS GROWTH OF AXIS BANK IN BUSINESS BANKING

CASH MANAGEMENT
Cash Management Services (CMS) initiatives leveraged the Bank's growing branch net work and robust technology to provide a wide range of customised solutions to suit the dynamic requirements of its clients. The Bank offers CMS solutions for collections and payments with an ideal blend of structured MIS and funds movement so that clients are able to enhance their fund management capabilities. Also the Bank's Web CMS initiative allows them to view their daily transactions on a real time basis. The strong correspondent bank alliance with partner banks offers corporate clients a wide geographical coverage. CMS foray is not only emerging as an important source of fee income but is also

contributing significantly towards garnering zero cost funds, forging large relationships. The Bank has established a strong presence by offering collecting bank services in the IPO/FPO segment and Dividend/Refund Warrant segments. During the year, the CMS throughput grew by 80% to Rs. 3, 79,067 crores compared to Rs. 2,10,977crores last year. During the same period, the number of CMS clients has grown to 2,164 clients from 1,432 clients. The Bank has acted as an Agency Bank for transacting Government Business for the last 6 years, offering banking services to various Central Government Ministries and Departments and other State Governments and Union Territories. Currently, the Bank accepts Income Tax and Other Direct Taxes through its 214 Authorized Branches at 137 locations, and Central Excise and Service Taxes through its 56 Authorised Branches at 13 locations. The Bank also handles disbursement of Civil Pension through 218 Authorised Branches and Defence Pension through 151 Authorised Branches. Additionally, the Bank is providing collection and payment services to four Central Government Ministries and Departments and seven State Governments and Union Territories. The Bank has further strengthened its association with the e-Governance initiatives of various State Governments in India aimed at providing better citizen services by setting up integrated citizen facilitation

centers. During the year, the Bank associated with the 'Choices' Project of the Government of Chhattisgarh and the 'e-Suvidha' initiative of Government of Uttar Pradesh. During 2006-07, the Bank has also extended the business of Stamp Duty Collection through franking in Rajasthan, in addition to Maharashtra and Gujarat. The Bank also launched an e-Tax Payment Facility for payment of Direct Taxes on behalf of the Central Board of Direct Taxes (CBDT) through the internet for its customers. Additionally, the Bank also launched an e-Payment facility for payment of Commercial Taxes on behalf of the Department of Commercial Taxes, Government of Chhattisgarh. During 2006-07, the total Government business throughput registered a growth of 36% to Rs. 37,932 crores against Rs. 27,888 crores in the previous year. LENDING TO AGRICULTURE, SME AND MID CORPORATES To fully exploit the business potential of the Small and Medium Enterprises (SME) and Mid Corporate segments, to bring greater focus on priority sector lending, to achieve the small scale industry and agricultural lending targets fixed by RBI and to explore new avenues of lending like microfinance, a separate business focus was provided during the year. Further, a separate business group was formed to target specific segments in SME and Mid

Corporate business by rolling out schematic loan products where the appraisal is based on systematically designed scoring sheets and simple appraisal techniques so as to reduce turnaround time and quickly increase the customer base. Advances Cells located at important business centers in the country have given a fillip to the Bank's SME, Mid-corporate and Agricultural lending business. During 2006-07, the Bank added 5 more Advances Cells, bringing the total number to 15. This has resulted in significant improvement in performance and portfolio quality. Dedicated marketing teams at the Advances Cells and in certain branches have given an impetus to new business relationships.

The Bank's focus on SSI lending was amply demonstrated by a 72% growth during the year. The Bank gave priority sector lending paramount importance and for the sixth year in a row, the Bank was compliant with the overall priority sector norms stipulated by RBI. The Bank has also laid down a well thought out strategy to grow the retail agricultural lending business. The Bank categorised centres across the country based on agricultural productivity, irrigation potential, infrastructure facilities and loan repayment track record, and chose districts with the good potential for agricultural lending. Further, the Bank is bringing branches in a district or even nearby districts under the umbrella of an 26 agriculture cluster for focused agriculture lending. The Bank has so far opened 18 such agriculture clusters. In

keeping with the focus of the government on increasing direct agricultural lending, the Bank rolled out several new loan products for the farming community. The Bank also fine-tuned its existing loan products to fully suit the varied requirements of its agriculture business clientele. During the year, the total agricultural advances of the Bank grew by an impressive 115%, with direct agricultural lending recording a 91% growth over the previous year. Thus, for the second year in succession, the Bank's direct agricultural lending has grown by over 90%. At the end of the year, direct agricultural advances stood at 9.59% of the net bank credit, which is the highest ever achieved by the Bank. The Bank would continue the focus on building up its agriculture business on profitable lines and is recruiting agriculture business personnel to sustain growth plans and maintain portfolio quality. The micro-finance business of the Bank witnessed increasing outreach through 64 micro-finance relationships. The portfolio under micro-finance increased by 161% during the year, which corresponds to a client outreach of 6.62 lacs, the majority being poor women in rural areas. The Bank also initiated the process of extending micro credit to self-help groups through village organisations. The Bank has also been implementing

various government-sponsored schemes. With a view to expanding our reach in the North-eastern region of the country,the Bank has signed a Memorandum of Understanding with South Asia Enterprises Development Facility,a multi-donor facility managed by the International Finance Corporation of the World Bank. The scope of the collaboration includes developing a profitable micro, small and medium enterprises business model supporting service based marketing linkages and export oriented operations, particularly to enterprises involved in value added agricultural production.

INTERNATIONAL BANKING With increasing integration of the Indian economy globally and consequent two way flows of funds and services, the Bank had identified international banking as a key opportunity to leverage the skills and strengths built in its domestic operations in serving the requirements of its clients in the areas of trade and corporate banking, as also investment banking by establishing presences at strategic international financial hubs in Asia. In this direction, the first overseas branch of the Bank was opened in Singapore in April 2006 and, subsequently, a branch in Hong Kong and a representative office in Shanghai in China commenced operation during the year 2006-07. In addition, the Bank has also set up a branch in the Dubai International Financial Centre, UAE in early April 2007. The Bank's presence at these locations, through which the bulk of the trade inAsia gets routed, would enable the Bank to provide services at every cycle of the trade finance products, besides providing an opportunity to foray in the international investment banking markets. In its first year of operations, the Singapore branch has been active in the area of corporate banking and has been able to participate in and facilitate the debt raising activities of Indian corporates in the international markets. The Singapore branch also provides trade finance and treasury solutions. As of March 31, 2007 the total assets at the overseas branches stood at US Dollars 731 million.

OBJECTIVES OF THE STUDY

The following are the objectives of research conducted: 1. 2. 3. 4. 5. To understand the strategies of bank. To understand the banking industry. To understand the companys functions. To suggest ways for improving the market share, profit margin. To make an effective advertising campaign.

RESEARCH METHODOLOGY

The methodology describes the process of research work. This contains the overall research design, the data collection methods, the sampling procedure, the field survey method and the analysis procedure. 1. 2. 3. 4. 5. Descriptive Research Primarily based on primary data collection. Follow questionnaire method. Quantitative Research Non- Probabilistic convenience sampling.

RESEARCH DESIGN A Research design is a framework or blueprint for conducting the marketing research project. Exploratory Research Purpose Exploratory Research 1. Formulating a problem or define a problem more precisely.

2. 3. 4. 5. 6.

Identify alternative courses of action. Development hypothesis. Isolate key variables and relationships for further examination. Gain insights for developing an approach to the problem. Establish priorities for further research.

Exploratory research design has been used. SAMPLE 1. SAMPLING UNIT: The sampling units selected were all above 18 years of age with diverse socio-economic background. 2. SAMPLING TECHNIQUE: Samples were collected by way of

convenient sampling and questions were asked to the respondents when they were coming out of their respective banks after availing the services there. 3. SAMPLE SIZE:A total sample size of 40 was selected.

LITERATURE REVIEW 'Doing a Literature Review' is a practical and comprehensive guide to researching, preparing and writing a literature review, a major component of research projects. It is an essential tool not only for postgraduate students but

also for undergraduate and novice researchers across the social sciences and humanities. A literature review is an examination of the research that has been conducted in a particular field of study. Hart (1998) defines it as: 1. The selection of available documents (both published and unpublished) on the topic, which contain information, ideas, data and evidence. [This selection is] written from a particular standpoint to fulfil certain aims or express certain views on the nature of the topic and how it is to be investigated, and 2. The effective evaluation of these documents in relation to the research being proposed DATA COLLECTION METHODS Data Collection is an important aspect of any type of research study. Inaccurate data collection can impact the results of a study and ultimately lead to invalid results. Data collection methods for impact evaluation vary along a continuum. At the one end of this continuum are quantatative methods and at the other end of the continuum are Qualitative methods for data collection Quantitative and Qualitative Data collection methods

The Quantitative data collection methods, rely on random sampling and structured data collection instruments that fit diverse experiences into predetermined response categories. They produce results that are easy to summarize, compare, and generalize. Quantitative research is concerned with testing hypotheses derived from theory and/or being able to estimate the size of a phenomenon of interest. Depending on the research question, participants may be randomly assigned to different treatments. If this is not feasible, the researcher may collect data on participant and situational characteristics in order to statistically control for their influence on the dependent, or outcome, variable. If the intent is to generalize from the research participants to a larger population, the researcher will employ probability sampling to select participants. Typical quantitative data gathering strategies include: 1. 2. Experiments/clinical trials. Observing and recording well-defined events (e.g., counting the number of patients waiting in emergency at specified times of the day). 3. 4. Obtaining relevant data from management information systems. Administering surveys with closed-ended questions (e.g., face-to face and telephone interviews, questionnaires etc).
DATA COLLECTION SOURCES

Poverty maps are not only influenced by the selection of a conceptual approach to define poverty and by the choice of a specific poverty indicator. The data collection method itself can determine the resolution of the poverty map and the type of analysis to conduct. A brief review of different data collection methods will highlight the pros and cons of various subjective and objective methods and the trade-off between survey and census data. A short section summarizing major sources for international poverty maps will show that the pool of existing data for a global poverty map is limited. Additional investments in data collection and modeling need to be made to produce maps with higher resolution, more comprehensive poverty measures, and a wider international country coverage.

SWOT ANALYSIS
STRENGTHS: 1. 2. 3. 4. High quality service provide Strong and well management. Second largest private bank all over India AXIS Bank has been to able maintain the quality of its loan portfolio

WEAKNESSES: 1. Strengthening of rupee hitting profits 1. Ability to pass through price increases in various markets due to 2. 3. Intense competition. Manpower problem is big problem.

OPPORTUNITIES: 1. 1. 2. 3. Development of modern banking. Potential for growth through increased penetration. Opportunity to no:1 bank all over india Increasing popularity in overseas markets

THREATS/CHALLENGES: 1. 1. 2. 3. 4. Environment with diverse players Rising competitors for private banking Change in fiscal benefits/laws People attraction & retention Management of country risk.

ANALYSIS OF DATA

MANAGEMENT DISCUSSION AND ANALYSIS MACRO-ECONOMIC ENVIRONMENT While macro-economic fundamentals have generally been strong in 2008-09, inflation, largely due to supply-side constraints, had become an overriding concern in the closing months of fiscal 2008-09. The GDP is expected to show a growth of 9.2% for the fiscal 2006-07 against 9% last fiscal year. Agriculture and allied sectors are expected to grow at a rate of 2.7% in 2008-09, while industrial production is expected to grow by about 10%. growth in industrial production was driven mainly by the manufacturing sector, which grew by 11.3% in 2008-09 following a growth of 9.1% in the previous fiscal. The momentum of growth in the services sector continued with a growth of 11.2% in fiscal 2006-07. Among the three sub-sectors of services, 'trade, hotels, transport and communication services' has continued to boost the sector by growing at double-digit rates for the fourth successive year. Inflation, with its roots in supply-side factors, was accompanied by buoyant growth of money

and credit in the last two years. Starting with a rate of 3.98%, the rate of inflation in 2006-07 has been on a generally upward trend with intermittent falls. However, average inflation during 2006-07 remained at 5%, with continuing fiscal and monetary policy interventions aimed at controlling price levels. Liquidity conditions remained fairly comfortable up to early September 2006. With year-on-year inflation stubbornly above 5% in the second half of the year, RBI announced further measures to stem inflationary expectations and also to contain the credit growth that put pressure on the liquidity position, thereby hardening interest rates in the economy. Growth trends were accompanied by robustness of overall macro-economic fundamentals, particularly with tangible progress towards fiscal consolidation and a strong balance of payments position. With an upsurge in investment, the outlook is distinctly upbeat. However, the major challenges lie in taking macroeconomic level corrective action to tackle the supply side constraints to keep inflation at an acceptable level. Interest rates have already shown signs of hardening, which may affect further investments in the industrial sector. In order to maintain the GDP growth over 9% in the coming years, the major challenge lies in balancing of current pace of growth with non-accelerating inflation. The current policy measures adopted by monetary authorities to tighten liquidity in order to fight inflation led to an increase in interest rates,

which could slow down economic growth in the coming year, particularly in respect of infrastructure and other core sector projects. Against the backdrop of generally strong economic fundamentals in the last year, the banking system seems to have done well during 2006-07, reflected in the growth of business in the form of aggregate deposits and advances. In terms of the Weekly Statistical Supplement published by RBI, the aggregate deposits of All Scheduled Commercial Banks (ASCB) as on 30 March 2007 have grown by 24.27% from 31 March 2006, while bank credit has grown by 28.51%. However, there continue to be areas of concern, primarily hardening interest rates that may result in pressure upon the net interest margins. The continuing rise in interest rates may make various projects economically unviable, resulting in higher NPAs and also affect valuations. Lastly, the sharp increase in provisions on standard assets will impact the profitability of banks. COMPETITOR ANALYSIS Axis Bank stands apart from its private sector competitors ICICI Bank and HDFC Bank in one crucial respect. While the other two banks have envisaged retail banking as a key area of strategic emphasis with the share of the retail business (both on the funding and asset sides) growing strongly year after year the share of retail business, particularly retail assets, has actually come down quite sharply in the case of Axis Bank.

The numbers here are quite interesting. For ICICI Bank, retail loans now (as of June 2007) account for as much as 70 per cent of the banks total loan book of Rs 2,00,000 crore. For HDFC Bank, retail assets are around 57 per cent (Rs 28,000 crore) of the total loans as of March 2007. In the case of Axis Bank, retail loans have declined from 30 per cent of the total loan book of Rs 25,800 crore in June 2006 to around 23 per cent of loan book of Rs.41,280 crore (as of June 2007). Even over a longer period, while the overall asset growth for Axis Bank has been quite high and has matched that of the other banks, retail exposures grew at a slower pace. If the sharp decline in the retail asset book in the past year in the case of Axis Bank is part of a deliberate business strategy, this could have significant implications (not necessarily negative) for the overall future profitability of the business. Despite the relatively slower growth of the retail book over a period of time and the outright decline seen in the past year, the banks fundamentals are quite resilient. With the high level of mid-corporate and wholesale corporate lending the bank has been doing, one would have expected the net interest margins to have been under greater pressure. The bank, though, appears to have insulated such pressures. Interest margins, while they have declined from the 3.15 per cent seen in 2003-04, are still hovering close to the 3 per cent

mark. (The comparable margins for ICICI Bank and HDFC Bank are around 2.60 per cent and 4 per cent respectively. The margins for ICICI Bank are lower despite its much larger share of the higher margin retail business, since funding costs also are higher). Such strong emphasis and focus on lending also does not appear to have had any deleterious impact on the overall asset quality. The banks non-performing loans are even now, after five years of extremely rapid asset build-up, below 1 per cent of its total loans. From a medium-term perspective, it appears that Axis Bank could be charting out a niche for itself in the private bank space. It appears to be following a business strategy quite different from the high-volume and commodity-style approach of ICICI Bank and HDFC Bank. That strategy also has its pluses in terms of the relatively higher margins in some segments of the retail business and the in-built credit risk diversification (and mitigation) achieved through a widely dispersed retail credit portfolio. But, as indicated above, Axis Bank has been to able to maintain the quality of its loan portfolio despite the concentrated nature of wholesale corporate lending

GRAPHS
RATE OF DIVEDEND DECLAIRED BY AXIS BANK

YEAR 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

DIVEDEND 12% 15% 20% 22% 25% 28% 35% 45% 60%

70% 60% 50% 40% 30% 20% 10% 0% DIVEDEND 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

RETAIL LIABILITIES

SB YEAR

DEPOSIT

(RS.

CRORE)

2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

1423 2585 4891 8061 12165

14000 12000 10000 8000 6000 4000 2000 0 SB DEPOSIT 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

RETAIL LIABILITIES

RETAIL ASSETS

INTELLECTUAL CAPITAL OF AXIS BANK

RISING PROFITABILITY OF AXIS BANK

ENHANCING SHARE HOLDER VALUE OF AXIS BANK

TABLES
RATIO ANALYSIS OF AXIS BANK
Mar 08 Capital Adequacy Ratio EARNINGS RATIOS Income from 0.00 49.48 42.51 42.56 36.28 0.00 ' Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04

11.57

11.08s

12.66

11.21

Fund Advances as a % of Op

Income Operating Income as a % of Working Funds Fund based 86.07 85.28 91.28 14.81 16.10 14.73 22.59

income as a % of 100.00 85.58 Op Income Fee based income as a % of Op 0.00 14.41

13.92

14.71

8.71

Income PROFITABLITY RATIOS Yield on Fund Advances Break-Even Yield Ratio Cost Ratio Net Margin Adjusted Return On Net Worth Reported Return On Net Worth BORROWING RATIOS Borrowings from RBI as % to Total 0.00 Borrowings Borrowings from other banks as a % to Total 0.00 11.54 32.37 9.55 18.61 0.00 0.00 0.00 0.00 Profit of Funds 4.73 7.32 6.84 6.27 8.19

8.11

8.11

7.64

10.90

4.67

4.23

3.56

4.75

12.17 12.01

13.47

14.33

13.14

12.21 19.50

16.94

13.54

24.01

12.21 19.42

16.88

13.89

24.49

Borrowings

Borrowings from others as a % to 100.00 23.17 Total Borrowings Borrowings within India as a % to Total 100.00 34.71 78.02 72.98 75.97 45.64 63.42 57.36

Borrowings Borrowings from outside India as a % to Total 0.00 65.28 21.97 27.01 24.02

Borrowings DEPOSIT RATIOS Demand Deposit of Total Deposits Saving Deposit 100.00 19.22 19.86 22.56 25.74

of Total Deposits Time Deposit of Total Deposits Deposits within

0.00

20.62

20.10

15.42

12.33

0.00

60.14

60.02

62.01

61.92

India as % to Total Deposits Deposits Outside India as % to

99.63

100.00

100.00

100.00

0.36

0.00

0.00

0.00

Total Deposits PER BRANCH

RATIOS Operating Income Branch Operating Profit Per Branch Net Profit Per 2.13 2.11 1.82 1.96 Per 9.74 7.99 6.78 8.39

Branch Personnel Expenses Branch Administrative Expenses Branch Financial Expenses Branch Borrowings Branch Deposits Branch PER Per Per Per Per Per

1.18

1.08

0.96

1.08

0.68

0.53

0.52

0.48

1.54

1.28

0.89

1.86

5.34

4.02

3.52

4.05

9.26

5.96

5.25

2.09

104.79

89.14

93.55

83.15

EMPLOYEE RATIOS (Rs. in Units) Operating Income Employee Operating Profit Per Employee Net Profit Per Per 5,472,542.3 5,485,206. 8 78 6,137,279.6 6 1,430,794.8 9 791,634.17

4,829,294.06

1,195,476.6 1,451,095. 5 663,264.93 07 742,839.7 7 366,552.4 2

1,293,245.96

Employee Personnel Expenses Employee Deposits Employee Fund Advances Per Per

685,089.48

382,110.32

371,465.66

351,755.15

58,903,407. 61,213,99 66,607,855.7 60,788,809. 92 5.57 0 11

36,950,383. 34,051,93 32,772,362.7 27,162,590. 97 1.02 4 66

Per Employee

FINDING & DISCUSSION

1. 2. 3. 4. 5. 6. 7. 8. 9.

Here lot of things I find to make this project report. Firstly know to how they manage there banking system. Secondly known there operation system. Thirdly known there controlling risk management. Fourthly I know it that how to manage there financial system. How to operate their share holder. Know how to control competitors. Growth banking industry. Growth of axis bank.

SUGGESTION & RECOMMENDATION

1.

An increase in interest rates is the reason of decline in bank activity so interest rate should appropriate.

2.

Technology should improve in banking sector because new technology replace traditional banking and reduced personnel cost.

3.

Bank should solved the problem of lack of efficient employees , so that man power could not become a hurdle in success of bank

4. 5.

CONCLUSION

The banking industry's market capitalization made a substantial decline. Most investors are concerned with whether the industry can sustain continued profitability as a result of these factors. Banks have responded in recent years to these problems by diversifying away from interest sensitive products and services. But interest rates are the fundamental aspect of any financial services. I believe the financial services industry will be deeply affected by rise Interest rates have already shown signs of hardening, which may affect further investments in the industrial sector. In order to maintain the GDP growth over 9% in the coming years, the major challenge lies in balancing of current pace of growth with non-accelerating inflation. The current policy measures adopted by monetary authorities to tighten liquidity in order to fight inflation led to an increase in interest rates, which could slow down economic growth in the coming year, particularly in respect of infrastructure and other core sector projects.ng interest rates. Axis Bank stands apart from its private sector competitors ICICI Bank and HDFC Bank -in one crucial respect. While the other two banks have envisaged retail banking as a key area of strategic emphasis with the share of the retail

business (both on the funding and asset sides) growing strongly year after year the share of retail business, particularly retail assets, has actually come down quite sharply in the case of Axis Bank.

LIMITATION

Credit risk management The changing operating environment for banks entails managing complex and variable risks in a disciplined fashion. The key challenges for effective management of variegated risks emanate from creation of skill sets within the Bank with appropriate domain knowledge and developing a functional framework to monitor risks with triggers in cases of breaches in the preaccepted levels of identified risks. The Bank, since the inception of the Risk Department, has developed in-house skills to manage key areas of risk viz., credit risk, market risk and operational risk.

Credit Risk Credit risk covers the inability of a borrower or counter-party to honour commitments under an agreement and any such failure has adverse impact on the financial performance of the Bank. Accordingly, the Bank strives to effectively assess, administer, monitor and enforce recovery of loans to various clients. The Additional measures of risk containment at the individual exposures and at the portfolio level are:

 Rating linked exposures norms adopted by the Bank are conservative in comparison to the regulatory prudential exposure norms. Industry-wise exposure ceilings are based on the industry performance, prospects and the competitiveness of the sector. Exposures with bullet repayments, long gestation projects, longer tenor exposures, and longer moratorium are assessed with additional care. Committee of Directors Risk Management Committee Audit Committee Board of Directors Credit Committees & ALCO Operational Risk Investment Committees Management Committee 28 Distributions of Credit Risk Assets by Asset Quality Industry analysis plays an important part in assessing the potential concentration risk from within the loan portfolio. Particular attention is given to industry sectors where the Bank believes there is a high degree of risk or potential for volatility in the future.. Consumer Credit Risk Management The Bank's continuing aggressive foray into retail banking has resulted in a sharp build up in the retail asset portfolio. The key challenge for a healthy retail asset portfolio is to ensure a stable risk adjusted earnings stream by maintaining

customer defaults within acceptable levels. The Bank periodically carries out a comprehensive portfolio level analysis of retail asset portfolio with a risk return perspective. Risk measurement for the retail portfolio is assessed primarily on a credit scoring basis. During the year, the Bank has initiated a project to revamp its existing credit scoring models for retail assets with external support from a reputed international vendor.

Market Risk Market risk is the risk to the Bank's earnings and capital due to changes in the market level of interest rates or prices of securities, foreign exchange and equities, as well as the volatilities of those changes. The Bank is exposed to market risk through its trading activities, which are carried out both for customers and on a proprietary basis. The Bank adopts a comprehensive approach to market risk management for its trading, investment and asset/liability portfolios. The Bank uses various risk metrics, both statistical and non-statistical, including non-statistical measures like position, gaps and sensitivities (duration, PVBP, option Greeks); Value at Risk (VaR); sensitivity of net interest income (EaR); and sensitivity of the Economic Value of Equity (EVE).

Liquidity Risk Liquidity risk arises in any bank's general funding of its activities. As part of the liquidity management contingency planning, the Bank assesses potential trends, demands, events and uncertainties that could reasonably result in an adverse liquidity condition. The Bank considers the impact of these potential changes on its sources of short term funding and long term liquidity planning. The Bank's ALM policy defines the gap limits for the structural liquidity and the liquidity profile of the Bank is analysed on a static as also a dynamic basis by tracking all cash inflows and outflows in the maturity ladder based on the expected occurrence of cash flows. The Bank undertakes behavioural analysis of the nonmaturity products viz. savings and current deposits and cash credit/ overdraft accounts, on a periodic basis to ascertain the volatility of residual balances in those accounts. The renewal pattern and premature withdrawals of term deposits and draw downs of unavailed credit limits are also captured through behavioural studies.

Country Risk The Bank has put in place a risk monitoring system for the management of country risk. The Bank uses the seven-category classification viz. insignificant,

low, moderate, high, very high, restricted and off-credit followed by the Export Credit Guarantee Corporation of India Ltd. (ECGC) and ratings of international rating agency Dun & Bradstreet for monitoring the country exposures. The ratings of countries are being undertaken at monthly intervals or at more frequent intervals if the situation so warrants i.e. in case of a significant change in the condition of a country involving sharp deterioration of its ratings. Exposure to a country includes all credit-related lending, trading and investment activities, whether cross border or locally funded. The Bank has set up exposure limits for each risk category as also individual country exposure limits, and the exposure limits are generally monitored at weekly intervals.

Operational Risk Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or normal external events. The Bank is in the process of rolling out a software solution for an operational risk management framework with emphasis on identification of key risk indicators at the unit level, monitoring identified risk at the unit level and then aggregating at a higher organizational level. The business units put in place the baseline internal controls as approved by the Product Management Committee to ensure a sound and well controlled operating environment throughout the organization. Each new product or service introduced is subject to a rigorous risk review and

signoff process where all relevant risks are identified and assessed by departments independent of the risk taking unit proposing the product. Variations of existing products, as well as outsourcing, are also subject to a similar process. Risk Management framework for Overseas Operations.

The Bank has put in place a comprehensive Risk Management policy for its global operations and has also formulated country specific risk policy for these operations based on the host country regulators' guidelines. The Asset Liability Management and all the risk exposures for the overseas operations are monitored centrally by implementing sound systems and controls, and also by adopting the norms as specified by the regulators in the host country.

BIBLIOGRAPHY

Web sites.

www.google.com www.axisbank.com www.ragadirect.com www.altavista.com www.answers.com www.slideshare.com www.managementparadise.com

ANNEXURE

1. What is your full time profession? a) Business c) Private Jobs e) Housewife d) Retired b) Govt. Service

2. What efforts can be made to bring about more awareness amongst people? a) Media Ads c) Newspaper e) Event Sponsorship b) Banners d) Agents f) Any Other

3. You like to work in market/field and want to interact with people? a) Yes b) No

4. From how many years you live in NCR? a) Below 6 months c) 1 year- 2 year b) 6 months 1 year d) more than 2 years

5.

How many people do you know in NCR? a) Less than 200 b) 200-500

c) 500-1000

d) Above 1000

6. Do you like to earn some extra money? a) Yes b) No

7. Are you involved in Banking Service? a) Yes If YES, than answer the following question: A. Duration of working? a) Below 6 months c) 1 2 years e) Above 3 years B. Annual Productivity given to company? a) Below 50,000 c) 1, 00,000 2, 00,000 e) 3, 00,000 4, 00,000 b) 50,000 1, 00,000 d) 2, 00,000 3, 00,000 f) Above 3, 00,000 b) 6 months 1 year d) 2 3 years b) No

C. Are you satisfied with your company? a) Yes b) No

D. Which age group do you belong? a) Below 25 c) 30 35 d) Above 35 b) 25 30

E. Are you married? a) Yes b) No

F. What is your Educational Background? a) 10+2 c) Post Graduation e) Other b) Graduation d) Professional

G. What is your Household income? a) Below 2 lacks c) 5 8 lacks b) 2 5 lacks d) Above 8 lacks

H. How much time you provide easily besides your job hours? a) 0-2 hrs - 22 c) 4-6 hrs - 15 b) 2-4 hrs d) Time

CASH FLOW STATEMENT

39

CASH FLOW STATEMENT (FOR THE YEAR ENDED 31 MARCH 2007)

Year ended

Year ended

31-03-2007 31-03-2006 (Rs. in 000) Effect of exchange fluctuation Translation reserve Net increase in cash and cash equivalents Cash and cash equivalents as at 1 April 2006 Cash and cash equivalents 36,418,422 45,029,364 32,764,629 (8,610,942) (5,015) (Rs. in 000)

As at 31 March 2007

69,183,051

36,418,422

PROFIT AND LOSS ACCOUNT

profit & Loss account of Axis Bank

Mar '11 12 mths Income Interest Earned Other Income Total Income Expenditure Interest expended Employee Cost Selling and Admin Expenses Depreciation Miscellaneous Expenses Preoperative Exp Capitalised Operating Expenses Provisions & Contingencies Total Expenses 15,154.81 4,632.13 19,786.94 8,591.82 1,613.90 2,406.59 289.59 3,496.55 0.00 5,734.55 2,072.08 16,398.45 Mar '11 12 mths Net Profit for the Year Extraordionary Items Profit brought forward Total Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Earning Per Share (Rs) Equity Dividend (%) 3,388.49 0.00 3,427.43 6,815.92 0.00 670.36 0.00 82.54 140.00

------------------- in Rs. Cr. ------------------Mar '10 12 mths 11,638.02 3,945.78 15,583.80 6,633.53 1,255.82 2,443.05 234.32 2,502.55 0.00 5,066.76 1,368.98 13,069.27 Mar '10 12 mths 2,514.53 0.00 2,348.09 4,862.62 0.00 567.45 0.00 62.06 120.00 Mar '09 12 mths 10,835.49 2,896.88 13,732.37 7,149.27 997.66 1,572.83 188.67 2,008.57 0.00 3,590.42 1,177.31 11,917.00 Mar '09 12 mths 1,815.36 0.00 1,553.87 3,369.23 0.00 420.52 0.00 50.57 100.00 Mar '08 12 mths 7,005.32 1,750.59 8,755.91 4,419.96 670.25 952.61 158.11 1,483.94 0.00 2,454.03 810.88 7,684.87 Mar '08 12 mths 1,071.03 0.00 1,029.07 2,100.10 0.00 251.64 0.00 29.94 60.00

12

4,5 9 5,5

2,9 3 5 1 8

1,3 5 4,8 M

12

6 7 1,3

Book Value (Rs) Appropriations Transfer to Statutory Reserves Transfer to Other Reserves Proposed Dividend/Transfer to Govt Balance c/f to Balance Sheet Total

462.77 836.95 338.84 670.36 4,969.77 6,815.92

395.99 867.43 0.31 567.45 3,427.43 4,862.62

284.50 600.62 0.00 420.52 2,348.09 3,369.23

245.13 294.60 -0.01 251.64 1,553.87 2,100.10

1 1,0 1,3

BALANCESHEET AS ON 31ST MARCH 2009

Balance Sheet of Axis Bank Mar '11 12 mths Capital and Liabilities: Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities 410.55 410.55 0.00 0.00 18,588.28 0.00 18,998.83 189,237.80 26,267.88 215,505.68 8,208.86 242,713.37 Mar '11 12 mths

------------------- in Rs. Cr. ------------------Mar '10 Mar '09 Mar '08 12 mths 405.17 405.17 0.17 0.00 15,639.27 0.00 16,044.61 141,300.22 17,169.55 158,469.77 6,133.46 180,647.84 Mar '10 12 mths 12 mths 359.01 359.01 1.21 0.00 9,854.58 0.00 10,214.80 117,374.11 10,185.48 127,559.59 9,947.67 147,722.06 Mar '09 12 mths 12 mths 357.71 357.71 2.19 0.00 8,410.79 0.00 8,770.69 87,626.22 5,624.04 93,250.26 7,556.90 109,577.85 Mar '08 12 mths

12

2 2

3,1

3,4 58,7 5,1 63,9 5,8 73,2 M

12

Assets Cash & Balances with RBI Balance with Banks, Money at Call Advances Investments Gross Block Accumulated Depreciation Net Block Capital Work In Progress Other Assets Total Assets Contingent Liabilities Bills for collection Book Value (Rs)

13,886.16 7,522.49 142,407.83 71,991.62 3,426.49 1,176.03 2,250.46 22.69 4,632.12 242,713.37 429,069.63 57,400.80 462.77

9,473.88 5,732.56 104,343.12 55,974.82 2,107.98 942.79 1,165.19 57.24 3,901.06 180,647.87 296,125.58 35,756.32 395.99

9,419.21 5,597.69 81,556.77 46,330.35 1,741.86 726.45 1,015.41 57.48 3,745.15 147,722.06 104,428.39 29,906.04 284.50

7,305.66 5,198.58 59,661.14 33,705.10 1,384.70 590.33 794.37 128.48 2,784.51 109,577.84 78,028.44 16,569.95 245.13

4,6 2,2 36,8 26,8 1,0 4 6

1,8 73,2

55,9 11,7 1