Annual Report

2006-07

IDBI - Broadening
Horizons
After helping build a modern and
industrially

buoyant

India

and

supporting the dreams of Corporate

India to its fruition, in every possible
way, for over 40 years, we are now
reaching out over a broader operating
canvas. As a new generation, fullservice commercial bank, geared to
fulfill our next commitment, to the
people of India. Our odyssey has just
begun. In the quest for inclusive
banking,

pervasive

growth

and

unbounded prosperity. To make every

hardworking Indian realise his dreams,
in our own special way. Blending
innovative products with customerfriendly technology. To bring a lasting
smile to your face. As your trusted
partner in progress, wherever you are,
whatever you are.

VISION
" To be the trusted partner in progress by
leveraging quality human capital and setting
global standards of excellence to build the most
valued financial conglomerate."

IDBI : TOUCHING THE LIVES OF PEOPLE

At IDBI, we have always strived to touch every aspect of our
customers' lives through each activity and initiative. Reaching out
across the country with increased presence and advanced
customer-friendly products. Today, these innovative and
customized products cater to every segment of society. Backed
by a youthful and highly experienced workforce, cutting-edge
technology, efficient systems and customer services that meet
high standards, resulting in an ever-expanding happy family of
IDBI customers. Not merely offering financial services - touching
people's lives.

Shri V.P. Shetty, CMD, IDBI and Chairman, Indian Banks' Association,
presenting a bouquet to Hon'ble Finance Minister Shri P.
Chidambaram at a Meeting of CEOs of all Public Sector Banks with
the Finance Minister.

Shri V.P. Shetty, CMD, IDBI and Shri Sanjay Sharma, Adviser (IT),
IDBI receiving the Awards for Best Internet Bank for Corporate
Customers and for the "IT Team of the Year from Dr. Y.V. Reddy,
Governor, RBI, at the Institute for Development and Research in
Banking Technology (IDRBT), Hyderabad.

Shri V. P. Shetty CMD, IDBI and Shri Jitender Balakrishnan, DMD,

IDBI along with Shri T. S. Vijayan, Chairman, LIC at the signing of the
MOU between IDBI and LIC for co-financing of long gestation
projects.

Shri V.P. Shetty, CMD, IDBI, Shri M. Venugopalan, Chairman, Federal

Bank and Mr. Peer Van Harten, CEO, Fortis Insurance, signed a Joint
Venture Agreement to establish a new Life Insurance company. Shri
O.V Bundellu, DMD, IDBI, was present on the occasion.

Shri V.P. Shetty, CMD, IDBI addressing the media at Satara on

October 3, 2006, the effective date of amalgamation of the erstwhile
The United Western Bank Ltd. with IDBI.

At a Home Loan exhibition in Mumbai, our dedicated customer

service executive provides information to a prospective customer
about various schemes and procedures.

Shri Pradip Roy, Executive Director, IDBI and Mr. Christian Haas,
Director, KFW Office, New Delhi exchanging the signed MoU to
jointly assist CDM projects in the presence of Shri Jitender
Balakrishnan, DMD, IDBI.

Shri O.V.Bundellu, DMD, IDBI and Ms. Gwynne J. Master, Managing

Director, Regional Manager Southeast Asia,Wachovia Bank, NA after
execution of Loan Agreementfor JPY loan equivalent to USD 100
mn.

Shri V.P. Shetty, CMD, IDBI receiving the 'Bilingual House

Magazine' Award for the Bank's house journal 'Shree Vayam'
from Dr. Y. V. Reddy, Governor, RBI. Shri V. Leeladhar,
Dy. Governor, RBI was present on the occasion.

Shri V.P. Shetty, CMD, IDBI, with one of our long-standing and loyal
customers at Satara on October 3, 2006, the effective date of
amalgamation of the erstwhile The United Western Bank Ltd. with
IDBI.

In tune with the Bank's commitment to the people, Shri K.D.

Hodavdekar, CGM-IDBI along with senior Govt. officials
distributing prizes at a function organized by Mahila Arthik Vikas
Mahamandal, Satara.

Shri V.P. Shetty, CMD, IDBI, during the Festival Cricket Match
between CMD XI v/s Sports Club President XI.

BOARD OF DIRECTORS

PRINCIPAL OFFICERS
(as on May 14, 2007)

/ Executive Directors
Shri Pradip Roy

Shri B. P. Singh

Shri B. Ravindranath

Shri Siby Antony

/ Other Principal Officers*

Shri Iswar C. Agasti

Shri L. P. Aggarwal

Shri S. Ananthakrishnan

Shri S. Andi

Shri S. N. Baheti

Shri T. R. Bajalia

Shri Balkrishan Batra

Shri Sohrab Chinoy

Shri R. Damodaran

Shri K. D. Hodavdekar

Shri D. C. Jain

Shri K. C. Jani

Smt. Medha Joshi

Shri D. K. Kambale

Shri R. K. Kapoor

Shri M. Chittaranjan Kumar

Shri Viney Kumar

Shri B. P. Mandal

Dr. T. K. Mukhopadhyay

Shri P. V. Naik

Shri R. Narasimhan

Shri C. P. Philip

Shri K. P. Ramakrishnan

Shri A. V. Rammurty

Shri J. K. Ray

Shri R. C. Razdan

Shri V. K. Saxena

Shri Deepak V. Shimpi

Shri Akhauri Rajesh Sinha

Shri S. K. V. Srinivasan

Shri U. Venkataraman

Capt. T. Venugopal

In alphabetical order

Chairman and Managing Director

From the CMD's DeskDear Shareholders,

I am happy to share with you the good performance of the Bank for
the year ended March 31, 2007. The Bank successfully added several
milestones during the last year and in the process earned a place in
the top league of the Public Sector Banks achieving more than Rs. one
lakh crore of business. It is a matter of great satisfaction that the Bank
has maintained the pace and tempo of growth in many parameters
and is emerging strong and also scaling new heights of all-round
performance.
We resolutely pursued a three-pronged strategy involving organic &
inorganic growth as also diversification. The amalgamation of the
erstwhile The United Western Bank Ltd. [UWB] with your Bank in
October 2006 is as a part of the inorganic growth strategy. We stand
committed to leveraging the virtuous combination of highly skilled
workforce, state-of-the-art technology platform and robust business
strategy to provide world-class financial solutions and services to
Indian and global customers.
In our quest for growth and accomplishing our long-term business
goals, we have expanded our business horizon through introduction of
new products as also further sharpening the existing offerings to our
customers. Your Bank has also diversified into related areas within the
financial sector. Let me assure you that your Bank has the
organizational capability to steer each of these new lines of business
to leadership positions in their respective fields.
In consonance with its mandate, your Bank will continue to play a
seminal role in creation of productive assets in the economy. We have
formulated an ambitious business plan for 2007-08 in such a way as to
ensure that the Bank grows organically and generates stakeholders'
value, on a sustainable basis, over the planning horizon. I may add that
your Bank will not hesitate in seizing any opportunity of inorganic
growth arising in the banking sector. The transformation of your Bank
from a Development Financial Institution to a major financial service
provider is already discernible.
I firmly believe that the pre-eminent position of your Bank today is
due to your continued faith and support to us. All business decisions
at your Bank are governed by the principle of creating stakeholders'
value. I would like to express sincere gratitude on behalf of the Board
of Directors and on my own behalf to you and other stakeholders. In
keeping with our tagline "Aao Sochein Bada", we would continue to
be counted amongst the pre-eminent banks in the country and in this
journey together we would strive to reach greater heights.

With warm regards,

V.P. Shetty
April 20, 2007

CMD

IDBI IN THE NEWS

1
9
12
17
19
23
24
33
36
65
117
CONTENTS
5

Directors' Report
Management Discussion & Analysis

37 Business Environment
40 Business Review
45 Risk Management
47 Management, Controls and Systems
51 Information Technology
52 Corporate Governance
61 Performance of Subsidiary Organisations
64 Future Prospects
Accounts
65 Accounts of IDBI Ltd.
117 Consolidated Accounts

SOME OF OUR COMMUNICATIONS

Inside Back

Industrial Development Bank of India Limited. Regd. Office: IDBI Tower, WTC Complex, Cuffe Parade, Mumbai 400 005. Tel: (+91 22) 6655 3355, 2218 9111 Fax: (+91 22) 2218 2352. Website: www.idbi.com

 : 2006-07
31 2007

.
, 1949
.

. 31 2007
62,471 18.5%
. 2006-07
( ) 34.4%
1,05,824.8 .

1 .

1,00,000
2007
1,03,839 .

. 2007
43,354 66.7% .

2006- 2007
7372.6
6345.4 1027.2
. 276.3

224.0 52.3
. 224.0 (
)

1 :
( )

2005-06

2006-07

723.8

724.4

5648.3

7575.5

26,000.9

43,354.0

47,530.2

42,404.4

8661.6

9781.0

88,564.8

1,03,839.3

2680.1

5406.5

2682.7

1504.6

25,350.5

25,675.3

52,739.1

62,470.8

5112.4

8782.1

88,564.8

1,03,839.3

2005-06

2006-07

( )

6448.7

7148.6

5860.3

6466.0

588.3

682.6

27.4

52.3

560.9

630.3

-

-

Directors Report-Hindi.pmd

17-May-07, 5:22 PM

 7148.6 .
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Directors Report-Hindi.pmd

17-May-07, 5:22 PM

2005-06

2006-07

560.9

630.3

787.4

1030.7

392.0

1.7

1740.3

1662.7

140.2

158.0

11.0

392.0

1.7

50.0

50.0

3.5

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108.6

108.7

15.2

18.5

1030.7

1314.9

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. .


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: 20 2007

Directors Report-Hindi.pmd

17-May-07, 5:22 PM

..

Directors Report : 2006-07

The Board of Directors of your Bank is pleased to
present its Report on the business and operations of
your Bank for the financial year ended 31st March 2007.
The financial information presented in this Report is in
terms of the form and content prescribed by the
Banking Regulation Act, 1949.
Your Banks financial highlights for the period under
review are given in Table 1.
During the financial year, total assets of your Bank
surpassed the level of Rs.1,00,000 crore and reached
the new height of Rs.1,03,839 crore at end-March 2007.
This was made possible with the benefits derived from
both organic and inorganic routes. Aggregate deposits
stood at Rs. 43,354 crore, clinching a healthy growth
of 66.7% at the end of the fiscal 2007. Your Bank
continued with its efforts to reduce dependence on
bonds during the fiscal. Total advances of your Bank

stood at Rs. 62,471 crore as on March 31, 2007

reflecting a growth rate of 18.5%. Total business
(advances plus deposits) of your Bank grew by 34.4%
during 2006-07 to reach a level of Rs. 1,05,824.8 crore.
Profit and Appropriations
Gross income earned by your Bank during the year
April 2006-March 2007 amounted to Rs.. 7372.6 crore
comprising interest income of Rs. 6345.4 crore and
other income of Rs. 1027.2 crore. Provisions during
the year amounted to Rs. 276.3 crore, consisting of
Rs. 224.0 crore as provisions for bad & doubtful debts
and investments and Rs. 52.3 crore towards tax. After
making provisions (for bad and doubtful debts and
investments) of Rs. 224.0 crore, net income was at Rs.
7148.6 crore. Total expenditure of your Bank, during
the year, excluding provisions and contingencies, stood
at Rs. 6466.0 crore consisting of Rs. 5687.5 crore of

Table 1 : Financial Highlights

(Rs. crore)

Particulars
As at year-end

2005-06

2006-07

723.8

724.4

5648.3

7575.5

Deposits

26,000.9

43,354.0

Borrowings

47,530.2

42,404.4

8661.6

9781.0

88,564.8

1,03,839.3

Cash & Balances with RBI

2680.1

5406.5

Balances with Banks and Money at Call & Short Notice

2682.7

1504.6

Investments

25,350.5

25,675.3

Advances

52,739.1

62,470.8

5112.4

8782.1

Total Assets

88,564.8

1,03,839.3

For the period

2005-06

2006-07

Total Income (net of provisions for bad & doubtful debts and investments)

6448.7

7148.6

Total Expenses

5860.3

6466.0

Profit Before Tax

588.3

682.6

Provision for Tax

27.4

52.3

560.9

630.3

Capital
Reserves & Surplus

Other Liabilities & Provisions

Total Liabilities

Fixed & Other Assets

Profit After Tax

Directors Report.pmd

17-May-07, 5:26 PM

interest expenses and Rs. 778.5 crore of operational

expenses.

this regard, your Bank has also undertaken proactive

steps to ensure compliance with the Basel-II framework.

Your Banks working during the year resulted in a Profit

Before Tax (PBT) of Rs. 682.6 crore. After making a
provision of Rs. 52.3 crore towards taxation, Profit
After Tax (PAT) amounted to Rs. 630.3 crore.
Appropriation of PAT as approved by the Board of
Directors is given in Table 22.

Business Strategy

For each share of face value of Rs.10, Earning Per Share

(EPS) during the year stood at Rs. 8.7 and Book Value
Per Share stood at Rs. 85.6 as at end-March 2007. The
Directors were pleased to recommend dividend at
15% on the fully paid-up equity capital for the financial
year 2006-07.
Capital Adequacy
Your Bank continued to maintain a sound capital base
as indicated by its Capital Adequacy Ratio (CAR). As
against the stipulated RBI norm of 9%, your Banks CAR
as at end-March 2007 worked out to 13.7%. The
Tier-I CAR also was at a high level of 9.1%. While this
level of capital is adequate for the current business
needs, your Bank would continue to ensure that capital
is adequate to be supportive of its long-term business
plans and is deployed effectively to optimize its cost. In

The year witnessed the amalgamation of the erstwhile

The United Western Bank Ltd. (UWB) with your Bank
with effect from October 3, 2006. This brought in a
diversified business portfolio including Small & Medium
Enterprises (SME) and agri-business, a wide branch
network including in rural and semi-urban areas and
skilled and experienced human resources. The
amalgamation, therefore, strengthened the efforts of your
Bank to pursue its business strategy more vigorously.
During the period under review, your Bank continued
with diversification of both asset and liability base,
through balanced retail growth on both sides of the
balance sheet, while simultaneously focusing on
expansion of both business and network. Emphasis was
laid on increasing the working capital assistance and
building up SME portfolio, while on the liability side,
efforts continued in the direction of reducing
dependence on borrowings through increased
mobilization of deposits. In a volatile and competitive
market environment, your Bank constantly evolved
appropriate strategies to ensure business growth. Steps

Table 2 : Appropriation of Profits

(Rs. crore)

Particulars

2005-06

2006-07

Net Profit/(Loss) for the year

560.9

630.3

Profit/(Loss) brought forward

787.4

1030.7

Investment fluctuation reserve balance transferred

392.0

1.7

1740.3

1662.7

140.2

158.0

Transferred to Capital Reserve

11.0

Transferred to general reserve

392.0

1.7

50.0

50.0

Transferred to staff welfare fund

3.5

Dividend for previous financial year

0.1

108.6

108.7

15.2

18.5

1030.7

1314.9

IDBI Exim (J) Special Fund

Profit available for appropriations
Appropriations :
Transferred to Statutory Reserve

Transferred to Special Reserve created and maintained u/s 36(1)(viii) of IT Act, 1961

Dividend
- Equity Shares
- Tax on Proposed Dividend
Balance of Profit carried to Balance Sheet
6

Directors Report.pmd

17-May-07, 5:26 PM

were also taken to boost the non-interest income by

taking advantage of the buoyant capital market as also
thrust on fee-based income.
Your Bank, since its conversion into a commercial bank,
has been focusing on lowering the cost of funds by
expanding its deposit base, more prominently under
current/savings accounts. The Banks Benchmark Prime
Lending Rate (BPLR) also was aligned with the
movement of interest rates. With increased
opportunities for cross-selling, your Bank aims to widen
its revenue model with concentrated focus on fee
income. Your Bank is also preparing to open overseas
offices. All these, put together, would ensure that your
Bank has put itself firmly on a long-term and sustainable
growth trajectory.
New Business Initiatives
Your Bank decided to enter into Life Insurance
business pursuant to which a Joint Venture Agreement
was signed in November 2006 with Fortis Insurance
International N. V. (Fortis), and Federal Bank Ltd.
Fortis is an international financial services provider
active in banking and insurance and is ranked among
Europes top financial institutions. Federal Bank is a
leading private sector bank with a network of over
450 branches having a strong NRI franchise. The new
Life Insurance Company has obtained the Certificate
of Commencement of Business from Registrar of
Companies, Mumbai and has filed application with
Insurance Regulatory and Development Authority
(IRDA) for authorisation as a Life Insurance Company.
The Company will undertake the business of
manufacturing, distribution and underwriting of life
insurance business including in-house asset
management activities and will develop a multidistribution model including bancassurance, agency /
direct sales and other channels. Also, during the year,
IDBI Gilts Ltd., a wholly-owned subsidiary of your
Bank was incorporated to undertake Primary
Dealership (PD) business.
Organisation Structure
Consequent upon the amalgamation of UWB, your Bank
acquired 229 branches, 14 Extension Counters and 78
Automated Teller Machines (ATMs) which increased
its presence, particulary in the State of Maharashtra.
Apart from acquiring the branch network of UWB,
your Bank also organically expanded its network during
the year. Your Bank, with its Registered Office at
Mumbai and Zonal Offices in different regions of the

country has a pan-India presence involving 255 cities/

towns. As on March 31, 2007, it had a network of 970
delivery outlets comprising 432 branches, 18 extension
counters and 520 ATMs, to service its customer base
across the country. Your Bank has also formulated an
ambitious plan for expansion of the network during
2007-08.
Your Bank complied with the provisions of the Scheme
of Amalgamation of UWB, which, among other things,
covers payment to the shareholders of UWB. It may
be further mentioned that the merger was effective
from October 3, 2006 and from the very first day
itself, it was business as usual at all UWB branches.
The process of organizational integration is going on
and functional integration in respect of certain areas
such as Finance and Accounts, Treasury, Audit and
Human Resources is already complete. Information
Technology (IT) System Integration, which is an
important link during integration process, is currently
underway. Business operations are being integrated
in phases. In the interim, to provide effective focus on
business areas, as also to ensure smooth transition to
an unified organization structure, operations of the
Bank are carried out through three Strategic Business
Units (SBUs) viz. Development Banking Strategic
Business Unit (DBSBU, focussing on the erstwhile IDBI
Ltd. on a standalone basis), Commercial Banking
Strategic Business Unit (CBSBU, which broadly denotes
the operations of the erstwhile IDBI Bank Ltd.) and
The United Western Bank Strategic Business Unit
(UBSBU, encompassing the operations of the erstwhile
The United Western Bank Ltd.).
Board of Directors
During the period under review (April 2006 March
2007), the composition of Board of Directors of your
Bank was as per Article 116 of the Articles of Association,
Section 10A(2)(a) of the Banking Regulation Act, 1949
and the revised Clause 49 of the Listing Agreement.
Presently, the Board comprises twelve directors including
the Chairman & Managing Director, two Deputy
Managing Directors, two officials of the Central
Government and remaining seven Directors in the
category of Independent Directors. Shri V.P. Shetty, is
holding the position of Chairman & Managing Director.
S/Shri O.V. Bundellu and Shri Jitender Balakrishnan are
holding the position of Deputy Managing Directors. Shri
Vinod Rai and Dr. Ajay Dua are Central Government
officials. Out of the seven Independent Directors, two
Directors namely Shri Analjit Singh and Smt. Lila Firoz
7

Directors Report.pmd

17-May-07, 5:26 PM

Poonawalla have been nominated by Government of

India in the professional category. The remaining five
Directors, viz., Shri K. Narasimha Murthy, Shri R.V.
Gupta, Shri H.L. Zutshi, Shri A. Sakthivel and Dr. D.
Veerendra Heggade were elected by the shareholders
at AGM held on August18, 2005. Out of the five elected
and rotational directors, one-third, i.e. two directors
namely Shri K. Narasimha Murthy and Shri R.V. Gupta
retired at the last AGM held on July 19, 2006 and were
re-appointed. At the ensuing AGM also, two directors
out of the remaining three elected directors shall retire
and be eligible for re-appointment.
Corporate Governance
Your Bank is committed to adopting the best practices
in the area of corporate governance. Your Bank
believes that proper corporate governance is not just
a requirement for regulatory compliance, but also a
facilitator for enhancement of shareholders value.
The details of corporate governance practices followed
in your Bank are given in this Annual Report as a
separate section under Management Discussion and
Analysis.
Disclosure regarding Remuneration of Employees
under Section 217(2A) of the Companies Act, 1956
In terms of Section 217(2A) of the Companies Act, 1956
(herein after referred to as the Act) and the rules made
thereunder, the required information is contained in
Annexure and forms part of this Report. However, in
terms of section 219(1)(iv) of the Act, the Directors
Report and Annual Accounts, being circulated among the
shareholders, do not contain the aforesaid Annexure. The
detailed Annexure will be available for inspection of the
shareholders at the registered office of your Bank during
working hours for a period of 21 days before the date
of AGM.
Eight personnel were in the services of your Bank for the
whole year and were in receipt of remuneration of over
Rs.24 lakh per annum. Further, another 8 personnel,
who were in the service of your Bank for part of the year,
received remuneration in excess of Rs.2 lakh per month
for the period they were in the service of the Bank.
The provisions of Section 217(1)(e) of the Act relating
to conservation of energy and technology absorption
do not apply to your Bank.

Directors Responsibility Statement

The Board of Directors hereby declares and confirms
that :
(i)

in the preparation of accounts, the applicable

accounting standards were followed along with
proper explanation relating to material departure.

(ii) the Directors had adopted such accounting

policies and applied them consistently and made
judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the
state of affairs of your Bank at the end of the
accounting year and of the profit or loss of your
Bank for that period.
(iii) the Directors had taken proper and sufficient care
for the maintenance of adequate accounting
records, in accordance with the regulatory
provisions, for safeguarding the assets of your Bank
and for preventing and detecting fraud and other
irregularities.
(iv) the Directors had prepared the accounts on a
going concern basis.
Acknowledgements
The Board of Directors is thankful to the Government
of India, Reserve Bank of India (RBI), Securities and
Exchange Board of India (SEBI) and the Insurance
Regulatory and Development Authority (IRDA) for
their continued co-operation and guidance. The Board
is also appreciative of the co-operation and support
extended by the State Governments and other banking/
financial institutions. The Board of your Bank wishes
to thank various multilateral institutions and
international banks/institutions for their continued
support. The Board also takes this opportunity to thank
all its shareholders and customers for extending their
support during the year and looks forward to their
continued association in the years ahead. Your Bank
has gained considerably by the sincere and devoted
services rendered by its entire staff. The Board is
pleased to place on record its deep appreciation of the
services rendered by the employees.

Place : Mumbai
Date : April 20, 2007

Directors Report.pmd

17-May-07, 5:26 PM

V. P. Shetty
Chairman



2006-07
. ()
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[1999-2000 ]. 200607
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2005-06 33.8%
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Business Environment
Gross Domestic Product
The Indian economy continued to exhibit strong
fundamentals during 2006-07. As per Advance Estimates
of the Central Statistical Organisation (CSO), the
economy is set to witness a growth of 9.2% during
2006-07 in its Gross Domestic Product (GDP) [at 19992000 prices] as compared to 9% during the previous
year. The main drivers of growth in 2006-07 continue
to be the industrial and services sectors, estimated to
grow at the rates of 10.1% and 11% respectively.
However, growth in agriculture and allied activities may
come down to 2.7% as compared to a growth of 6%
achieved in 2005-06.

during the year 2006-07 as compared to the previous

year. The consumer goods sector witnessed a decline
in growth rate with 10.0% growth during the year 200607 as compared to a growth of 12% during the previous
year. However, the intermediate goods sector showed
a robust growth of 11.7% as against 2.5% for the
previous year. Capital goods sector, which is an indicator
of new industrial investments, continued to exhibit high
growth of 17.7% during the current year, which is
even higher than the growth of 15.8% exhibited during
the previous year (Figure 2).
Figure 2: Sectoral Growth of IIP (%)

Investment and Industrial Scenario

The investment climate remained conducive for business
growth. The higher GDP growth was coupled with a
significant pick-up in investment, reflecting high business
confidence leading to higher Gross Domestic Investment
(GDI), particularly, private investment. While GDI
increased from 25.2% in 2002-03 to 33.8% in 2005-06,
Gross Domestic Savings (GDS) increased from 26.4% to
32.4% during the same period (Figure 1).
Figure 1: Trends in Investments & Savings (as % of GDP)
33.8

25.2

26.4

28.0

29.7

31.5 31.1

32.4

During the year 2006-07, Index of Industrial Production

(IIP) recorded a growth of 11.3% as compared to a
growth of 8.2% during 2005-06. The growth of industrial
sector was primarily led by manufacturing sector. As
per use-based classification, the intermediate goods,
basic goods and capital goods sector, with the exception
of consumer goods sector, witnessed higher growth

In the infrastructure sector, during the year 2006-07,

the composite index of six infrastructure industries
(accounting for a weightage of 26.7% in IIP) viz.
electricity, crude petroleum, petroleum refinery
products, coal, finished steel and cement, witnessed a
higher growth rate as compared to the previous year,
due to better performance of sectors such as
electricity, crude petroleum and petroleum refinery
products.
The improved performance of industrial sector is
expected to significantly impact your Banks business.
Sectors which have high business potential for your Bank
for increasing its asset base in FY 2008 are Auto
Components, Food Processing, Power, Textiles, Iron
& Steel and Telecom. Other industry sectors with good
business potential for increasing your Banks asset base
in FY 2008 are Oil & Gas Exploration & Refineries,
Roads, Ports, Chemicals & Petrochemicals, Cement,
Paper & Paper Products, Capital Goods, Hospitals,
Hotels and Aviation. Significant business opportunity
37

also exists in business domains such as SME, Agribusiness and Retail Banking.
External Sector
During FY 2006-07, Indias merchandise trade deficit
was at USD 56.7 billion, as compared to USD 39.6 billion
during the previous year. However, overall Balance of
Payments (BOP) position remained comfortable given
the high foreign exchange reserves. With imports
growing faster than exports, the trade balance is
expected to be negative, especially if there is further
increase in the oil prices. Also, capital flows, both debt
and non-debt, during 2006-07 so far, have been higher
than a year ago, reflecting growing investor interest in
the Indian economy on the back of strong growth
prospects and buoyant investment demand. It is thus
felt that higher invisible inflows and strong capital flows
will limit the rise in the current account deficit and
Indias foreign trade volume will continue its current
upward trend.
Foreign Exchange Reserves & Exchange Rates
As at end-March, 2007, Indias foreign exchange reserves
stood at USD 199.2 billion, which was higher by 47.55
billion than as at end-March 2006. During 2006-07,
orderly conditions were generally observed in the Indian
foreign exchange market. Exchange rate for US dollar
as at end-March 07 stood at Rs. 43.6 as compared to
Rs.44.6 as at end-March 2006.

The uptrend in inflation is a sign of increased supplyside pressures as well as firming up demand. Proximate
reasons for the recent trend of increasing inflation are:
(i) an uptrend in prices of primary articles; (ii) upward
movement in the prices of manufactured products;
(iii) rising capacity utilization; (iv) increased consumption
and investment demand; (v) expansion in demand for
bank credit; (vi) rising asset prices; and (vii)
international oil prices - although this moderated in
recent months.
Liquidity and Interest Rates
During 2006-07, financial markets remained generally
stable, although interest rates in money and
Government securities markets rose. Also, in a
situation when credit growth, on occasions,
outstripped liquidity in the market, there was pressure
on liquidity and interest rates. Accordingly, there was
across-the-board hike in deposit rates by most banks
and corresponding hikes in lending rates, as indicated
by the rise in Prime Lending Rates (PLRs) of leading
banks. The Credit Deposit Ratio (CD Ratio) for the
banking sector was 74.1% as on March 30, 2007 as
against 71.5% as at end-March 2006. During 2006-07,
money supply (M3) increased by 20.7% as on March
30, 2007. Interest rates across maturity were generally
high as compared to the previous year (Figure 4).
Figure 4: Movement in Yield of GoI Securities (%)

Inflation
Inflation, as measured by the Wholesale Price Index
(WPI), was higher at 5.7% as on March 30, 2007, as
compared to 4.1% as at end-March 2006. Consumer
Price Index (CPI) also was higher at 6.7% as compared
to 4.9% during end-March 2006 (Figure 3).
Figure 3: Trends in Inflation as at end-March (%)

38

The hike in repo rate and Cash Reserve Ratio (CRR) by

RBI signals an upward bias towards lending rates. With
tightening liquidity, the banks have been selling their
securities in the Statutory Liquidity Ratio (SLR) portfolio
to accommodate the increased credit demand,
particularly from the private sector. This evidently cannot
continue to be a long-term strategy as shortage of SLR
securities could constrain the banks recourse to Liquidity
Adjustment Facility (LAF). Banks would thus need to
mobilize larger amount of deposits and move towards
a more favourable CD ratio. However, growth in

deposits and advances would continue in order to support

the demand emanating from the growth momentum of
the economy. The trend in deposit and credit growth of
the banking sector is given in Figure 55.
Figure 5: Trends in Deposits and Credit Growth (%)

The demand for bank credit during the year was broadbased, led by retail loans, industry and agricultural loans
sectors. Credit to agriculture sector recorded a robust
growth reflecting the impact of various policy initiatives
to improve the flow of credit to the sector. Increase in
industrial credit was mainly on account of infrastructure
(viz, power, road, ports and telecommunications),
petroleum products, textiles, iron & steel, chemicals,
vehicles, gems & jewellery, food processing and
construction. Credit from retail sector was mostly led
by housing loans, credit card receivables and personal
loans. Also, policy measures to augment credit flow to
small and medium enterprises were undertaken.

Capital Market
A strong macro-economic outlook, positive investment
climate and encouraging corporate financial results were
the main factors driving the overall capital market
sentiment during the year. During the period April-March
2006-07, while cumulative resources raised through
public issues increased, the resources raised through
Euro issues viz. ADRs and GDRs were in line with the
previous year. Also, the domestic stock market remained
buoyant on the back of strong economic fundamentals,
robust corporate results, upward trend in international
equity markets and decline in global crude oil prices.
Future Outlook
The Indian economy is poised today at a very
advantageous position. The economy is ascending a higher
growth path, with the step-up in the growth rate of the
economy being facilitated by increase in domestic
investment, financed predominantly by domestic savings.
The success of the economic reforms process, as a
consequence of the widespread deregulation and
introduction of competition in most segments of the
economic sphere has led to increased efficiency gains,
manifesting itself in acceleration in investment and output
growth. This has resulted in a change in the composition
of Indias GDP with the emergence of new growth drivers.
All this augurs well for your Bank and will result in
improved business prospects for your Bank. The banking
sector and specifically your Bank, is well poised to play
the required role in sustaining this growth momentum.

39

Business Review
Retail Finance
The Indian retail finance scenario has witnessed a
major change in the last few years. This change has
been driven by rising income levels at the hands of
the individual, positive change in mindset of consumers
in availing credit and expansion of presence of
financiers. Considering the robust growth and potential
in this sector, your Bank has given a major thrust to
this business segment.
Your Bank offers a wide spectrum of Retail Asset
products, both Secured (Housing Loan, Mortgage Loan,
Loan against Securities) and Unsecured (Personal Loans,
Education Loans and Overdraft to Merchant
Establishments). During the year, the Bank successfully
participated in various Property Exhibitions at major
centres such as Mumbai, Pune, Jaipur, Kolkata, Chennai
and Hyderabad that gave a significant mileage to the
Home Loan products of the Bank. Also, a revised
Education Loan Scheme was launched during the year.
Your Bank now has Retail Asset Centres across 22
cities, which will help the Bank in enhancing the geographic
spread, product acceptance, operational efficiency and
credit expertise.
Your Bank is always in pursuit of offering value-added
services to its esteemed clients and towards this
endeavour, your Bank has recently formalized a tie-up
with IDBI Capital Market Services Limited, a 100%
subsidiary of the Bank, to offer state-of-the-art Internetbased trading facility in Equities, Futures and Options
markets. The clients can also purchase and redeem units
of Mutual Funds and can subscribe to Initial Public
Offerings of various corporates / institutions using this
facility. This unique facility provides total convenience
as all the above services can be availed with the click of
a mouse and the complete process is seamless.
Your Bank is also engaged in distribution of third party
products to its retail customers. During the year, your
Bank installed an Automated Teller Machine (ATM) in
one of the Terminals (in the check-in area) of the
Mumbai Domestic Airport, making it the first bank to
provide an ATM in the check-in area of the Airport
Terminal. Also, plans are afoot to issue debit cards under
other franchises in addition to the present franchise.
40

With a view to offering a more secure environment to

the customers for transacting their business, your Bank
is taking two important initiatives viz. adding Encrypted
Pin Pad (EPP) and Triple Data Encryption System (Triple
DES) to all the older-generation ATMs and obtaining
Verified By Visa (VBV) certification for all card
transactions acquired on the internet.
Corporate Finance
Your Bank has been mandated for providing project
finance to boost capital formation and infrastructure
development in the country. Your Bank provides project
finance in both rupee and foreign currencies. Assistance
is provided for greenfield projects as also for expansion,
diversification and modernization. Your Bank follows
the Global Best Practices in project appraisal and
monitoring and has a well-diversified industry portfolio.
Apart from project finance, non-project finance for short
and medium term maturities also is provided as Shortterm Loan, Working Capital and Treasury Products to
meet the ongoing requirement of corporates. To further
strengthen the product offerings, your Bank has signed
a Memorandum of Understanding (MoU) with LIC in
December 2006 for undertaking joint and take-out
financing of long-gestation projects, including
infrastructure projects.
Your Bank offers a wide array of corporate banking
products under various business segments such as
Deposits, Cash Management Services, Central and State
Government agency business (both direct and indirect
taxes), Trade Finance and Treasury Products.
Your Bank has set up dedicated trade sales teams for
product offerings at key locations to have a focused
and specialized approach to trade services. Your Bank
carries out Trade Finance operations through designated
branches, which provide Trade Finance Products viz.,
Letters of Credit, Bank Guarantees, Collections,
Remittances, Forward Contracts, Packing Credit, PostShipment Finance, Maturity Factoring, Invoice
Discounting and Trade Advisory Services. It is
noteworthy that your Bank was among the select banks
under the auspices of Indian Banks Association (IBA)
to test, pilot and implement Structured Financial
Messaging System (SFMS) for domestic trade

transactions. Your Bank also entered into a tie-up with

Export Credit Guarantee Corporation (ECGC) for
financing the export receivables under the full-fledged
factoring facility of ECGC.
In respect of Cash Management Services, your Bank
has bagged several prestigious debt servicing,
redemption and dividend deals from leading corporates.
Your Bank is the first bank to offer payment facility of
direct taxes through Internet and is also the first bank
to offer online payment of Central Excise Duty and
Service Tax through the Internet. Your Bank has the
mandate to collect direct taxes at several branches and
extension counters across the country and also to
collect Excise Duty and Service Tax at select branches.
Additionally, your Bank has the mandate to collect sales
tax and stamp duty for certain State Governments and
import/export licence fees over the Internet.
Your Bank has set up a Sourcing and Syndication
Department, which primarily focuses on augmenting
fee-based income of the Bank through debt syndication
and other value-added services like equity syndication,
financial appraisal, IPO monitoring agency, corporate
advisory including advisory on mergers & acquisitions
and other business advisory services. During the past
year, your Bank became a major player in the domestic
debt syndication market and executed a number of
advisory/other assignments for corporate clients.
Infrastructure Finance
Your Bank continues to remain a prominent player in
infrastructure financing. It has been actively participating
in structuring and financing of infrastructure projects
in the areas of power, telecom, roads, airports, seaports,
railways and logistics as well as Special Economic Zones,
ever since the infrastructure sector was opened for
private investment. Besides providing financial assistance,
your Bank interacts with Government and other
stakeholders and market participants, on policy and
operational issues, facilitating smooth flow of funds to
infrastructure sector.
Your Bank is also a member of the Core Committee of
the Government set up for finalisation of the Ultra Mega
Power Projects. Further, it is also an active member of
the Inter-Institutional Group for power sector, which
meets regularly to resolve various issues for achieving
timely financial closure of identified power projects.

Your Bank continues to provide assistance to road

projects considering the imperatives of road
infrastructure development for achieving higher growth
in the national economy. Your Bank has also taken
initiatives in funding modernization of airports, besides
part-financing development of international airports and
seaports under the Public-Private Partnership route.
SME Initiatives
Your Bank has been actively engaged in providing a
major thrust to financing of Small & Medium Enterprises
(SMEs). With a view to improving the credit delivery
mechanism and shortening the Turn Around Time
(TAT), your Bank has set up Centralized Loan
Processing Cells (CLPCs) at major centres across the
country. The CLPCs will process the applications and
submit for sanction to delegated authorities. All activities
relating to credit facilities and policy matters pertaining
to the SME sector as well as co-ordination and control
of CLPCs are being looked after by a newly-created
SME Division at Head Office. This would considerably
improve the customer service levels in your Bank. To
further upgrade the service levels, training programmes
were conducted during the year on AgriComm and
SME products for the officers and other employees of
your Bank to keep them abreast with the competition
in the market.
To strengthen the credit delivery process, the Credit
Appraisal & Rating Tool (CART) Module developed by
Small Industries Development Bank of India (SIDBI),
which combines both rating and appraisal mechanism for
loan proposals up to Rs.100 lakh, was adopted by your
Bank for faster processing of loan proposals. During the
year, products were rolled out targeting the SME sector,
which considerably expanded your Banks offerings to its
customers. Also, the German Technical Co-operation
and your Bank entered into an understanding for
strengthening the growth and competitiveness of SMEs
by providing better access to demand-oriented business
development and financial services.
Agriculture and Microfinance
Your Bank launched several new products during the
year catering to the rural and agri community viz.
Horticulture Loans, Farm Mechanisation Loans, Crop
Receivables Financing etc. Few more products are on
the drawing board and would be introduced gradually.
Your Bank has been active in the financial inclusion
41

programme and has launched a scheme in three States

on a pilot scale to free the farmers from indebtedness.
Also, your Bank has been catering to the Micro Finance
Institutions in different regions of the country. In an
attempt to reach these sectors throughout the country
and to have a focused attention, your Bank is setting up
Agri Cells in various branches.
Financial Inclusion
Your Bank stands committed to introducing products
and services to cater to diverse sections of the society
and thereby including in the formal financial system
sections of the society hitherto excluded. As a first step
in this endeavour, your Bank launched the Sabka savings
account with an intention to make basic banking services
accessible to a vast majority of the unbanked and
underbanked population. The facility offers core-banking
facilities and conveniences at a low average balance
requirement. The scheme was subsequently further
modified so as to cover a wider network of customers.
Technology Upgradation Fund Scheme
Your Bank has been discharging the functions of the
Principal Nodal Agency for Technology Upgradation
Fund Scheme (TUFS) launched by the Ministry of
Textiles, Government of India on April 1, 1999,
initially for a period of five years and subsequently
extended by three years to cover sanctions up to
March 31, 2007. The Scheme aims at a focussed and
time-bound programme for modernisation through
technology upgradation in the industry. The Budget
for FY 2007-08 has announced further extension of
the Scheme for five years. While the thrust of the
Scheme is on post-spinning segments (weaving,
processing and garmenting), spinning segment also has
been included under the Scheme. Your Bank, in its
role as principal nodal agency for the textile industry
(non-SSI Sector) under TUFS, examines eligibility of
loans sanctioned by Primary Lending Institutions from
TUFS angle and administers interest reimbursement
out of funds provided by Government of India for the
purpose.
Environment Protection Schemes
Your Bank is acting as Financial Agent (FA) for the
World Bank (WB) funded Ozone Depleting Substances
(ODS) Phase-out projects, and is responsible for
appraising projects, administering and disbursing grant
out of Ozone Trust Fund (OTF) and overseeing
42

implementation of the projects aimed at phasing out

the use of ODS in the industry.
As part of ongoing efforts towards Environment
protection, your Bank is presently handling two
projects aimed at phase-out of ODS, which will be
completed by 2010. Your Bank entered into an
agreement during FY 2000-01 with WB to channelise
grant funds amounting to USD 80.80 mn. under Chloro
Fluoro Carbon (CFC) Production Sector Gradual
Phase-out Project (ODS-III). Your Banks role under
this Project is that of a banker to facilitate transfer of
grant funds upon authorization by WB. In addition,
since August 2004, your Bank has been acting as FA
for implementation of Carbon Tetra Chloride (CTC)
Phase-out Project (ODS-IV) involving both Production
and Consumption Sector.
Global warming has become an important international
environmental issue during the last 15-20 years. With
the objective of controlling emission of Green House
Gases (GHG) at global level, the third conference of
parties to the United Nations Framework Convention
on Climate Change (UNFCCC) adopted the Kyoto
Protocol, in December 1997. Under this Protocol, Clean
Development Mechanism (CDM) is one of the initiatives
for providing incentives to the companies, which develop
GHG abatement projects. Credits for GHG abatements
are awarded in terms of Certified Emission Reduction
(CER). These CERs are tradable and purchase of the
same entitles the buyer to have fulfillment of its
commitments under the protocol. Your Bank has been
active in providing the following services in the field of
CDM projects and carbon trading advisory:
(i)

Identification of CDM projects;

(ii) Funding of CDM projects;

(iii) Aiding the process of registration of CDM projects
with UNFCCC;
(iv) Commercialisation/sale of CERs; and
(v) Provision of any other related banking products/
services.
In connection with the CDM project activity and
carbon advisory activity, during the year, your Bank
entered into MoUs with MITCON, a leading Technical
Consultancy Organisation in India, the International
Finance Corporation (IFC), Washington and KfW,
Germany.

Treasury Operations
Your Banks Treasury effectively managed the liquidity
requirements of the Bank to meet the funds flow for credit
disbursements apart from servicing the past borrowings
through bonds and deposits. Whilst there was an overall
emphasis on increasing the share of low-cost Current
Account Savings Account (CASA) deposits, your Bank
used a judicious mix of domestic and international
resource raising to meet the liquidity requirements of the
Bank in a cost-effective manner.
In the domestic market, your Bank used a variety of
instruments to augment the resource base. It took
proactive steps to identify the opportunities in a volatile
market and progressively build up the SLR portfolio,
with a judicious mix of Central and State Government
securities in consonance with the risk perception and
risk appetite of your Bank.
In terms of Treasury operations, your Bank also deals in
equity investments as part of the overall investments
portfolio. Though investments in equity have mainly been
by way of direct subscription as part of project finance
activities / primary market and conversion of loans as
part of rehabilitation measures including those through
packages formulated under Board for Industrial &
Financial Reconstruction / Corporate Debt Restructuring
Mechanism, secondary market operations also are
undertaken keeping in view the market conditions.
The Treasury of your Bank also caters to all types of
foreign exchange requirements of corporate and retail
customers to meet their needs in import, export and
remittance transactions apart from undertaking
proprietary trading. Periodical interaction with clients
coupled with proactive Treasury advisory services on
Currency and Interest Rate movements have enabled
your Bank to broaden its client base not only in the
metros but also in Tier-II cities. In this regard, the
Specialised Treasury Branch of your Bank works in close
co-ordination with the Corporate Banking and Retail
Banking divisions to have a wider reach as well as to
source and sustain new relationships.
Derivatives & Treasury Marketing
In the sphere of derivative services, your Bank advises
and concludes transactions on Exchange and Interest
Rate Derivatives for its clients. Your Bank is in constant
dialogue with corporate clients to regularly assess their
requirements in order to provide need-based solutions
to manage the currency and interest rate exposures by

using derivative structures. It is also on constant lookout for new derivative structures, which can be offered
as risk management tools to corporate clients. Your
Bank follows a meticulous system for assessing the
derivative requirements of corporate customers with
measures of appropriateness. Your Bank has also
undertaken derivative deals for Asset Liability
Management. These deals are periodically reviewed to
monitor their effectiveness as hedge tools. Your Bank
has put in place a proper risk management process to
monitor the entire derivatives portfolio.
Resource Mobilization
During the year, your Bank mobilized rupee resources
by way of borrowings under bonds, as also through
deposits including term/savings/current accounts and
certificates of deposits. Your Bank has put considerable
emphasis on raising resources through deposits with a
long-term view to make deposits its predominant source
of funds. Particular emphasis has also been laid to
increase the share of retail deposits.
As part of the continuous process of bringing innovative
products to the market, during the year, your Bank
launched the IDBI Suvidha Plus Fixed Deposit, IDBI
Suvidha Tax Saving Fixed Deposit, IDBI Suvidha Recurring
Deposit and Access Plus Super Saving Account, which
were received well by the market. The IDBI Suvidha Plus
Fixed Deposit was targeted for customers looking for
investment in short to medium term Fixed Tenor FD
and attractive rate of interest.. The schemes under this
umbrella were for varied tenors and were in the market
for a limited period only. The IDBI Suvidha Tax Saving
Fixed Deposit was aimed at utilizing the opportunity
provided by the tax concessions given by the CBDT
notification dated July 28, 2006. Both the deposits were
competitively priced to attract customers.
Your Bank continued to raise long-term resources by
way of private placement of bonds. The subordinated
Tier-II Bond issues strengthened the Banks Capital
Adequacy. In view of the rise in cost of borrowings in the
later part of the year, your Bank resorted to more of
short-term borrowings to meet the fund requirements.
Keeping in view the comfortable Capital Adequacy Ratio
and unutilized limit for raising Tier-II capital, your Bank
did not avail the facility provided by RBI for raising capital
funds in the form of (a) Innovative Perpetual Debt
Instruments which are eligible for inclusion as Tier-I
43

capital; and (b) Debt Capital Instruments which are

eligible for inclusion as Upper Tier-II capital. Your Bank
will, however, explore the possibility of raising resources
under the aforesaid Bond options also, as and when the
need and opportunity arises. It may be noted that RBI
has agreed to your Banks request for issuing bonds on
reimbursement basis to meet financing requirements
of long-gestation projects other than those in the
infrastructure sector. The aforesaid permission by RBI
has further enhanced your Banks scope of raising longterm resources.
Foreign Currency Resources
During the year under review, your Bank prepaid one
of the high-cost Foreign Currency (FC) borrowings in
order to reduce the overall cost of funds. During the
same period, under the limit of 25% of unimpaired
Tier-I capital, your Bank raised a sum of USD 325
million from overseas banks / overseas branches of
Indian banks by way of inter-bank deals and by way of
syndicated loans. Your Bank is planning to come up
with an Euro Commercial Paper Medium Term Note
(ECP MTN) programme of USD 1.5 billion for raising
foreign currency funds, in different tranches by way of
senior debt and also through perpetual Tier-I and
upper Tier-II capital in conformity with RBI guidelines.
The funds so raised will be utilized for regular
requirement of FC funds for domestic operations,
future expansion / acquisition purposes as also for
operations of overseas branches proposed to be opened
during FY 2007-08. Your Bank also raised FC deposits
by way of the available window for NRI deposits.
Cross-Border Branches
With a view to catering to the cross-border financing
needs of the Banks customers and leveraging the
domestic banking strengths to offer products
internationally, your Bank has decided to make a foray
into the overseas markets. The Reserve Bank of India
(RBI) has accorded its approval for setting up Offshore
Business Units (OBUs) in Singapore and Bahrain and
representative offices in Shanghai, Moscow and Dubai.
Ratings
Your Bank obtains credit ratings for both domestic and
foreign currency borrowings. The ratings for rupee
resources, as indicated in Table 33, reflect high safety
with respect to timely payment of interest and principal.
44

Table 3 : Ratings for Rupee Borrowings

(As on March 31, 2007)
CRISIL

ICRA

Fitch

Long-Term
Rupee Bonds

AA+/Stable

LAA+

AA+(ind)

Fixed Deposit

FAAA

MAA+

AA+(ind)

P1+

A1+

F1+(ind)

Short-Term
Borrowings

The FC borrowings of your Bank are rated by

international rating agencies viz. Standard & Poors
(S&P), Moodys Investor Services (Moodys) and Fitch
Ratings. The long-term foreign currency ratings and Bank
Financial Strength Ratings (BFSR) assigned by the
international rating agencies are indicated in Table 4.
While the Foreign Currency debt ratings for your Bank
as assigned by S&P and Fitch Ratings are at par with the
sovereign ratings, the rating assigned by Moodys is one
notch higher than the sovereign rating.
Table 4: Ratings for Foreign Currency Borrowings
(As on March 31, 2007)
Rating Agency

Long term Rating

BFSR

Standard & Poors (S&P)

BBB-

Moodys Investor
Services (Moodys)

Baa2

D-

Fitch Ratings

BBB-

C/D

Asset Quality
As at end-March 2007, 98.88% of your Banks loan
assets were standard assets. While sub-standard assets
formed 0.78%, doubtful assets constituted 0.34% of
your Banks loan assets, for which adequate provisions
were made in conformity with extant prudential
regulations. Your Bank continues to pursue various
recovery efforts to improve the bottom line of the
Bank. During the year, your Bank initiated several steps
to settle the Non-Performing Assets / Fully WrittenOff (NPA/FWO) cases in its portfolio. Among the
various steps undertaken were restructuring of
liabilities, One Time Settlement/Negotiated Settlement
(OTS/NS), legal action, action under the SARFAESI Act,
change of management, sale of assets to Asset
Reconstruction Companies (ARCs), induction of
strategic investors etc. depending on the specific
requirements of each case.

Risk Management
The role of risk management in your Bank is to
identify, evaluate, monitor, manage & control and
mitigate the risks. Managing risk has become crucial
in modern-day banking. The philosophy of your Bank
with regard to risk is guided by the twin objectives
of enhancement of shareholders value and optimum
allocation of capital. Your Bank has put in place proper
structure, policies and review processes in the area
of risk management. The Bank has prepared a road
map and has taken several steps for implementation
of the Basel-II guidelines within the framework
prescribed by Reserve Bank of India.
Overall risk management is the responsibility of Risk
Management Committee of the Board. Your Bank has
an integrated risk management function that looks after
all aspects of enterprise-wide risk management. The
policy approach is to conform to the best international
standards and in the process, emphasis is laid on
gradual harmonization with international best practices,
keeping in view the timing, context and level of
implementation amongst the competing broad
segments of the financial sector in the country. The
risk management systems developed and adopted by
your Bank pay significant attention to suitability of IT
structure including issues of connectivity and
integration, designing Management Information System
that is risk-focused, ensuring segregation of risk
assessment from operations and frequent review of
risk management systems to ensure that there is no
slippage and that appropriate skills are developed
within the Bank. There is a well-established, effective
and independent internal control mechanism in your
Bank for supplementing the risk management systems.
Credit Risk
Your Bank follows a proactive Credit Risk Policy and
employs best international practices through
appropriate credit delivery processes, portfolio &
account monitoring, tracking early warning signals and
remedial management procedures. Sectoral exposures
and target businesses are monitored regularly, putting
in place appropriate industry-specific lending policies.
Your Bank uses credit ratings at transaction level and
portfolio level in managing its credit risk. It is also in
the process of upgrading its risk management

architecture by putting in place a comprehensive Credit

Risk Management System, covering various business
segments and risk management tools. For
implementation of Basel-II guidelines for credit risk,
your Bank will initially adopt Standardised Approach
and at the same time put in place processes and
infrastructure to adopt Internal Rating Based Approach
in due course of time.
Market Risk
Your Bank addresses all forms of market risks viz.
liquidity risk, interest rate risk and forex risk. Keeping
in view the intensity and magnitude of market risks,
separate treatment is given to the management of risks
in the trading book and banking book. The trading
book risks are continuously measured and managed by
marking the positions to the prevalent market rates
and analysis of positions based on changes in market
rates, analysis of past trends, stress tests through rate
shocks, scenario analysis, etc. Market risks on the
banking book are analysed and managed through
liquidity and interest rate sensitivity gap, duration and
scenario analysis. The overall positions and functions
of market risks are run under the policy framework
defined in Asset Liability Management Policy, Market
Risk Policy and Investment Policy.
In order to implement the Basel-II norms in respect
of market risk, your Bank is in the process of refining
the framework for measuring liquidity and interest rate
risks under various scenarios, including stress testing.
Your Bank is also implementing Value at Risk (VaR)
model for the entire Treasury trading portfolio with
a view to assessing capital requirement for market risks
based on Advanced Approach under Basel-II. The
capital charge for banking book will be fine-tuned
through duration gap analysis.
Operational Risk
Operational risk management is an integral part of your
Banks business strategy. A Basel-II compliant software
is being used to track, measure and monitor
operational risk. Branches of your Bank are being rated
for their operational quality through an embedded
branch rating model. Your Bank has a policy in place
for Know Your Customer (KYC) and Anti Money
45

Laundering (AML) requirements. Though your Bank

will initially adopt Basic Indicator Approach for
operational risk, steps are being taken to migrate to
Advanced Measurement Approach over a period of
time. As a measure of operational risk management,
review exercises for new products and processes are
carried out. With a view to providing non-stop banking

46

services to its valued customers, protecting core

banking operations from natural disasters and
minimizing business disruption time, your Bank has set
up a Disaster Recovery (DR) site, which was tested
successfully by carrying out a DR drill. Apart from DR
site, your Bank is also in the process of preparing a
Business Continuity Plan.

Management, Controls and Systems

HR Initiatives
During 2006-07, your Bank recruited 905 employees
(Officers 887, Class-III 2 and Class-IV 16), of which
133, 42 and 178 belong to Scheduled Castes, Scheduled
Tribes and Other Backward Classes (OBCs)
respectively. The said recruitment also includes 4
Persons with Disabilities (PWD) and 5 Ex-Servicemen.
As on March 31, 2007, your Bank had 7482 employees
on its rolls, comprising 4277 officers, 1936 Clerical
(Class III) and 1269 Sub-staff (Class IV) employees.
As mentioned earlier, after its conversion into a
commercial bank and subsequent amalgamation of the
erstwhile IDBI Bank Ltd. and The United Western
Bank Ltd. with itself, your Bank has initiated steps for
evolving a common comprehensive Human Resource
(HR) architecture for all the three Strategic Business
Units (SBUs), which is aimed at integrating the
manpower through HR intervention. The roll-out of
a robust Oracle-based Human Resource Management
System (HRMS) has already begun. In subsequent
phases, more modules would be designed and activated
so as to derive maximum benefit from an online HR
database in terms of role profiling and competency
mapping and modeling to suit the changing HR needs.
Representation of Scheduled Castes (SCs),
Scheduled Tribes (STs) and Other Backward
Classes (OBCs)
Your Bank has been implementing the Rules of
Reservation for SCs/STs w.e.f. April 1977 in direct
recruitment and from February 1980 in promotion.
Your Bank has also been implementing reservation for
OBCs w.e.f. September 1993 in direct recruitment. In
terms of revised instructions of the Government of
India, Post-Based Roster System has been duly adopted.
The representation of SCs, STs and OBCs in the total
strength of your Bank in various cadres as on March
31, 2007 is indicated in Table 55.
It may be noted in this context that two of the SBUs,
being erstwhile Private Sector Banks, were not
required to follow Government guidelines on

Table 5 : Representation of SCs/STs/OBCs

Total
Strength

SCs

Officers

4277

397

119

302

Class-III

1936

208

74

184

Class-IV

1269

291

92

219

Total

7482

896

285

705

11.98

3.81

9.42

% of Total Strength

Out of which
STs OBCs

reservations prior to the respective effective dates of

their amalgamation with your Bank. Presently, separate
Rosters/Registers for DBSBU, CBSBU and UBSBU are
being maintained in view of the different grades and
pay scales in the three SBUs. These would be merged
after integration and mapping of the employees of all
the SBUs. Besides, there were 60 Ex-Servicemen and
64 Physically Handicapped persons in the Bank as on
March 31, 2007. Your Bank maintains a separate Roster
for PWDs, as per Govt. of India guidelines.
Your Bank has appointed Chief Liaison Officers for
SCs/STs and OBCs at its Head Office as also Zonal
Liaison Officers at each of the Zonal Offices (with
jurisdiction over the concerned Zone) to effectively
redress the grievances of SC/ST/OBC employees. Your
Bank conducted four quarterly meetings with
representatives of the SC/ST/OBC Welfare
Association during the year. Workshops on
reservation policy were conducted for the benefit of
SC/ST Cell, Liaison Officers and representatives of SC/
ST Association. Your Bank organized pre-recruitment
programmes for SC/ST candidates appearing for
written test / interviews for officers and Class-III posts.
Additionally, pre-promotion programmes were held
for Class-III staff belonging to SC, ST and OBC
categories for preparing them for promotion.
Human Resources Development
During the year, your Bank trained 3359 employees
through 280 training programmes. Of these, 126 were
in-house training programmes covering 3101
participants at your Banks Jawaharlal Nehru Institute
for Development Banking (JNIDB), Hyderabad and
Training Centre at Belapur, Navi Mumbai as also handson training at various Branches.
47

During the year, 243 officers were nominated for 146

external training programmes conducted by other
institutes / training organisations in India and 15 officers
were nominated for 8 training programmes held abroad.
In addition, 9 training programmes covering 219
participants were conducted at the Training Centre of
the erstwhile The United Western Bank Ltd. (UWB)
at Satara, which was merged with your Bank in
October 2006.
The training programmes were focused on the areas
of Retail Banking, especially Banking Basics, Branch
Operations, Finacle, Retail Products, Third Party
Products (Insurance, Mutual Funds and Govt. Business
etc.) and related areas. The other functional
programmes were in the areas of Priority Sector
Lending, Credit Rating, Working Capital, Trade Finance
and Derivatives. Induction programmes covering the
functions of the Bank and the various skills required
for efficient execution of the same were conducted for
new entrants. In addition, several soft skill programmes
on Business Etiquette, Innovation & Creativity in
Business, Problem Solving, Presentation Skills, Effective
Communication & Customer Service, Negotiation Skills
& Personal Effectiveness etc. were also organized.
Periodic meets of Heads of various business domains,
Zonal/Branch In-charges and Retail & Sales Heads were
organised setting a platform for exchange of views and
enhancing business.
Training in Jawaharlal Nehru Institute for
Development Banking
The Jawaharlal Nehru Institute for Development Banking
(JNIDB), a premier Training Institute, was established
by your Bank in 1991 with the objective of developing
human resources in financial and banking sector in India
and other developing countries through training,
research and consultancy. Over the years, JNIDB has
emerged as a centre of excellence in training and
development. During the year, 2318 participants (your
Bank 1470 and Others 848) attended various training
programmes at JNIDB as against 1821 participants in
the previous year. The year witnessed continued demand
for customized programmes from other banks/
institutions in the areas of Project Appraisal and Followup, Infrastructure Finance, Working Capital
Management, Executive Development Programmes etc.
In all, 27 such programmes were conducted during the
year as against 25 programmes conducted during the
48

previous year. For the first time, JNIDB collaborated

with the Department of Public Enterprises (DPE) and
conducted two programmes during the year one each
in Infrastructure Financing and Strategic Financial
Management for executives of PSUs. An international
programme on Project Appraisal and Infrastructure
Financing was conducted in collaboration with the
Association of Development Financing Institutions in
Asia and the Pacific (ADFIAP). Besides participants from
other countries such as Sri Lanka, Kazakhstan, Malaysia
and Fiji, the programme was also attended by executives
from a number of banks in India. The Institute continued
its initiative of conducting off-site programmes for banks
and corporate customers and conducted seven such
programmes at Kolkata, Mumbai, Chennai and
Hyderabad. The Institute also, for the first time, designed
and developed an open programme on Implementation
of Official Language for Hindi officers in banks / FIs.
As an appreciation of the services rendered by the
Institute, on completion of the first phase of the
Consultancy Assignment for DFCC Bank, Sri Lanka, the
Institute was given a mandate to carry out an
Assessment Development Centre for the executives
of DFCC Bank during the year.
Against an assessed capacity of 12,000 participant days
of training, the Institute imparted training for around
15,000 participant days, indicating a capacity utilization
of 125%. With the planned expansion of commercial
banking activities of your Bank, the need and demand
for specialized training at the Institute is expected to
increase substantially. Recognizing such requirements,
the Institute has planned for expansion of the academic
and hostel facilities and to double the existing capacity.
Preliminary steps have been initiated to implement the
expansion project.
Internal Audit
Your Bank has a well-equipped Internal Audit &
Regulatory Compliance Department carrying out regular
independent appraisal of all activities undertaken by
different business/support units and branches. The
function is headed by Senior Management Personnel
with reporting lines to CMD and Audit Committee of
the Board. The audit function maintains its independence
and objectivity while carrying out the assignments. It
evaluates, on a continuous basis, the adequacy and
effectiveness of internal control mechanisms, adherence
to policies and procedures and suggests measures to

strengthen and streamline controls for timely addressing

of various risks. Your Bank adopted risk-based internal
audit as its strategy while carrying out the activities.
There is an Information System Audit in place as part of
Internal Audit mechanism to address technology and IT
security issues commensurate with the nature and
complexities of the operations. There exists proper coordination between audit and other operational wings
for enhancing operational efficiency and fine-tuning of
the processes.
Your Bank has, in line with the regulatory requirements,
put in place a comprehensive concurrent audit system
to supplement the internal audit function. Emphasis is
placed on benchmarking your Banks practices and
procedures in an endeavour to migrate to the best
practices. The Audit Committee of the Board and Audit
Committee of Executives review the performance, give
directions to the internal audit functionaries and review
effectiveness of internal control systems as also
compliance with regulatory guidelines.
Vigilance Mechanism
A Vigilance Department functions at the Head Office
of your Bank. Additionally, Zonal Vigilance Cells
(ZVCs) set up at each Zonal Office co-ordinate the
matters relating to vigilance at Zonal/Branch level and
facilitate expeditious disposal of cases. The Vigilance
Department operates as a channel for providing inputs
to the Top Management for carrying out investigation
into vigilance-related complaints and to suggest
corrective measures for improving the control systems
and compliance of laid-down procedures. Your Bank
has put in place a system wherein complaints received
from the public / any other source are attended to
promptly and steps are taken to avoid recurrence of
such complaints in future.
A Vigilance Awareness Week was observed during
November 6-10, 2006 at Head Office/Zonal and Branch
Offices of your Bank to sensitise the employees about
the evils of corruption. Preventive Vigilance visits were
undertaken to various Zonal/Branch Offices to examine
their functioning and adherence to Systems and
Procedures and for suggesting corrective measures,
wherever necessary. During the year, a Best Practices
Code in respect of various functional areas of your Bank
was formulated and the same was put on the Intranet to
facilitate easy access for all staff members.

A Fraud Monitoring Group set up in your Bank

exclusively monitors cases relating to frauds, dacoities,
robberies, burglaries and thefts and reports the same
to RBI, Ministry of Finance, Board of Directors, Fraud
Monitoring Committee and Audit Committee of Board
and advises concerned Departments to take necessary
action in this regard.
Code of Banks Commitments to Customers
During the year, your Bank became a member of
Banking Codes and Standards Board of India (BCSBI),
recently set up by the Reserve Bank of India. The
Board of Directors of your Bank adopted the Code
of Banks Commitment to Customers (the Code) for
implementation. The Code is voluntary and sets
minimum standards of banking practices for banks to
follow when they are dealing with individual customers.
It provides protection to customers and explains how
banks are expected to deal with them for their dayto-day operations.
As an integral part of your Banks compliance with the
Code, information on the Code is provided to
customers through display on the Banks Website, at
the Branches, ATMs and with the Customer
Statements of Accounts. Copies of the Code have been
distributed to customers through the branches. Also,
a copy of the Code is being sent to all new customers
sourced after January 1, 2007.
In further compliance with the provisions of the Code,
a poster has been displayed at all branches of your
Bank notifying availability of various policy documents
on your Banks website as well as at branches, which
can be provided to the customers on demand. Name
& contact details of the Code Compliance Officer are
also displayed at branches and on the Banks website.
Your Bank is undertaking all necessary steps to comply
with the evolving BCSBI guidelines on an ongoing basis.
Also, it has in place Customer Service Committee of
the Board (CSCB) & Standing Committee on
Customer Service (SCCS) to ensure that Banks
products, processes and services are periodically finetuned to meet the desired objective of BCSBI of
achieving customer satisfaction.
Furthermore, to bring awareness amongst the staff
members, a copy of the Code is hosted on the Banks
intranet. All the branches have been conducting training
programmes for the branch staff, sales teams &
collection teams for familiarizing them with the
49

provisions of the Code and ensuring care while dealing

with customers. Besides, special training sessions on
the provisions of the Code are being conducted at
Banks training centers.
Regulatory Compliance
The compliance function of your Bank involves timely
submission of returns/reports to statutory bodies / RBI
and other regulatory bodies as also submission of
information to the Parliament / Government. Your
Bank has taken adequate steps to ensure compliance
with various Statutory & Regulatory guidelines. A
senior functionary of your Bank has been designated
as Regulatory Compliance Officer, to review, coordinate and enhance the compliance of regulatory
guidelines on an on-going basis.
Initiatives under the Right to Information Act
With a view to promoting transparency and
accountability in the working of every Public Authority,
Government of India enacted The Right to Information
Act, 2005. To facilitate compliance with the provisions
of the said Act and, in particular, having regard to
punitive clauses for non-compliance, the furnishing of
requisite information to applicants seeking information
from your Bank was initially centralized. However, in
order to streamline the activity further as also to
reduce the response time, the process has recently
been decentralized and a larger number of Central
Public Information Officers with specified functional
domains have been designated for expeditious
furnishing of information. As required under Section
4 of the Information Act, 2005, your Bank has
published the relevant information on its website. The
information sought by applicants under the RTI Act are
dealt with as per the provisions of the Act.
Progressive Use of Hindi
In accordance with the guidelines laid down by
Government of India (GoI) for progressive use of Hindi
in official work, several measures were undertaken
during the year. Your Bank ensured compliance of
various provisions of the Official Language Act and
Rules of Govt. of India. Concerted efforts were made
to enhance the use of Hindi in correspondence and
internal work. Increased use of Hindi helped your Bank
in reaching wider sections of the society.
During the period under review, further efforts were
made to increase the use of Hindi in the technologyenabled environment. Hindi software training was
50

imparted to the staff members. Information relating to

various products and services, guidelines to
shareholders/bondholders etc. were made available in
Hindi on your Banks website. Innovative steps were
taken to implement the Official Language Policy in
various areas of its operations. Your Bank would
continue its efforts for achieving the various targets
set out in the Annual Implementation Programme
issued by Govt. of India.
The Parliamentary Committee on Official Language
visited the Banks Pune office and appreciated the
efforts made by your Bank in implementation of the
Official Language Policy. The progressive use of Hindi
in your Bank was also reviewed in the quarterly
meetings of Official Language Implementation
Committee of Banking Division, Ministry of Finance,
Govt. of India.
Banks house journal Shree Vayam received an award
in Reserve Bank of India bilingual house journal
competition. Also, various branch offices of your Bank
received several coveted awards/prizes for excellent
performance in the use of Hindi from Rajbhasha
Vibhag, Ministry of Home Affairs and Town Official
Language Implementation Committees.
Corporate Communications
Your Banks advertising and publicity initiatives during
2006-07 were centered around its various products
with occasional brand advertising. The need to grow
business volumes in tune with your Banks Business
Plan warranted a complementary emphasis on product
advertising in general and promotion of retail products
in particular.
As part of this strategy, your Bank launched focused
multi-media advertising campaigns for several key
products during the year, such as IDBI Suvidha Fixed
Deposit and Home Loans in print, TV, radio and
outdoors for mutual reinforcement of the product
message. Varied sponsorship support was also
extended to events having business association for the
Bank. Further, your Banks website was continuously
updated to offer information on the wholesale and
retail banking products and services offered by your
Bank in a user-friendly format.
The complementary Public Relations initiatives were
designed to promote positive public perception of your
Bank while highlighting the excellent services offered
by your Bank and generally ensuring visibility for the
IDBI brand in the media domain.

Information Technology
Major IT initiatives during the year 2006-07 were
focused on centralization, application migration and
infrastructure integration of the erstwhile The United
Western Bank Ltd. (UWB) with your Bank. The main
focus was to integrate different solutions and processes
so that your Bank can quickly encash on business
synergies arising out of the amalgamation.
In the last 12 months, your Bank focussed on 24 X
7 service delivery by offering uniform services across
various alternate channels such as ATM, Phone
Banking, Mobile Banking, Internet Banking, etc. It also
provided its customers, a centralized multi-branch
connectivity integrated to a heterogeneous Core
Banking System across branches in India. This
integration provides a seamless access point for
clients for all banking products and services across
the channels. Your Bank is also the frontrunner in
respect of secured electronic transmission of tax
collection data through the usage of Digital Signature
Certificates.
Your Bank won the coveted Outstanding Achiever of
the Year Award 2006 under both Corporate and
Individual categories at the Indian Banks Association
(IBA) Awards 2006 organized by IBA and Trade Fares
& Conferences International (TFCI) this year. It was
also awarded the Special Award for Best Internet
Bank for Corporate Customers and for the IT Team
of the Year by Institute For Development and
Research in Banking Technology (IDRBT). This
portrays your Banks commitment towards technology
initiatives and customer-centric service deliveries.

Your Bank also carried out a Disaster Recovery (DR)

Drill, to check on the continuity of all the services
between Data Centre (DC) and DR. For the purpose
of continuity check on the replication that happens
between DC and DR and to have a consistent process
in place, a DR Drill manual has been prepared. As part
of the DR drill, the Banks Core Banking & Channels
were successfully operated from Disaster Recovery Site.
The focused efforts of IDBI Intech Ltd., the whollyowned technology arm of your Bank, in leveraging the
new & emerging technology platforms for its efficiency
& reliability in launching new products that are first
of their kind in the industry, resulted in further
boosting the customer confidence and perspective.
Your Bank acquired the erstwhile The United Western
Bank Ltd. in October, 2006 and immediately started
the process of integration of various activities like HR,
Treasury, Cash Management, Technology, Operations
etc. Among the most challenging and complex activities
was to integrate the heterogeneous technology and
operational processes of the two banks. Your Bank
entrusted IDBI Intech Ltd. with the task of system
integration. IDBI Intech simultaneously integrated 174
branches on core banking system of erstwhile The
United Western Bank Ltd. to the common platform
of IDBI Ltd. It was a complex and challenging project
as both the banks were on different technology
platforms. With meticulous planning, minute study of
parameters for business requirements and dedication
of all the team members it was ensured that the diverse
core banking solutions were integrated successfully.

51

Corporate Governance
Your Bank is committed to upholding the highest
standards of Corporate Governance in its
operations. The responsibility for maintaining high
standards of governance lies with your Banks Board
of Directors and various Committees of the Board,
which are empowered to monitor implementation of
the best Corporate Governance practices including
making of necessary disclosures within the
framework of legal and regulatory provisions and
banking conventions.
In this direction, your Bank is committed to ensure
that the Banks Board of Directors continues to be
constituted as per the prescribed norms, meets
regularly, provides effective leadership, exercises
control over the management, monitors executive
performance and makes appropriate disclosures. In
addition, establishment of a framework of strategic

control and continuous reviewing of its efficacy and

establishment of clearly documented and transparent
management processes for policy development,
implementation and review, decision-making,
monitoring, control and reporting are the other
policy directives. Your Bank provides free access to
the Board to all relevant information, advices and
resources to enable it to carry out its role
effectively.
Board Meetings
During the period under review (April 1, 2006 - March
31, 2007), a total of 11 Board Meetings were held on
April 21, 2006, May 24, 2006, June 23, 2006, July 19,
2006, August 19, 2006, September 21, 2006, October
19, 2006, December 11, 2006, January 22, 2007,
February 21, 2007 and March 24, 2007. Out of the

Table 6 : Directors Attendance at the Board Meetings and AGM,

their Directorships and Committee Memberships
Attendance at
the Banks
Board Meetings
(Total No. of
Meetings held -11)

Attendance at
the last
AGM held
on
July 19, 2006

Directorships
in other
companies

ACB / S/IGC
Memberships/
Chairmanships
in other
Companies

Shri V.P. Shetty, CMD

11

Attended

NIL

Shri O.V. Bundellu, DMD

11

Attended

Shri Jitender Balakrishnan, DMD

11

Attended

NIL

Shri Vinod Rai

Did not Attend

NIL

Dr. Ajay Dua

Did not Attend

NIL

NIL

Shri Analjit Singh

Did not Attend

12

NIL

Smt. Lila Firoz Poonawalla

10

Attended

Shri K. Narasimha Murthy

11

Attended

NIL

Shri R. V. Gupta

Did not Attend

Shri H.L Zutshi

10

Attended

Dr. D.Veerendra Heggade

Did not Attend

NIL

NIL

Shri A. Sakthivel

Attended

NIL

Name of Directors

52

above, 9 meetings were held in Mumbai and 2 meetings

in New Delhi.
Details in respect of each Director of your Bank
regarding attendance at Board Meetings, attendance at
the last Annual General Meeting (AGM), directorships
in other companies and memberships of Committees
are given in Table 66.
Audit Committee
As on March 31, 2007, Audit Committee of the Board
(ACB) comprised six members with two Deputy
Managing Directors and four Independent Directors.
Shri K. Narasimha Murthy, a qualified Chartered-cumCost Accountant was the Chairman of the Audit
Committee and S/Shri O.V. Bundellu, Jitender
Balakrishnan, DMDs, H.L. Zutshi, R.V. Gupta and Smt.
Lila Firoz Poonawalla were the other members. During
the period April 1, 2006 to March 31, 2007, the Role
& Powers of ACB were in line with the provisions of
revised Clause 49 of the Listing Agreement, Section
292A of the Act and relevant RBI guidelines. No
personnel has been denied access to the Audit
Committee. Appointment of Statutory Auditors was
made with the approval of RBI as per provisions of
the Banking Regulation Act, 1949. The matters dealt
with by the ACB, inter-alia, included review of
quarterly / half-yearly / annual accounts, Internal Audit

Reports, compliance of RBI Inspection Reports, etc.

ACB met 12 times during the period April 1, 2006
March 31, 2007 on April 21, 2006, May 24, 2006, July
18, 2006, July 19, 2006, September 27, 2006, October
19, 2006; December 4, 2006, December 11, 2006,
January 9, 2007, January 22, 2007, February 21, 2007
and March 24, 2007.
Details of attendance of Directors at ACB meetings
are given in Table 77.
Remuneration of Directors
Remuneration and perquisites of the Chairman &
Managing Director and Deputy Managing Directors are
decided by Government of India. The details of
remuneration paid to CMD and DMDs are given in
Table 88. Other Independent Directors were paid only
sitting fees for each Board / Committee Meeting
attended by them @ Rs.5,000 (for Board, Executive
Committee and Audit Committee Meetings) and @
Rs.2,500 (for other Committee Meetings of the Board)
per meeting. Apart from the remuneration to CMD
and DMDs and sitting fees to Independent Directors,
no other remuneration was paid to the Directors. The
pecuniary relationship/transactions of Non-Executive
Directors vis--vis your Bank have been nil during the
period under review.

Table 7 : Directors Attendance at ACB Meetings

Names of Directors

Meetings held during

the Members tenure

Meetings Attended

Shri K. Narasimha Murthy

12

12

Shri O.V. Bundellu, DMD

12

12

Shri Jitender Balakrishnan, DMD

12

12

Dr. Ajay Dua (up to May 7, 2006)

Shri R. V. Gupta

12

Shri H.L Zutshi

12

10

Shri A. Sakthivel (up to May 7, 2006)

Smt. Lila Firoz Poonawalla (w.e.f May 8, 2006)

11

10

53

Table 8 : Elements of Remuneration of Chairman & Managing Director and Deputy Managing Directors
Salary & Allowances

Shri V.P.Shetty - Rs.26,000 p.m. + 50% of the pay as Dearness Pay

Shri O.V. Bundellu - Rs.22,050 p.m. + 50% of the pay as Dearness Pay
Shri Jitender Balakrishnan - Rs.22,050 p.m. + 50% of the pay as Dearness Pay.

Entertainment

Shri V.P. Shetty - Actual entertainment subject to a ceiling of Rs.6000 p.a.

(membership of club adjustable within the above ceiling)
Shri O.V. Bundellu - Actual entertainment subject to a ceiling of Rs.6000 p.a.
(membership of club adjustable within the above ceiling)
Shri Jitender Balakrishnan - Actual entertainment subject to a ceiling of Rs.6000
p.a.(membership of club adjustable within the above ceiling)

Housing

Rent-free furnished accommodation in respect of CMD and DMDs.

Leave Travel
Concession

For self and family once in a block of 2 years for visiting any place in India as per
entitled class as applicable for official tour in respect of CMD and DMDs.

Pension

Entitled to draw pension, if any, admissible in the career post (below Board level)
as per the rules and regulations of your Bank where the career post is held.

Gratuity

At the rate of half months pay for every completed year of service or more than
6 months of service as Chairman & Managing Director/ Deputy Managing Directors.

Tenure

Shri V.P. Shetty - Appointed as CMD vide Govt. of Indias Notification F.No. 8/4/
2005-IF.I dated March 1, 2005 with effect from March 3, 2005 till the date of his
superannuation or until further orders, whichever is earlier.
Shri O. V. Bundellu - Appointed as DMD vide Govt. of Indias Notification F.No.
8/13/2005-IF.I dated March 14, 2006 with effect from March 14, 2006 till the date
of superannuation or until further orders, whichever is the earliest.
Shri Jitender Balakrishnan - Appointed as DMD vide Govt. of Indias Notification
F.No. 8/13/2005-IF.I dated March 14, 2006 with effect from March 14, 2006 till
the date of superannuation or until further orders, whichever is the earliest.

Performance
linked incentives /
Stock Option

54

In view of the recent Government Guidelines for payment of incentives to Banks

Chairman and Whole Time Directors, a Remuneration Committee of the Board
has been constituted to take a decision regarding grant of performance linked
incentives to the Chairman & Managing Director and Deputy Managing Directors.
Grant of such incentives will be subject to the limits prescribed by the Central
Government in this regard.

Risk Management Committee

Executi
ve Committee
Executive

The Risk Management Committee of your Bank

consisted of six members as on March 31, 2007, viz.,
Shri V.P. Shetty, CMD, S/Shri O.V. Bundellu, Jitender
Balakrishnan, DMDs, K. Narasimha Murthy, Analjit Singh
and Smt. Lila Firoz Poonawalla, Directors. The
Committee assesses various risks associated with the
business of your Bank, their mitigation and also
addresses the issues relating to asset liability mismatch.
During the period April 1, 2006 March 31, 2007, 4
meetings of the Risk Management Committee were held
on July 18, 2006, September 27, 2006, December 11,
2006 and March 24, 2007.

Apart from the Board, your Bank continues to have

an Executive Committee to consider the matters other
than policy matters and those specifically required to
be considered by the Board and to exercise such other
powers as delegated to it by the Board. As on March
31, 2007, Shri V.P. Shetty, CMD was the Chairman of
the Committee with S/Shri O.V. Bundellu, Jitender
Balakrishnan, DMDs, Vinod Rai, K. Narasimha Murthy,
H.L. Zutshi and A. Sakthivel as members. During the
period April 1, 2006 March 31, 2007, 11 meetings
of the Executive Committee were held on April 21,
2006, May 24, 2006, June 23, 2006, July 19, 2006,
August 19, 2006, September 27, 2006, October 19,
2006, December 04, 2006, January 22, 2007, February
21, 2007 and March 24, 2007.

Shareholders / Investors Grievance Committee

As on March 31, 2007, the Shareholders / Investors
Grievance Committee (S/IGC) of your Bank comprised
five members with two Deputy Managing Directors
and three Independent Non-Executive Directors. Shri
R.V. Gupta was the Chairman of S/IGC and S/Shri O.V.
Bundellu, Jitender Balakrishnan, DMDs, H.L. Zutshi and
K. Narasimha Murthy were the other members.
During the period April 1, 2006 March 31, 2007, 4 S/
IGC meetings were held on May 24, 2006, October 19,
2006, December 4, 2006 and March 24, 2007.
The Committee has been constituted to look into the
redressal of shareholders and investors grievances
pertaining to transfer of shares, non-receipt of Annual
Report, non-receipt of declared dividend, etc. Further,
to expedite the process of share transfers, an internal
committee of a Deputy Managing Director and a Chief
General Manager has been set up to approve the
Memorandum of Transfers (MoTs) on a weekly basis.
Your Bank has named Shri S.N. Baheti, Company
Secretary of the Bank as Chief Compliance Officer.
As on April 1, 2006, no investor grievances were
pending for redressal and during the period April 1,
2006 to March 31, 2007, 51,902 investor grievances
were received from shareholders / investors by your
Banks Registrar and Transfer Agents. Of these, 51,737
grievances were redressed and 165 grievances were
pending for redressal as on March 31, 2007. In respect
of shares/bonds, 125 cases of transfers were pending
on April 1, 2006. During the period April 1, 2006 to
March 31, 2007, 10,988 requests for transfer of shares/
bonds were received by your Banks Registrar and
Transfer Agents. All these were processed and none
was pending as on March 31, 2007.

Frauds Monitoring Committee

A Frauds Monitoring Committee was set up to look
into fraud related aspects of the Bank. As on March 31,
2007, the Committee comprised Shri V.P. Shetty, CMD
as Chairman and S/Shri O.V. Bundellu, Jitender
Balakrishnan, DMDs, R.V. Gupta, A. Sakthivel and Smt.
Lila Firoz Poonawalla as members. The Frauds Monitoring
Committee was constituted on May 24, 2005 and during
the year its 2 meetings were held on September 27,
2006 and February 21, 2007.
Customer Service Committee
To look into the customer grievances and effective
service to customers in the retail banking segment, a
Customer Service Committee was set up by your Bank.
As on March 31, 2007, it comprised Shri V.P. Shetty,
CMD as Chairman and S/Shri O.V. Bundellu, Jitender
Balakrishnan, DMDs, A. Sakthivel and Smt. Lila Firoz
Poonawalla as members. The Customer Service
Committee was constituted on September 30, 2005
and during the year, held its 2 meetings on September
27, 2006 and March 24, 2007.
Information Technology Committee
In view of the measures taken by your Bank to set up a
technology platform for rendering various services to the
clients; to help in streamlining the approach, launch of
products and provision of services, Information
Technology Committee was set up by your Bank. As on
March 31, 2007, it comprised Shri V.P. Shetty, CMD as
55

Chairman and S/Shri O.V. Bundellu, Jitender Balakrishnan,

DMDs, H.L. Zutshi and Smt. Lila Firoz Poonawalla as
members. The Information Technology Committee was
constituted on March 4, 2006 and during the year, held
its meeting on March 24, 2007.
General Body Meetings
The last Annual General Meeting (AGM) of your Bank
was held on July 19, 2006. Details of AGMs/EGM of IDBI
Ltd. are given in Table 99.
Disclosure
No company was assisted during April 1, 2006 March
31, 2007, in which any of the Directors of your Bank
was interested.
Your Bank has complied with the mandatory
requirements of revised Clause 49 of the Listing
Agreement and is also in the process of adopting nonmandatory requirements. As regards details of noncompliance / penalties etc. during the last three years,
a penalty of Rs. 5 lakh each was levied by RBI in 200506 and 2006-07 respectively for not adhering to norms
relating to Know Your Customer (KYC) and IPO
Financing. However, no penalty was levied in 2004-05.
Your Bank has established a whistle blower mechanism
and is considering adopting training of directors and
evaluation of non-executive directors as well as other

non-mandatory requirements of revised Clause 49 of

the Listing Agreement.
Compliance of the Code of Conduct
The Broad of Directors has approved a Code of Conduct
and Ethics for Directors, officers and Employees of your
Bank. In compliance of the requirement of revised Clause
49 of the Listing Agreement, a declaration signed by
Chairman & Managing Director about affirmation of
compliance of the Code of Conduct by Board members
and Senior Management Personnel of your Bank is as
follows:
Declaration by CEO
Pursuant to the provisions of Clause 49 of the Listing
Agreement, it is hereby declared for the information of
all concerned that all the Board Members and Senior
Management Personnel of IDBI Ltd. have affirmed
compliance with the code of conduct for Directors,
Officers and Employees of IDBI Ltd. for the F.Y. 2006-07.

Sd/(V.P.Shetty)
Chairman & Managing Director
April 3, 2007

Table 9 : Details of Annual General Meetings / Extra-Ordinary General Meeting

Location, date and time when the last AGMs and
EGM were held

1) February 23, 2005 at Nehru Centre Auditorium, Worli,

Mumbai - 400 018 at 3.00 p.m. (EGM).
2) August 18, 2005 at Nehru Centre Auditorium, Worli,
Mumbai - 400 018 at 3.30 p.m. (1st AGM).
3) July 19, 2006 at Nehru Centre Auditorium, Worli,
Mumbai - 400 018 at 3.30 p.m. (2nd AGM).

56

Whether Special Resolutions were passed in the

last AGM

Yes, a special resolution for appointment of Statutory Auditors of

the Bank under section 224A of the Companies Act, 1956 was
passed at the last AGM of the Bank held on July 19, 2006.

Whether any Special Resolution is proposed to

be conducted through postal ballot

No.

Whether Special Resolutions were put through

postal ballot last year and details of voting pattern

No.

Person who conducted the postal ballot exercise

Not applicable

Procedure for postal ballot

Not applicable

Means of Communication
Apart from providing detailed Annual Report on the
working of your Bank, consisting of Directors Report
(containing Management Discussion and Analysis) and
Annual Accounts, your Bank regularly brings out its
quarterly results for information of its shareholders
through publications thereof in one English language
newspaper, having nation-wide circulation and in one
regional language newspaper. The aforesaid information
is also placed on your Banks website (www.idbi.com)
along with the official press release and presentation
made to institutional investors and analysts.

The documents referred to but not sent to the persons

entitled to receive notice of the Annual General
Meeting will be made available for inspection of
shareholders at the registered office of your Bank
during working hours for a period of 21 days before
the date of AGM.
General Shareholders Information
Details of share price movement during April 1, 2006
March 31, 2007 and other general information
relevant to shareholders are provided in Figure 6,
Table 10 and Table 11 respectively.

Table 10 : IDBI Ltd.s Share Price Movement on Bombay Stock Exchange Limited (BSE) : April 2006 - March 2007
(Rupees))
Month

High

Low

Month

High

Low

April 06

89.85

79.85

October 06

87.00

78.40

May 06

95.65

68.90

November 06

82.55

73.85

June 06

67.55

49.90

December 06

84.65

72.45

July 06

58.45

49.20

January 07

102.85

75.40

August 06

66.05

54.85

February 07

107.60

80.55

September 06

82.70

62.15

March 07

81.70

67.65

Figure 6 : Share Price of IDBI Ltd. (Rs.) and BSE Sensex April 2006 March 2007

57

Table 11 : General Shareholders Information

Financial Calendar

April 1, 2006 to March 31, 2007 as under 1) Results for the quarter ended June 30, 2006 were considered on
July 19, 2006.
2) Results for the quarter/half year ended September 30, 2006 were
considered on October 19, 2006.
3) Results for the quarter/nine months period ended December 31,
2006 were considered on January 22, 2007.
4) Audited Results for the year ended March 31, 2007 were
considered on April 20, 2007.

58

Book closure date

June 18 to June 22, 2007

Record date for dividend

June 22, 2007

Last date for receipt of proxy forms

June 20, 2007

Date, time and venue of AGM

June 22, 2007 at 3.30 p.m. at Nehru Centre Auditorium, Worli,

Mumbai 400 018.

Dividend payment date

By July 20, 2007

Probable date of despatch of dividend warrants

By July 15, 2007

Board Meeting for considering the quarterly results

Within one month of the closure of respective quarter.

Listing on Stock Exchanges

Bombay Stock Exchange Ltd. (BSE) and The National Stock

Exchange of India Ltd. (NSE)

Stock code / Symbol

BSE 116, NSE EQ IDBI

Registrar and Transfer Agents

Karvy Computershare Pvt. Ltd. (upto April 30, 2007),

Investor Services of India Ltd. (from April 30, 2007)

Share Transfer system

Share Transfers are approved on weekly basis by an internal

committee comprising of a Deputy Managing Director and a Chief
General Manager.

Number of shares and convertible instruments held

by Non-Executive Directors

Nil

Distribution of Shareholding
The details of shareholding in your Bank by major categories of shareholders and distribution schedule as at
end-March 2007, is presented in Table 12 and Table 13 below:
Table 12 : Shareholding Pattern as at end-March 2007
Category of Shareholders
Government of India
Employees
Public
Hindu Undivided Families
Bodies Corporate
Institutions
Societies
Trusts
Insurance Companies
NRIs
NSDL (transit)
GRAND TOTAL

No. of Shares Held

% to Total

381778000

52.71

1964604

0.27

102293842

14.12

1753086

0.24

26382826

3.64

139308555

19.23

28960

0.01

779861

0.11

64484898

8.90

4832596

0.67

746860

0.10

724354088

100.00

Table 13 : Distribution Schedule as at end-March 2007

S.No

Category

No. of

% to total

Amount

% to total

From

To

Shareholders

Shareholders

(Rs.)

Amount

5000

303085

90.36

568254910

7.84

5001

10000

19690

5.87

149193930

2.06

10001

20000

7307

2.18

106878510

1.48

20001

30000

1927

0.57

48892640

0.67

30001

40000

807

0.24

28628720

0.40

40001

50000

671

0.20

31684300

0.44

50001

100000

966

0.29

71689290

0.99

100001
& above

978

0.29

6238318580

86.12

335431

100.00

7243540880

100.00

Total

59

Table 14 : Details of Dematerialisation and Address for Correspondence

Dematerialisation of shares and liquidity

The fully paid-up capital of IDBI Ltd. is Rs.724.35 crore comprising of 72.44
crore equity shares of Rs.10 each. Out of the total investor base of
approximately 3.35 lakh, 2.17 lakh investors are holding 31.48 crore shares
in electronic mode. The total number of investors (excluding Government
of India) holding shares in electronic form works out to 91.90%. IDBI Ltd.
scrip is actively traded at BSE and NSE. Listing fees for the year 2006-07
has been paid to these Exchanges.

Outstanding GDRs/ADRs/ Warrants or

convertible instruments, conversion
date and likely impact on equity

IDBI Ltd. has not issued GDRs/ADRs/Warrants or convertible instruments.

Plant Locations

Not Applicable. However information about locations of your Banks

branches is available on the Banks website viz. www.idbi.com.

Address for correspondence

Equity Cell - Board Department, IDBI Ltd.,

3rd floor, IDBI Tower,
WTC Complex, Cuffe Parade,
Mumbai 400 005
Phone 022 - 66552244
Fax 022 - 2218 23 52
E-mail mn.kamat@idbi.co.in

Auditors Report on Corporate Governance

To the Members of
Industrial Development Bank of India Limited
We have examined the Compliance of the conditions of Corporate Governance by Industrial Development Bank of
India Limited (herein after referred to as the Bank) for the year ended March 31, 2007 as stipulated in Clause 49 of the
Listing Agreement of the said Bank with Stock Exchanges in India.
The Compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited
to a review of the procedures and implementation thereof, adopted by the Bank for ensuring compliance with the conditions
of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Bank.
In our opinion and to the best of our information and according to the explanations given and representations made by
the Directors and the Management, we certify that the Bank has complied with the conditions of Corporate Governance
as stipulated in the above-mentioned Listing Agreement.
We state that such compliance is neither an assurance as to the future viability of the Bank nor the efficiency or effectiveness
with which the management has conducted the affairs of the Bank.
For Khimji Kunverji & Co.
Chartered Accountants

For Suresh Chandra & Associates

Chartered Accountants

Sd/-

Sd/-

Shivji K Vikamsey
Partner
Membership No. 2242

Ved Prakash Bansal

Partner
Membership No.500369

Mumbai,
April 20, 2007

60

Performance of Subsidiary Organisations

IDBI Capital Market Services Limited
IDBI Capital Market Services Limited (ICMS), a wholly
owned subsidiary of your Bank, established in 1993
offers a full suite of financial products and services to
institutional, corporate and retail clients. Its businesses
include Primary Dealing, Stock Broking, Distribution
of Financial Products, Merchant Banking, Corporate
Advisory Services, Debt arranging & underwriting,
Portfolio Management of Pension / PF Funds &
Research services. However, in accordance with
revised RBI guidelines, the primary dealing business has
been segregated and IDBI Gilts Limited has been
incorporated as a subsidiary of IDBI, for the purpose.
During the year under review, ICMS launched its
investment Portal www.idbipaisabuilder.in to help retail
investors invest in Equity (BSE / NSE / F&O), Mutual
Funds (15) and IPOs with information / analysis /
recommendations provided therein. To enhance its
retail reach across the country, ICMS has tied up with
your Bank as also with Punjab National Bank, Bank
of Rajasthan and Oriental Bank of Commerce for
marketing its investment portal. This would help build
value in the company.

ICMS has established itself in the Investment Banking

business having completed seven issues apart from
Corporate Advisory assignments in Project Appraisal,
Shares Valuation, Loan Syndication, Debt restructuring
etc. It has also made initial forays into Private Equity
investment. At the same time, it continues to remain a
major player in the PF / Pension Fund Management
with assets under management of over Rs.13,000 crore
and also remains among the top ten Mutual Fund
Distributors. This has helped the Company to obtain
CNBCs Best National Financial Advisor Award in
the Institutional Category.
In view of the adverse conditions / volatility prevailing
in debt and equity market and after accounting for a
revenue expenditure of Rs.20 crore to establish the
retail investment portal, ICMS incurred a net loss of
Rs. 18.16 crore during the year.
The abridged Balance Sheet and Profit and Loss Account
of ICMS is given in Table 15 and 16 respectively. The
Auditors Report in this regard is given at Appendix I.
IDBI Homefinance Limited
Your Bank acquired the entire shareholding of
Tata Finance Ltd. in Tata Homefinance Ltd. in

Table 15 : IDBI Capital Market Services Ltd. Abridged Balance Sheet

(Rs.crore)

As at March 31

2006

2007

Paid-Up Capital

167.90

157.90

Reserves and Surplus

264.39

204.84

Borrowings

252.79

0.00

44.34

23.35

1.96

2.22

Total Liabilities

731.38

388.31

Total Assets

731.38

388.31

Current Liabilities and Provisions

Deferred Tax Liability

Table 16 : IDBI Capital Market Services Ltd. Abridged Profit and Loss Account
For the year ended March 31

(Rs.crore)

2006

2007

125.67

40.81

Total Expenditure

74.18

58.49

Profit/(Loss) Before Tax

51.49

(17.69)

Profit/(Loss) After Tax

46.29

(18.16)

Total income

61

Table 17 : IDBI Homefinance Ltd. Abridged Balance Sheet

As at March 31

2006

2007

109.98

129.98

16.97

30.26

Borrowings

1560.82

2157.16

Total Liabilities

1687.77

2317.40

Loans

1516.93

2146.95

Net Fixed Assets

5.60

5.41

Defer Tax Asset

0.88

2.12

164.31

162.89

0.05

0.03

1687.77

2317.40

Paid Up Capital
Reserves and Surplus

Net Current Assets

Misc Expenditure
Total Assets

Table 18 : IDBI Homefinance Ltd. Abridged Profit and Loss Account

For the year ended March 31

(Rs.crore)

2006

2007

100.44

169.62

Interest expenses

71.51

132.09

Net interest income

28.93

37.53

9.38

16.58

Total income

38.31

54.11

Total expenditure

18.12

21.09

1.65

3.40

Profit/(Loss) Before Tax

18.54

29.62

Profit/(Loss) After Tax

14.43

23.12

Interest income

Fees and Other income

Provisions

September 2003. Later, the name of the company was

changed to IDBI Homefinance Ltd. Over the years, the
company has taken steps to enhance its retail reach,
strengthen brand image, improve asset quality, achieve
business growth etc. The authorized capital of the
company has been increased from Rs.150 crore to
Rs.200 crore. During the year, IHFLs outstanding loan
portfolio increased by Rs.630 crore from Rs.1517 crore
to Rs.2147 crore, registering a growth of 42%.
The abridged Balance Sheet and Profit and Loss Account
of IDBI Homefinance Ltd. are given in Table 17 and 18
respectively. The Auditors Report in this regard is given
at Appendix II.
As on March 31, 2007, IHFLs Capital Adequacy Ratio
(CAR) was 13.92%, while its debt-equity ratio stood
62

(Rs.crore)

at 13.69 :1. Net NPA level as on March 31, 2007

reduced by 0.31% to 0.69% as compared to 1.0% as
on March 31, 2006.
IDBI Intech Ltd.
IDBI Intech Ltd. (IIL) was established by your Bank in
March 2000, as a wholly-owned subsidiary to
undertake activities in the Information Technology
sector. Consequent upon your Banks conversion into
a commercial bank and subsequent merger of the
erstwhile IDBI Bank Ltd. with itself, IILs operational
horizon was expanded to take care of IT needs of
your Bank and its group companies. During the year
under review, IIL signed Advisory and Consultancy
Agreement with your Bank and also received an
assignment from your Bank for end-to-end system

Table 19 : IDBI Intech Ltd. Abridged Balance Sheet

(Rs.crore)

As at March 31

2006

2007

Paid Up Capital

13.13

13.13

Accumulated Losses

11.06

4.81

Current Liabilities and Provisions

0.46

2.63

Total Liabilities

2.53

10.95

Total Assets

2.53

10.95

Table 20 : IDBI Intech Ltd. Abridged Profit and Loss Account

For the year ended March 31

(Rs.crore)

2006

2007

Total income

0.27

7.68

Total Expenditure

4.13

3.24

Profit/(Loss) Before Tax

(3.86)

4.44

Profit/(Loss) After Tax

(3.81)

6.55

integration of TC-4 (Core Banking Solution used by

erstwhile The United Western Bank Ltd.) with Finacle.
During the year, IIL recorded total income of
Rs. 7.68 crore from IT and Software services.
The abridged Balance Sheet and Profit and Loss Account
of IDBI Intech Ltd. are given in Table 19 and 20
respectively. The Auditors Report in this regard is given
at Appendix III.
IDBI Gilts Ltd.
IDBI Gilts Ltd. was set up as a wholly-owned
subsidiary of your Bank to undertake Primary
Dealership (PD) Business with an authorized capital
of Rs.200 crore. The company was incorporated in

December 2006 and obtained Certificate for

Commencement of Business in February 2007. The
PD business from IDBI Capital Market Services Ltd.
(ICMS) would be segregated and transferred to IDBI
Gilts Ltd. IDBI Gilts Ltd. will focus on Bond trading,
underwriting in auctions of primary issuance of
Government dated securities and treasury bills. In
addition, the company also plans to be a major player
in the interest rate and credit derivatives market. The
abridged Balance Sheet of IDBI Gilts Ltd. is given in
Table 21
21. As the Company was not operational
during FY 2006-07, IDBI Gilts Ltd. does not have
Profit & Loss Account for the year. The Auditors
Report in this regard is given at Appendix IV.

Table 21 : IDBI Gilts Limited Abridged Balance Sheet

As at March 31

(Rs. lakh)
2007

Share Capital

500.00

Total Liabilities

500.00

Cash & Bank Balances

500.00

Less: Current Liabilities & Provisions

141.59

Net Current Assets

358.41

Miscellaneous Expenditure

141.59

Total Assets

500.00

63

Future Prospects
The strong growth of the Indian economy provides
increased opportunities for your Bank to increase its
presence both in width as well as in depth. Your Bank
will capitalise on its intimate knowledge of Indian
economy to participate in this growth process in a
meaningful manner. Your Bank also has deep
understanding of the financial markets, both Indian and
global, which enables it to initiate appropriate strategies
to assess and mitigate key risks. However, in a
competitive environment, growth needs to be
accompanied by increased efficiency by reaping the
benefits of the economies of scope and scale. Only
then growth would have a positive impact on the
bottomline. Your Bank has already consolidated its
position through the amalgamation of its erstwhile

64

subsidiary followed by the further amalgamation of the

erstwhile The United Western Bank Ltd.
Going forward, as part of its growth strategy, your
Bank will give thrust to both retail as well as
corporate business, apart from pursuing its mandated
role of providing development finance. Growth
would also come from the SME and agri-business
segments, which are emerging areas in your Banks
business landscape. Your Bank is also entering into
new businesses and geographic landscape including
embarking on international presence. These efforts,
together, would enable your Bank to move closer
to achieving its long-term vision and bring benefits
to all the stakeholders.

Industrial Development Bank of India Limited

Report of the Auditors to the Members

of Industrial Development Bank of India
Limited

We have audited the attached Balance Sheet of the

Industrial Development Bank of India Limited
(the Bank) as at March 31, 2007, as also the Profit
and Loss Account and the Cash Flow Statement of
the Bank for the year ended on that date annexed
thereto.

() 31 2007
-
.
.

.

.



.

.

,

.

These financial statements are the responsibility of

the Banks management. Our responsibility is to
express an opinion on these financial statements
based on our audit. We conducted our audit in
accordance with the auditing standards generally
accepted in India. Those standards require that we
plan and perform the audit to obtain reasonable
assurance about whether the financial statements
are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements.
An audit also includes assessing the accounting
principles used and significant estimates made by
the management, as well as evaluating the overall
financial statement presentation. We believe that
our audit provides a reasonable basis for our
opinion.

- , 1956

The Balance Sheet and Profit and Loss Account

have been drawn up in accordance with the
provisions of Section 29 of the Banking Regulation
Act, 1949 read with Section 211 of the Companies
Act, 1956.

211 , 1949

We report that

29 .

1.

We have obtained all the information and

explanations, which, to the best of our
knowledge and belief, were necessary for the
purposes of our audit and have found them to
be satisfactory.

2.

The transactions of the Bank which have come

to our notice have been within the powers of

1.

,
.

65


2.

.
3.

3.

The returns received from the offices and

branches of the Bank have been found adequate
for the purposes of our audit.

4.

In our opinion, proper books of account as

required by law have been kept by the Bank
so far as appears from our examination of
those books and proper returns adequate for
the purpose of our audit have been received
from offices and branches not visited by us.

5.

The Banks Balance Sheet, Profit and Loss

Account and Cash Flow Statement dealt with
by this report are in agreement with the
books of account and the returns.

6.

In our opinion, the Balance Sheet, Profit and

Loss Account and Cash Flow Statement dealt
with by this report comply with the Accounting
Standards referred to in sub-section 3(C) of
Section 211 of the Companies Act, 1956 read
with guidelines issued by the Reserve Bank of
India in so far as they apply to the Bank.

7.

The provisions of Section 274(1)(g) of the

Companies Act, 1956 are not applicable in
terms of Notification No.G.S.R.829 (E) datedOctober 21, 2003 issued by Department of
Company Affairs, Government of India.

8.

In our opinion and to the best of our

information and according to the explanations
given to us, the said financial statements give
the information required by the Banking
Regulation Act, 1949 as well as the Companies
Act, 1956 in the manner so required for
banking companies and give a true and fair
view in conformity with the accounting
principles generally accepted in India.

4.

the Bank.

, ,

,

,
,
.

5.

,
.

6.

,
- ,

, 1956 211 3()
,
, .

7.

21
2003 . ...829 ()
, 1956 274 (1) ()
.

8.

,
, 1949
, 1956


.
) , 31 2007
.

66

a)

In the case of the Balance Sheet, of the

state of affairs of the Bank as on March
31, 2007;

Industrial Development Bank of India Limited

) - ,

b)

In the case of the Profit and Loss Account,

the same shows a true balance of Profit
for the year ended March 31, 2007
covered by such accounts; and

c)

In the case of the Cash Flow Statement,

of the cash flows for the year ended
March 31, 2007.

31 2007

) , 31 2007
.

.

.

: 2242

20 2007

: 500369

For Khimji Kunverji & Co. For Suresh Chandra & Associates
Chartered Accountants
Chartered Accountants
Shivji K. Vikamsey
Partner
Membership No. 2242

Ved Prakash Bansal

Partner
Membership No. 500369

Mumbai
April 20, 2007

67


31 2007 - / Balance Sheet as at March 31, 2007
( / Rupees in '000s)

31 2007

31 2006

Schedule

As on 31-Mar-07

As on 31-Mar-06

724 35 41
7575 10 71

723 79 46
5647 38 85

40 13
43354 04 14
42404 37 56
9781 04 43
--------------------------------103839 32 38
============

87 59
26000 91 64
47530 20 57
8661 59 99
--------------------------------88564 78 10
============

5406 47 11

2680 09 49

7
8
9
10
11

1504 61 84
25675 31 19
62470 82 26
2778 36 65
6003 73 33
--------------------------------103839 32 38
============
108527 82 49
2405 15 12

2682 68 65
25350 52 63
52739 06 78
810 90 19
4301 50 36
--------------------------------88564 78 10
============
77020 05 84
1519 43 60

CAPITAL AND LIABILITIES
/ Capital
/ Reserves and Surplus

1
2

()
Employees stock options (grants) outstanding
/ Deposits
/ Borrowings
/ Other Liabilities and Provisions

3
4
5

/ TOTAL

/ ASSETS

Cash and balances with Reserve Bank of India

Balances with banks and money at call and short notice
/ Investments
/ Advances
/ Fixed Assets
/ Other Assets

/ TOTAL
/ Contingent Liabilities
/ Bills for collection

Significant Accounting Policies and Notes to accounts
form an integral part of the accounts

12

17 &18

BY ORDER OF THE BOARD

(. )

(. . )

( )

(K. Narasimha Murthy)

(O.V. Bundellu)

(Jitender Balakrishnan)

Director

Dy. Managing Director

Dy. Managing Director

(. . )
(V. P. Shetty)

Chairman & Managing Director

As per our report attached of even date

For Suresh Chandra & Associates

Chartered Accountants

Chartered Accountants

( . )

( )

(Shivji K. Vikamsey)

(Ved Prakash Bansal)

Partner

Partner

. 2242

. 500369

Membership No. 2242

Membership No. 500369

, 20 2007
Mumbai, April 20, 2007
68

For Khimji Kunverji & Co.

(. . )
(L. P. Aggarwal)

-
Corporate Head - Financial Officer

Industrial Development Bank of India Limited

31 2007 -
Profit and Loss Account for the year ended March 31, 2007
( / Rupees in '000s)

I.

31 2007

31 2006

Schedule

Year ended
31-Mar-07

Year ended
31-Mar-06

13
14

6345 41 92
1027 18 34
---------------------------7372 60 26
==========

5380 71 85
1280 44 92
---------------------------6661 16 77
==========

15
16

5687 49 00
778 46 62

5000 82 47
859 48 22

2029 31 00

(2029 31 00)

276 33 70
---------------------------6742 29 32
==========

239 97 34
---------------------------6100 28 03
==========

630 30 94
1030 71 03

560 88 74
787 44 91

392 00 00

1 69 15
---------------------------1662 71 12
==========

---------------------------1740 33 65
==========

158 00 00

140 22 19

11 00 00

1 69 15

392 00 00

50 00 00

50 00 00

3 50 00

10 83

108 65 31

108 56 92

18 46 56

15 22 68

1314 90 10
---------------------------1662 71 12
==========

1030 71 03
---------------------------1740 33 65
==========

/ INCOME
/ Interest earned
/ Other income
/ TOTAL

II.

/ EXPENDITURE
/ Interest expended
/ Operating expenses
( 18 2 )
Adjustment of floating provision (Refer Schedule 18 note 2)

-
Non-performing assets adjusted

:
Less: withdrawn from Floating Provision

Provisions and contingencies

/ TOTAL
III.

/ PROFIT / LOSS
/ () / Net profit / (loss) for the year
/ () / Profit / (loss) brought forward
- ,
Investment Fluctuation Reserve, balance transferred

() ,
IDBI EXIM (J) Special Fund, balance transferred

/ TOTAL
IV. / APPROPRIATIONS

/ Transfer to Statutory Reserve

/ Transfer to Capital Reserve
/ Transfer to General Reserve
, 1961 36(1) (viii)
Transfer to Special Reserve under section 36(1)(viii) of the Income Tax Act, 1961

/ Transfer to Staff Welfare Fund

/ Dividend for previous financial year
/ Proposed Dividend
/ Tax on proposed dividend
/ Balance carried over to balance sheet
/ TOTAL

69


31 2007 -
Profit and Loss Account for the year ended March 31, 2007
( / Rupees in '000s)

31 2007

31 2006

Schedule

Year ended
31-Mar-07

Year ended
31-Mar-06

8.70
8.70

7.76
7.74

Significant Accounting Policies and Notes to
Accounts form an integral part of the Accounts

17 & 18

(.) [( 18 17 )]
Earnings per share (Rs.) [refer Schedule 18 note 17]

/ Basic
/ Diluted

BY ORDER OF THE BOARD

(. )

(. . )

( )

(K. Narasimha Murthy)

(O.V. Bundellu)

(Jitender Balakrishnan)

Director

Dy. Managing Director

Dy. Managing Director

(. . )
(V. P. Shetty)

Chairman & Managing Director

As per our report attached of even date

For Suresh Chandra & Associates

Chartered Accountants

Chartered Accountants

( . )

( )

(Shivji K. Vikamsey)

(Ved Prakash Bansal)

Partner

Partner

. 2242

. 500369

Membership No. 2242

Membership No. 500369

, 20 2007
Mumbai, April 20, 2007

70

For Khimji Kunverji & Co.

(. . )
(L. P. Aggarwal)

-
Corporate Head - Financial Officer

Industrial Development Bank of India Limited

/ Schedules forming part of Accounts
( / Rupees in '000s)
1 -
SCHEDULE 1 - CAPITAL

31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

1250 00 00
---------------------------1250 00 00
==========

1250 00 00
-----------------------------1250 00 00
===========

724 35 41

723 79 46

---------------------------724 35 41
==========

-----------------------------723 79 46
===========

10/- 125 00 00 000
Authorised Capital
125 00 00 000 Equity Shares of Rs.10/- each

,
Issued, Subscribed and Paid-up Capital

10/- : 72 43 54 088 (72 37 94 603)

72 43 54 088 (72 37 94 603) Equity Shares of Rs.10/- each fully paid up

5 59 485 (20 19 581)

5 59 485 (20 19 581) Equity Shares alloted during the year against ESOPs excercised

/ TOTAL

2 -
SCHEDULE 2 - RESERVES AND SURPLUS
I. / Statutory Reserve
/ Opening balance
/ Additions during the year
/ Deductions during the year

II. / Capital Reserve

/ Opening balance
/ Additions during the year
/ Deductions during the year

III. / Revaluation Reserve

/ Opening balance

31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

314 08 18
158 00 00

---------------------------472 08 18
==========

173 85 99
140 22 19

-----------------------------314 08 18
===========

178 32 66
11 00 00

---------------------------189 32 66
==========

178 32 66

-----------------------------178 32 66
===========

2063 91 00

---------------------------2063 91 00
==========

-----------------------------
===========

1756 13 52
2 02 61

---------------------------1758 16 13
==========

1749 30 00
6 83 52

-----------------------------1756 13 52
===========

( 18 4 )
Additions during the year (Refer Schedule 18 Note 4)
/ Deductions during the year

IV. / Share Premium

/ Opening balance
/ Additions during the year
/ Deductions during the year

V. / Revenue and other reserves

.
a. General Reserve
71


() / Schedules forming part of Accounts (Contd.)
( / Rupees in '000s)
2 - ()
SCHEDULE 2 - RESERVES AND SURPLUS (Contd.)

/ Opening balance

31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

2090 36 18

1698 36 18

1 69 15

392 00 00

640 24 85
-----------------------------1451 80 48
===========

-----------------------------2090 36 18
===========

34 73 09
1 04 03
2 20 00
-----------------------------33 57 12
===========

32 15 59
5 94 23
3 36 73
-----------------------------34 73 09
===========

1 69 15

1 69 15

1 69 15
-----------------------------
===========

-----------------------------1 69 15
===========

-----------------------------
===========

392 00 00

392 00 00
-----------------------------
===========

6 35 04

-----------------------------6 35 04
===========

6 35 04

-----------------------------6 35 04
===========

Additions during the year

( 18 1 )
Deductions during the year (Refer Schedule 18 note 1)

.
b.

Staff Welfare Fund

/ Opening balance
/ Additions during the year
/ Deductions during the year

()

c.

IDBI EXIM (J) Special Fund

/ Opening balance
/ Additions during the year

Deductions during the year

.
d.

-
Investment Fluctuation Reserve

/ Opening balance
/ Additions during the year
/ Deductions during the year

, 1961 36 (1) (viii)

e.

Special Reserve under Section 36(1)(viii) of the Income Tax Act, 1961
/ Opening balance
/ Additions during the year
/ Deductions during the year

, 1961 36 (1) (viii)

f.

Special Reserve created and maintained under

Section 36(1)(viii) of the Income Tax Act, 1961
/ Opening balance
/ Additions during the year
/ Deductions during the year

235 00 00
50 00 00

-----------------------------285 00 00

185 00 00
50 00 00

-----------------------------235 00 00

1314 90 10
-----------------------------7575 10 71

1030 71 03
-----------------------------5647 38 85

============

VI. -
Balance in Profit and Loss Account

/ TOTAL

72

============

============

============

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
( / Rupees in '000s)
3 -
SCHEDULE 3 - DEPOSITS

31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

119 99 35
6868 62 45
-------------------------------6988 61 80
-------------------------------4034 42 00
--------------------------------

78 34 39
5096 32 21
-------------------------------5174 66 60
-------------------------------2498 96 49
--------------------------------

2111 85 01
30219 15 33
-------------------------------32331 00 34
-------------------------------43354 04 14
===========

1255 13 68
17072 14 87
-------------------------------18327 28 55
-------------------------------26000 91 64
===========

43354 04 14

26000 91 64

-------------------------------43354 04 14
===========

-------------------------------26000 91 64
===========

31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

711 31 95

1630 02 44

6 70 12

7 23 45

2130 50 00

2130 50 00

5412 51 35

5419 36 35

28359 71 49

32332 66 65

5783 62 65
-------------------------------42404 37 56
===========

6010 41 68
-------------------------------47530 20 57
===========

. A.
I.

Demand Deposits
(i) / From banks
(ii) / From others

II.

/ Saving Bank Deposits

III. / Term Deposits
(i) / From banks
(ii) / From others
/ TOTAL
. B.
(i)
Deposits of branches in India
(ii)
Deposits of branches outside India

/ TOTAL

4 -
SCHEDULE 4 - BORROWINGS
I.

/ Borrowings in India
(i) / Reserve Bank of India
(ii) / Other banks
(iii) / Other institutions and agencies

.
a.

Government of India borrowings

. -I
b.

Tier I bonds issued to Government of India

.
c.

Bonds guaranteed by Government of India

.
d.
II.

Others

Borrowings outside India

(I II) / TOTAL (I and II)

I II - 2022,81,95 (1434,21,17 )

Secured borrowings included in I and II above - Rs.2022,81,95 Thousand (Rs.1434,21,17 Thousand)

73


() / Schedules forming part of Accounts (Contd.)
( / Rupees in '000s)
5 -
SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS
I.

/ Bills Payable
II. - () / Inter-office adjustments (net)
III. / Interest accrued
IV. , ( II )

31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

498 95 75

659 27 30

7 68 00

1336 03 36

1440 58 22

5270 71 06

3804 34 95

V.
Prudential provisions against standard assets

318 83 99

220 84 90

VI.
Dividend and dividend tax payable on Equity Shares

127 11 87

123 79 60

19 27 16

29 42 32

40 00

2210 11 24
---------------------------9781 04 43
==========

2375 24 70
--------------------------8661 59 99
==========

Unsecured, Redeemable Bonds (Subordinated for Tier II Capital)

VII.
Receipts in respect of cases transferred to SASF
VIII. / Application Money for OMNI
IX. / Others

/ TOTAL

6 -
SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIA
I.
II.

31 2006
As on 31-Mar-06

211 04 28

117 55 80

5195 42 83

---------------------------5406 47 11
==========

2562 53 69

--------------------------2680 09 49
==========

31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

113 68 93

110 99 58

49 50 25

801 70 40

279 00 00

800 00 00

50 00 00
---------------------------492 19 18
==========

360 00 00
--------------------------2072 69 98
==========

( )
Cash in hand (including foreign currency notes)
/ Balances with Reserve Bank of India
(i) / in Current Account
(ii) / in Other Accounts

(I II) / TOTAL (I and II)

7 -

SCHEDULE 7 - BALANCES WITH BANKS
AND MONEY AT CALL AND SHORT NOTICES
I.

31 2007
As on 31-Mar-07

/ In India
(i) / Balances with banks
() *
(a) In Current Accounts*

()
(b) in Other Deposit Accounts
(ii) / Money at call and short notice

()
(a) with banks

()
(b) with other institutions

I / TOTAL I

74

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
( / Rupees in '000s)
7 -
()
SCHEDULE 7 - BALANCES WITH BANKS
AND MONEY AT CALL AND SHORT NOTICES (Contd...)
II.

/ Outside India
(i) / in current accounts
(ii) / in other deposit accounts
(iii) / Money at call and short notice
II / TOTAL II
(I II) / GRAND TOTAL (I and II)

31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

119 27 19

134 88 61

22 96 81

111 54 12

870 18 66
------------------------------------1012 42 66
------------------------------------1504 61 84
=============

363 55 94
------------------------------------609 98 67
------------------------------------2682 68 65
=============

* 14,28,62 (38,40,41 ) .
* includes Rs.14,28,62 Thousand (Rs.38,40,41 Thousand) remitted by branches through non correspondent banks.

8 -
SCHEDULE 8 - INVESTMENTS
I.

31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

/ Investments in India in
(i) / Government Securities
(ii) / Other approved securities
(iii) / Shares
(iv) / Debentures and Bonds
(v) / / Subsidiaries and / or joint ventures
(vi) ( , ) / Others (CPs, Units in MFs etc.)
/ TOTAL I

II. / Investments outside India in

(i) ( )
Government Securities (including local authorities)
(ii) /
Subsidiaries and / or joint ventures abroad
(iii) () / Others investments (shares)

II / TOTAL II
(I II) / GRAND TOTAL (I and II)
III. / Investments in India
(i) / Gross value of investments
(ii) / Aggregate provision for depreciation
(iii) / Net investments
IV. / Investments outside India
(i) / Gross value of investments
(ii) / Aggregate provision for depreciation
(iii) / Net investments

16191 38 92
17 24 41
3708 17 53
3640 87 84
357 02 20
1759 55 76
------------------------------------25674 26 66
=============

16179 91 53

2403 49 24
4399 62 62
346 98 50
2013 86 13
------------------------------------25343 88 02
=============

1 04 53
------------------------------------1 04 53
=============
25675 31 19
=============

6 64 61
------------------------------------6 64 61
=============
25350 52 63
=============

25896 27 55
222 00 89
------------------------------------25674 26 66
=============

25596 99 50
253 11 48
------------------------------------25343 88 02
=============

1 04 53

------------------------------------1 04 53
=============

6 64 61

------------------------------------6 64 61
=============
75


() / Schedules forming part of Accounts (Contd.)
( / Rupees in '000s)
9 -

31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

(i) /
Bills purchased and discounted / rediscounted

2294 18 26

2203 20 37

(ii) ,
Cash credits, overdrafts and loans repayable on demand

5477 64 47

2556 28 36

54698 99 53
---------------------------------62470 82 26
============

47979 58 05
---------------------------------52739 06 78
============

54338 08 72

43031 52 06

1025 97 80

1506 20 01

7106 75 74
---------------------------------62470 82 26
============

8201 34 71
---------------------------------52739 06 78
============

(i) / Priority sector

9290 40 85

6872 28 00

(ii) / Public sector

6682 80 65

4640 83 40

808 26 51

83 27 15

45689 34 25
---------------------------------62470 82 26
============

41142 68 23
---------------------------------52739 06 78
============

(i) / Due from banks

(ii) / Due from others :

---------------------------------
---------------------------------62470 82 26
============

---------------------------------
---------------------------------52739 06 78
============

SCHEDULE 9 - ADVANCES

. A.

(iii) / Term loans

/ TOTAL
. B.
(i) *
Secured by tangible assets*
(ii) / **
Covered by bank / government guarantees**
(iii) Unsecured

/ TOTAL
. C.
I.
I.

Advances in India

(iii) / Banks
(iv) / Others

/ TOTAL
II.

Advances outside India

() /
(a) Bills purchased and discounted / rediscounted

()
(b) Syndicated loans

()
(c) Others

/ TOTAL
( I II) / GRAND TOTAL ( C I and C I I )
* .
** .
* includes advances secured against book debts.
** includes advances secured against letters of credit issued by other banks.

76

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
( / Rupees in '000s)
10 -
SCHEDULE 10 - FIXED ASSETS
I. [ 18 3 ] / Premises [Refer Schedule 18 note 3]
/ Opening balance
/ Addition during the year
* / Deductions during the year*

31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

364 06 93
264 88 89
99 93 66

366 11 50
61 73 72
63 78 29

2063 91 00
--------------------------2592 93 16
============

85 15 76
--------------------------278 91 17
============

384 12 50
96 19 07
36 21 77
309 89 24
--------------------------134 20 56
==========

331 90 35
58 89 91
6 67 76
232 55 41
--------------------------151 57 09
===========

1521 39 82
1 76 51
4 54 72
708 34 06
768 92 69
10 26 51
--------------------------40 17 79
==========

1728 22 40

36 70 39
206 82 58
1177 58 19
8 50 00
--------------------------372 02 02
==========

11 05 14
--------------------------2778 36 65
============

8 39 91
--------------------------810 90 19
============

( 18 4 )
Revaluation during the Year (Refer Schedule 18 note 4)
/ Depreciation to date

II. ( )
Other fixed assets (including furniture & fixtures)
/ Opening balance
/ Additions during the year
/ Deductions during the year
/ Depreciation to date

III. / Assets given on Lease

/ Opening balance
/ Additions during the year
/ Lease adjustment account
/ Deductions during the year
/ Depreciation to date
- / Provisions for Non-Performing assets

IV.
Capital Work-in-Progess

(I+II+III+IV) / TOTAL (I+II+III+IV)

* 31 2007 97,06,81
* Includes accumulated depreciation of Rs. 97,06,81 Thousand upto March 31, 2007 set off against original cost, upon revaluation.

11 -
SCHEDULE 11 - OTHER ASSETS
I. - () / Inter-office adjustment (net)
II. / Interest accrued
III. / ()
Tax paid in advance / tax deducted at source (net)
IV. / Stationery and stamps
V.

31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

11 94 07
823 84 34

681 77 99

2105 49 60
1 02 52

2014 56 53
41 98

122 60 60

10 77 50
33 04 81

9 09 45
46 79 76

3017 60 49
--------------------------6003 73 33
===========

22 79 12
1403 44 93
--------------------------4301 50 36
===========

Non-Banking Assets acquired in satisfaction of claims

VI. /
Expenses / Disbursements in respect of cases transferred to SASF
VII. /VRS expenses not written-off
VIII. ()
Deferred Tax Assets (Net)
IX. / Others

/ TOTAL

77


() / Schedules forming part of Accounts (Contd.)
( / Rupees in '000s)
12 -

31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

680 88 28

385 85 26

17708 91 00

19570 55 09

8080 63 37

4022 60 51

121 44 62

4 58 64

V. ,
Acceptances, endorsements and other obligations

8227 54 14

5829 20 69

VI. / Currency Swaps

7134 77 73

6740 62 38

VII. / Options

5299 32 20

6551 05 01

58948 78 00

31374 37 92

712 36 62

635 88 99

17 94 28

28 22 28

1583 82 25

1556 54 03

11 40 00
----------------------------------108527 82 49
==============

320 55 04
--------------------------------77020 05 84
=============

SCHEDULE 12 - CONTINGENT LIABILITIES

I.

Claims against the Bank not acknowledged as debts

II.

:
Liability for partly paid investments

III.
Liability on account of outstanding forward exchange contracts
IV.
Guarantees given on behalf of constituents

) / a) in India
) / b) outside India

VIII. / Interest Rate Swaps

IX. / Forward Rate Agreements
X. / Capital commitment
XI. , , *
On account of disputed Income tax, Interest tax, penalty and interest demands*
XII.
Other items for which the bank is contingently liable

(I XII) / Grand TOTAL (I to XII)

* 3289,29,78 (3441,49,14 ) . 1705,47,53

(1884,95,11 ) .
1583,82,25 (1556,54,03 ) .
* Additional demands raised on account of disputed tax liabilities is Rs.3289,29,78 Thousand (Rs. 3441,49,14 Thousand). The
demand includes Rs. 1705,47,53 Thousand (Rs. 1884,95,11 Thousand) in respect of which the Bank has favourable appellate
decisions in its own cases in earlier years. The net contingent liability is Rs.1583,82,25 Thousand (Rs. 1556,54,03 Thousand).

78

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
( / Rupees in '000s)
13 -

31 2007

31 2006

SCHEDULE 13 - INTEREST EARNED

Year ended
31-Mar-07

Year ended
31-Mar-06

I.

/ / / Interest / discount on advances / bills

5241 91 17

4407 06 52

II.

/ Income on investments

998 44 57

845 36 91

76 31 86

120 65 93

28 74 32
----------------------------------6345 41 92
=============

7 62 49
----------------------------------5380 71 85
=============

31 2007

31 2006

Year ended
31-Mar-07

Year ended
31-Mar-06

265 84 18

271 96 78

333 70 15

703 39 66

III. / () ()
Profit / (Loss) on revaluation of investments (net)

(19 55 92)

IV. , / () ()
Profit/(Loss) on sale of land, bulidings and other assets (net)

178 62 27

6 34 90

V. / ()
Profit on exchange transactions/Derivatives (net)

45 73 24

59 01 68

VI. /
Dividend income from subsidiary companies and / or joint ventures in India

11 69 13

22 42 88

211 15 29
----------------------------------1027 18 34
=============

217 29 02
----------------------------------1280 44 92
=============

31 2007

31 2006

Year ended
31-Mar-07

Year ended
31-Mar-06

1993 34 16

912 81 18

137 52 50

182 72 04

3556 62 34
----------------------------------5687 49 00
=============

3905 29 25
----------------------------------5000 82 47
=============

III. -
Interest on balances with RBI and other inter-bank funds
IV. / Others

/ TOTAL

14 -
SCHEDULE 14 - OTHER INCOME
I.

,
Commission, exchange and brokerage

II.

()
Profit on sale of investments (net)

VII. ( )
Miscellaneous Income (including lease income)

/ TOTAL

15 -
SCHEDULE 15 - INTEREST EXPENDED
I.

Interest on deposits

II.

/ -
Interest on Reserve Bank of India / inter-bank borrowings

III. ( 18 6 )
Others (refer Schedule 18 note 6)

/ TOTAL

79


() / Schedules forming part of Accounts (Contd.)
( / Rupees in '000s)
16 -

31 2007

31 2006

Year ended
31-Mar-07

Year ended
31-Mar-06

282 89 60

318 50 74

72 36 94

61 02 71

III. - / Printing and stationery

15 44 37

15 98 57

IV. / Advertisement and publicity

11 01 34

16 94 98

V. / Depreciation on banks property

61 46 59

47 52 69

VI. / Depreciation on leased assets

60 52 93

96 02 08

VII. , / Directors fees, allowances and expenses

33 46

28 83

VIII. / Auditors fees and expenses

95 51

96 60

2 35 61

4 64 56

X. , , , / Postage, Telegram, Telephone, etc.

30 46 20

28 31 68

XI. / Repairs and maintenance

34 91 14

26 90 15

XII. / Insurance

31 94 38

16 90 51

173 78 55
----------------------------778 46 62
===========

225 44 12
----------------------------859 48 22
===========

SCHEDULE 16 - OPERATING EXPENSES

I.

( )*
Payments to and provisions of employees
(Including VRS expenditure written off)*

II.

, ** / Rent, taxes and lighting**

IX. / Law Charges

XIII. / Other expenditure

/ TOTAL

* 1 2002 110,20,00 .
** - .
* Previous year's figure includes provision of Rs.110,20,00 Thousand for revision of pay scales w.e.f. November 1, 2002.
** Includes operating lease rentals for office and employee related residential premises.

80

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
- 17 :
SCHEDULE 17 : SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

() , , ( )
, ( ) .
The financial statements have been prepared on the historical basis and conform, in all material aspects, to
Generally Accepted Accounting Principles (GAAP) in India which encompasses applicable statutory provisions,
regulatory norms prescribed by Reserve Bank of India (RBI), Accounting Standards (AS) and prevailing practices
in Banking industry.

Use of Estimates

,
. . ,
.
The preparation of financial statements requires the management to make estimates and assumptions that
affect the reported amount of assets, liabilities and disclosure of contingent liabilities as at the date of the
financial statements. Management believes that these estimates and assumptions are reasonable and prudent.
However, actual results could differ from estimates.

Revenue Recognition

1 .
.
C1 Interest income and lease rentals are accrued except in the case of non performing assets where it is
recognised upon realisation as per the prudential norms of RBI.

2 / 1 ,
/ .
C2 Commissions on LC/ Guarantee are reckoned as accrued, upfront in cases where the commission does
not exceed Rs.1 lakh and, in other cases, accrued over the period of LC/ Guarantees.

3 .
C3 Fee based income are accrued on certainty of receipt.

4 .
C4 Income on discounted instruments is recognised over the tenure of the instrument on a constant yield
basis.

5 .
C5 Dividend is accounted on accrual basis when the right to receive the dividend is established.
81


() / Schedules forming part of Accounts (Contd.)

Advances and Provisions

, ,
. -
.
Advances are classified into Standard, Sub-standard, Doubtful and Loss assets and provisions are made in
accordance with the prudential norms prescribed by RBI. Advances are stated net of provisions towards nonperforming advances.

Investments

1 :
E1

In determining acquisition cost of an investment:

,

.

Brokerage, commission and stamp duty paid are included in cost of acquisition in respect of acquisition of
equity instruments from the secondary market whereas in respect of other investments, including treasury
investments, such expenses are charged to revenue.

( )
.

Interest accrued upto the date of acquisition of securities (i.e. broken period interest) is excluded from
the acquisition cost and charged as interest expense.

2 - `` '', ``
'' ``- '' .
i) ii) iii) iv) v) /
vi) (, ) .
E2

In terms of extant guidelines of the RBI, the entire investment portfolio is categorised as Held to
Maturity, Available for Sale and Held for Trading. Investments under each category are further
classified as i) Government Securities ii) Other Approved Securities iii) Shares iv) Debentures and Bonds
v) Subsidiaries/ Joint Ventures vi) Others (CP, Mutual Fund Units, etc.).

3 //
.
E3

The debentures/ bonds/ preference shares deemed to be in the nature of advance, are subject to the
usual prudential norms of asset classification and provisioning that are applicable to advances.

4 `` ''
. ,
. .
/
- . -
.
82

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
E4

Investments acquired with the intention to hold till maturity are categorised under Held to Maturity.
Such investments are carried at acquisition cost unless it is more than the face value, in which case
the premium is amortised over the remaining period of maturity. Diminution, other than temporary,
in the value of investments in subsidiaries/ joint ventures under this category is provided for each
investment individually. Profits on sale of investments in this category are first credited to Profit and
Loss account and thereafter appropriated to the Capital Reserve Account at the year end.

5 / -
`- ' . ,
`` '' .
E5

Investments acquired with the intention to trade by taking advantage of the short-term price/ interest
rate movements are categorised under Held for Trading. Investments which do not fall within the above
two categories, are categorised under Available for Sale.

6 `` '' `` '' -
, ,
, , .
E6

Investments classified as Held for Trading and Available for Sale are marked to market scrip-wise and
the resultant net depreciation, if any, in each category is recognized in the Profit and Loss account, while
the net appreciation, if any, is ignored.

7 - :
E7

Investments categorised as Held for Trading and Available for sale are valued in the following manner:




-/ -/ - .
()
()

In respect of traded/ quoted investments, the market price is taken from the trades/quotes available on
the stock exchanges. Government Securities are valued at market prices or prices declared by Primary
Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivative Association
of India (FIMMDA) and

/ /
.
() .

The unquoted shares/ units are valued at break-up value/ repurchase price or at Net Asset Value. The
unquoted fixed income securities are valued on Yield to Maturity (YTM) basis with appropriate mark-up
over the YTM rates for Central Government securities of equivalent maturity.

Treasury Bills are valued at carrying cost,

8 .
E8

Investments are shown net of provisions.

9 - .
E9

Upfront incentives received on subscription to securities are recognised as income.

83


() / Schedules forming part of Accounts (Contd.)
10 : /
.
E10 Investments are shown net of securities given against borrowing and include securities received against
lending under Repo/ Reverse Repo arrangements respectively.

Derivative transactions

``'' () :
In Transactions designated as Hedge:

1 / .
F1

Net interest payable/ receivable on derivative transactions is accounted on accrual basis.

2 / /
, , .
F2

On premature termination of Hedge swaps, any profit/ losses are recognised over the remaining contractual
life of the swap or the residual life of the asset/ liability whichever is lesser.

3 :
.
F3

Redesignation of hedge swaps by change of underlying liability is accounted as the termination of one
hedge and acquisition of another.

4
.
.
F4

Hedge contracts are not marked to market unless the underlying is also marked to market. In respect
of hedge contracts that are marked to market, changes in the market value are recognized in the profit
and loss account.

`-' :
In Transactions designated as Trading:

5 , - , , ,
, . /
. -
/ .
F5

Outstanding derivative transactions designated as Trading, which includes interest rate swaps, cross
currency swaps, cross currency options and forward rate agreements, are measured at their fair value.
The resulting profits/ losses are included in the profit and loss account. Premium on options is recorded
as a balance sheet item and transferred to Profit and Loss Account on maturity/ cancellation.

Fixed Assets and depreciation

1 , , .
`` '' .
.
84

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
G1 Fixed assets are carried at historical cost except wherever revalued. The appreciation on revaluation, if
any, is credited to the Revaluation Reserve Account. In respect of revalued assets, the additional
depreciation consequent to revaluation is transferred from Revaluation Reserve to the Profit and Loss
account.

2 5000 .
G2 Fixed assets individually costing less than Rs. 5000 are fully depreciated in the year of addition.

3 () . , 1956
XIV .

/
. :
G3 Depreciation is provided on Straight Line Method (SLM) from the date of addition. The rates of depreciation
prescribed in Schedule XIV of the Companies Act, 1956 are considered as the minimum rates. If the
managements estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the
remaining useful life on a subsequent review is shorter, depreciation is provided at a higher rate based on
managements estimates of the useful life/ remaining useful life. Pursuant to this policy, depreciation has
been provided using the following rates:

/ Assets

/ Depreciation Rate

/ Premises

1.63%

/ Furniture and fixtures

8.33%

/ Electrical installation and machinery

8.33%

/ Motor vehicles

20%

/ Computers

33.33%

/ Automated Teller Machines

12.50%

- / VSAT equipment

10%

Consumer durables with employees

20%

4 / .
G4 Depreciation on additions/ sale of fixed assets during the year is provided for the actual period.

5 .
G5 Leasehold land is amortised over the period of lease.

6 2.5
5 .
G6 Computer Software costing more than Rs. 2.50 lakh is capitalised and depreciated over its useful life, not
exceeding 5 years.
85


() / Schedules forming part of Accounts (Contd.)

Assets given on lease

1 31 2001 `` '' ``
'' . , 1956 XIV
. `` '' ,
, .
H1 Assets given on finance lease by the Bank on or before March 31, 2001 are classified as Leased Assets
under Fixed Assets. Depreciation thereon is provided on SLM basis at the rates prescribed under
Schedule XIV of the Companies Act, 1956. The amount of Lease Equalisation representing the difference
between the annual lease charge and the depreciation is adjusted in the Profit & Loss Account.

2 31 2001 19
`` '' .
H2 Assets given under finance lease after March 31, 2001 are accounted in accordance with the provisions of
AS 19 and included under Other Assets.

Securitisation Transactions

()
, .
: .
/ , ,
.
Securitisation of various consumer loans result in sale of these assets to Special Purpose Vehicles (SPVs),
which, in turn issue securities to investors. Financial assets are partially or wholly derecognised when the
control of the contractual rights in the securitised assets is lost. The Bank accounts for any loss arising on sale
immediately at the time of sale and the profit/ premium arising on account of sale is amortised over the life of
the securities issued or to be issued by the SPV to which the assets are sold.

Sale of financial assets to Securitisation Companies/ Reconstruction Companies

() / ()
()/ () , ,
. / .
-
/ /
. , ,
- .
Sale of financial assets to Securitisation Companies (SCs)/ Reconstruction Companies (RCs) is reckoned at the
lower of the redemption value of Security Receipts (SRs)/ Pass Through Certificates (PTCs) received and the
net book value of the financial asset. The SRs/ PTCs are carried at this value till their sale or realisation. Gains
arising on such sale or realisation are not recognised in the profit and loss account but earmarked as provisions
86

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
for meeting the losses/ shortfall arising on sale of other financial assets to SCs/ RCs or sale/ realisation of other
SRs/ PTCs. Losses arising on such sale or realisation are first set off against balance of provisions, if any,
created out of earlier gains and residual amount of losses are charged to profit and loss account.

Foreign Currency Transactions

.
. ()

.
.

K1 The Bank does not have any foreign operations. Foreign currency transactions, on initial recognition are
recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities are
translated at the closing rates prescribed by Foreign Exchange Dealers Association of India (FEDAI) and
the resultant gain or loss is recognised in the profit and loss account. Exchange differences arising on the
settlement of monetary items are recognised as income or expense in the period in which they arise.

, ,
.
. .

K2 Premium or discount arising at the inception of Forward Exchange Contracts which are not intended for
trading or speculation is amortised as expense or income over the life of the contract. Premium or
discount on other Forward Exchange Contracts is not recognised.

, ,
.
. /
.

K3 Outstanding Forward Exchange Contracts which are not intended for trading or speculation are revalued
at closing FEDAI rates. Other outstanding Forward Exchange Contracts are revalued at rates of exchange
notified by FEDAI for specified maturities or at interpolated rates for in-between maturities. The resultant
profit/ losses are included in the profit and loss account.

/, ,
, .

K4 Profit/ losses arising on premature termination of Forward Exchange Contracts, together with unamortized
premium or discount, if any, is recognised on the date of termination.

, , .

K5 Contingent liability in respect of outstanding forward exchange contracts is calculated at the contracted
rates of exchange and in respect of guarantees, acceptances, endorsements and other obligations are
calculated at the closing FEDAI rates.

87


() / Schedules forming part of Accounts (Contd.)

Employee Benefits

1
.
L1

Provision for Gratuity is made on the basis of liability actuarially determined and administered by Life
Insurance Corporation of India under its Group Gratuity Scheme.

2 .
L2

Leave encashment is provided for on the basis of actuarial valuation at the year end.

3 :
L3

Superannuation benefits:

.
10%
.

Certain employees of the Bank are covered under superannuation scheme administered by the LIC and
the Bank contributes 10% of the annual basic salary as its contribution and the same is charged to Profit
& Loss Account.

Contribution to Pension Fund based on actuarial valuation at the year-end, in respect of employees who
have opted for Pension scheme is charged to Profit & Loss account.

4 .
L4

Contribution towards Provident Fund is charged to the profit and loss account.

5 ()
.
L5

The intrinsic value of options under Employee Stock Option Plan (ESOP) is expensed on a straight-line
basis over the vesting period of the ESOP.

Voluntary Retirement Scheme

- 5 .
Expenditure towards ex-gratia and additional contribution in respect of gratuity and pensions under Voluntary
Retirement Scheme (VRS) is amortized over a period of five years in terms of RBI guidelines.

Income Tax

1 , .
N1 Tax expense comprises of current, deferred and fringe benefit tax.

88

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
2 ()
.
N2 Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is
convincing evidence that the Bank will pay normal income tax during the specified period.

3
- .

.
N3 Deferred tax for timing differences between the book and tax profits for the year is accounted for, using
the tax rates and laws that have been substantively enacted as of the balance sheet date. Deferred tax
assets arising from timing differences are recognized to the extent there is reasonable certainty that
these would be realized in future.

4
.
N4 Deferred tax assets in case of unabsorbed losses are recognized only if there is virtual certainty that such
deferred tax asset can be realized against future taxable profits.

5 , `` '' .
N5 Disputed taxes not provided for, are included under Contingent Liabilities.

Earnings Per Share

1 20 .
.
O1 The Bank reports basic and diluted Earnings Per Share in accordance with AS 20. Basic Earnings Per Share
is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding
for the period.

2
.

.
O2 Diluted Earnings Per Share reflect the potential dilution that could occur if securities or other contracts
to issue equity shares were exercised or converted during the period. Diluted Earnings Per Share is
computed by dividing the net profit after tax by the sum of the weighted average number of equity shares
and dilutive potential equity shares outstanding during the period.

Impairment of Assets

/ -
.
. , ,
.
89


() / Schedules forming part of Accounts (Contd.)

.
The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment
based on internal/external factors. An asset is treated as impaired when the carrying cost of assets exceeds its
recoverable value. An impairment loss, if any, is charged to Profit and Loss Account in the year in which an
asset is identified as impaired. Reversal of impairment losses recognized in prior years is recorded when there
is an indication that the impairment losses no longer exist or have decreased.

Provisions, Contingent Liabi

lities and Contingent Assets
Liabilities

1

.
Q1 A provision is recognised when there is a present obligation as a result of past event and it is probable
that an outflow of resources will be required to settle the obligation, in respect of which a reliable
estimate can be made.

2 -
.
Q2 Provisions are not discounted to its present value and are determined based on best estimate required to
settle the obligation at the balance sheet date.

3
.
Q3 Reimbursement expected in respect of expenditure required to settle a provision is recognised only
when it is virtually certain that the reimbursement will be received.

4 .
Q4 Contingent Liabilities are disclosed by way of notes.

5 .
Q5 Department appeals in respect of cases won by the Bank are also considered as Contingent Liabilities.

6 .
Q6 Contingent Assets are not recognised.

90

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
18:
SCHEDULE 18: NOTES FORMING PART OF THE ACCOUNTS
1.

.
AMALGAMATION OF THE UNITED WESTERN BANK LTD.

, 1949 45(7)
, .( ) .
( ) () 3 2006
.

a.

In exercise of powers under Section 45(7) of the Banking Regulation Act, 1949, Government of India
(GOI) has sanctioned the Scheme of Amalgamation (the Scheme) of The United Western Bank Ltd.,
(the Transferor Bank), with the Industrial Development Bank of India Ltd. (the Transferee Bank),
both banking companies, and specified October 3, 2006 as the prescribed date, which is the effective date
of amalgamation for accounting purposes.

. 1
,
:
b.

In terms of the Scheme all business, assets and liabilities of the Transferor Bank have been transferred to
the Transferee Bank with effect from the prescribed date at the following values, as certified by an
independent firm of Chartered Accountants, and after giving effect to the adjustments described in paragraph
1.e hereunder:

Liabilities
/ Deposits

Rs. 000
5625,61,96

Assets

26,08,63

Other Liabilities & Provisions

526,34,70

Balances with Banks
& Money at call
& short notice

Rs. 000

Cash & Balances with RBI

/ Borrowings

187,53,36

603,11,48

Investments

1838,72,94

( )

/ Total

6254,82,07

Advances (net of provisions)

2988,03,30

/ Fixed Assets

99,05,75

/ Other Assets

125,42,17

/ Total

5765,12,22

Excess of liabilities over assets

/ Contingent Liabilities

753,30,53

/ Bills for collection

331,51,80

489,69,85

91


() / Schedules forming part of Accounts (Contd.)

92

14 ` '
.

c.

The amalgamation is accounted on the basis of Purchase Method specified in AS 14 Accounting for
Amalgamation.

150,55,00 : 28
( ) .

d.

As per the Scheme, the Transferee Bank made a payment of Rs.28 (Rupees Twenty Eight) in respect
of every fully paidup share to the registered shareholders of the Transferor Bank on the prescribed
date, in partial satisfaction of their claim amounting to Rs.150,55,00 Thousand towards their interest
in such shares.

`` '' ``
/ ''
. `` /
'' 364,00,00 . ``
/ ''
. `` / ''


.

e.

The Scheme provides for classification of the Transferor Banks advances into two categories namely,
Advances considered good and readily realizable and Advances considered not readily realizable and/
or bad or doubtful of recovery. Provision of Rs.364,00,00 Thousand has been made against advances
that have been considered not readily realizable and/or bad or doubtful of recovery, based on the
report of an independent firm of Chartered Accountants. Bank is maintaining memorandum records for
ascertaining the ultimate realization against the Advances considered not readily realizable and/or bad
or doubtful of recovery. In the event of ultimate realization from the Advances considered not readily
realizable and/or bad or doubtful of recovery being in excess of the value at which they are taken over
and after considering the effect of items specified in the Scheme, the surplus will be distributed to the
erstwhile shareholders of the Transferor Bank after a period of twelve years or earlier, as prescribed
under the Scheme.

(489, 69,85 )
(150,55,00 ) 640,24,85 3 2006
.

f.

Pursuant to approval of the RBI, the aggregate of the excess of liabilities over assets (Rs.489,69,85 Thousand)
and upfront consideration (Rs.150,55,00 Thousand) aggregating to Rs.640,24,85 Thousand has been adjusted
against the balance available in General Reserve of the Transferee Bank as on October 3, 2006.

g.

Figures of the current year include those relating to the Transferor Bank and hence are strictly not
comparable with the figures of the previous year.

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
/ UTILISATION OF FLOATING PROVISION
2.

1 2004 31 2005
2029,31,00 . 2005-06
/
: .
As on March 31, 2005, a sum of Rs.2029,31,00 Thousand was available as floating provision for provisioning
towards any possible decline in value of the assets created prior to October 1, 2004. With the concurrence of
RBI, during the previous year 2005-06, the floating provision was fully utilized for making specific provisions/
write-offs and reversal of unrealized income for certain assets.

/ PREMISES
3.

() 1339,59,76 (128,42,99 ) .
Premises include Leasehold Land (revalued) of Rs.1339,59,76 Thousand (Rs.128,42,99 Thousand).

4.

- / ,
31 2007
. 2063 91 00 31 2007
529 02 00 2592 9300 ,
.
During the year, the Bank has revalued its properties comprising Freehold Land & Residential/ Office building
and accounted it on March 31, 2007, based on valuations made by professionally qualified independent Valuers
at market value. The net appreciation of Rs.2063 91 00 Thousand arising on revaluation, being the difference
between the net book value of Rs.529 02 00 Thousand and revalued amount of Rs.2592 93 00 Thousand as on
March 31, 2007, has been credited to Revaluation Reserve.

/ IMPAIRMENT OF ASSETS
5.

: 28 `` ''
. -
.
The Banks assets substantially comprise of financial assets, which are not covered by AS 28 Impairment of
Assets. In the opinion of the Banks management, there is no impairment in the value of its nonfinancial assets
in terms of the said AS.

/ OTHERS
6.

/ .
247,43,51 (399, 97, 57 )
.
The Bank gets reimbursement towards differential interest from GOI in respect of certain borrowings from
Banks/ Institutions. The interest expenditure debited to Profit & Loss Account is after considering credit of
Rs.247,43,51 Thousand (Rs.399,97,57 Thousand) on account of reimbursement towards differential interest
for the year.

7.

`` ()''
( ) 500 (500 ) .
93


() / Schedules forming part of Accounts (Contd.)
A penalty of Rs.500 Thousand (Rs.500 Thousand) was levied by Reserve Bank of India (RBI) for not adhering
to norms relating to Know Your Customer (KYC) and IPO Financing.
8.

()

, , .
With the approval of RBI, the Bank continued to retain its investments in State Financial Corporations (SFCs)
at face value and has not provided for diminution, if any, pending decision by appropriate authority regarding
the price at which the shares of SFCs are to be transferred to an institution.

18
RELATED PARTY DISCLOSURES IN TERMS OF AS 18
9.

:
Joint Venture:

IDBI Fortis Life Insurance Company Ltd.

10.
Key Management Personnel:

.. ,

Shri V. P. Shetty, Chairman & Managing Director

. .. ,
b

Shri O. V. Bundellu, Deputy Managing Director

Shri Jitender Balakrishnan, Deputy Managing Director

11. -
Transactions with related parties:

Joint Venture:
i

: 3,70,000
Contribution to capital: Rs.3,70,000

ii

: 7,20,00,000
Advance for share capital: Rs.7,20,00,000

iii

: 6,79,337
Preliminary Expenses : Rs.6,79,337

. :
b

Key Management Personnel:

i

: 19,55,761 (6,13,176 )
Gross Salary including Perquisites: Rs.19,55,761 (Rs.6,13,176)

94

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
ii

: 1,64,167 (10,829 )
Interest on loans: Rs.1,64,167 (Rs.10,829)

iii

: 10,71,499 (20,50,463 )
Outstanding balance of loans: Rs.10,71,499 (Rs.20,50,463)

. - .
c There are no transactions with relatives of Key Management Personnel.

/ SEGMENT REPORTING
12. - , .

, ,
17 .
. :
.
The Bank operates in three segments Wholesale Banking, Retail Banking and Treasury Services. These segments
have been identified in line with AS 17 on Segment Reporting after considering the nature and risk profile of
the products and services, the target customer profile, the organization structure and the internal reporting
system of the Bank. The Bank has disclosed business segment as the Primary Segment. Since the Bank operates
in India, the Bank is considered to operate only in the domestic segment and as such there are no reportable
geographical segments.
13. , ,

.
.
Segment revenue, results, assets and liabilities include the amounts identifiable to each of the segments as also
amounts allocated, as estimated by the management. Assets and liabilities that cannot be allocated to identifiable
segments are grouped under unallocated assets and liabilities.
( . / Rs. '000)
.

Sr. No.

Particulars

. / a.

/ Segment Revenue
/ Wholesale banking
/ Retail banking
/ Treasury
/ TOTAL
:- -
Less: Intersegment revenue

31 , 2007

31 , 2006

Year ended
March 31, 2007

Year ended
March 31, 2006

6075,11,86

6090,56,57

2005,63,13

1293,97,28

2443,52,67

1291,02,22

10524,27,66

8675,56,07

3151,67,39

2014,39,30

7372,60,26

6661,16,77

Net income from operations

95


() / Schedules forming part of Accounts (Contd.)

Sr. No.

Particulars

. b.

31 , 2007

31 , 2006

Year ended
March 31, 2007

Year ended
March 31, 2006

/ Wholesale banking

380,68,65

427,94,96

/ Retail banking

195,55,72

139,58,88

/ Treasury

106,37,93

20,80,90

/ TOTAL

682,62,29

588,34,74

682,62,29

588,34,74

/ Income taxes

52,31,35

27,46,00

/ Net profit

630,30,94

560,88,74

/ Wholesale banking

77977,38,15

72913,05,41

/ Retail banking

19745,05,32

11515,85,05

/ Treasury

4011,39,31

2098,51,99

/ Unallocated corporate assets

2105,49,60

2037,35,65

103839,32,38

88564,78,10

/ Wholesale banking

73147,65,12

69227,10,40

/ Retail banking

18414,09,44

10889,54,80

3978,11,70

2076,94,60

33,57,11

36,42,24

95573,43,37

82230,02,04

339,12,13

100,32,40

21,92,80

20,29,85

3,04

1,38

361,07,96

120,63,63

/ Wholesale banking

98,07,00

118,74,63

/ Retail banking

23,75,23

24,11,19

17,28

68,95

121,99,51

143,54,77

- - / ()
Segment Results Profit/(Loss) before tax

:
Less: Other unallocable expenditure net of unallocable income

- / Total profit before tax

. c.

/ Segment assets

/ Total assets
d.

/ Segment liabilities

/ Treasury
/ Unallocated corporate liabilities
/ Total liabilities
e.

/ Capital Expenditure
/ Wholesale banking
/ Retail banking
/ Treasury
/ Total

f.

/ Depreciation

/ Treasury
/ Total
96

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
/ JOINT VENTURES
14. . .

.. , 23 2006
. 31 2008
.
IDBI Fortis Life Insurance Ltd., a company incorporated in India pursuant to the Memorandum of Understanding
dated November 23, 2006, in which the Bank is a shareholder jointly with The Federal Bank Ltd. and Fortis
Insurance International N. V., has been considered as a Joint Venture. Since, the company has not commenced
operations and its first accounting year will be for the period ending on March 31, 2008, no disclosure has been
made for the preliminary expenses incurred by the company during the period.

() / EMPLOYEES STOCK OPTION SCHEME (ESOS)

15. 31 2007 1,24,99,965

(1,16,14,965 ) :
In terms of the ESOS, as amended, pursuant to the approval of the shareholders, 1,24,99,965 options (1,16,14,965
options) granted to eligible employees were outstanding as at March 31, 2007, as detailed herein below:

Year Ended

Number of Options

/ March 31, 2001

16,76,951

/ March 31, 2002

25,54,352

/ March 31, 2003

32,77,542

/ March 31, 2004

21,47,669

/ March 31, 2005

19,58,451

/ March 31, 2006

8,85,000

/ Total

1,24,99,965

16. / Details of Options:

Grant
dates

Number
of options

(.)

Exercise
Price (Rs.)

31 2006 .. 06-07 .. 06-07 31 2007

Options
Outstanding
as of March
31, 2006

Exercised
Options
Lapsed
During the During the Outstanding
FY 06-07 as of March
FY 06-07
31, 2007

31 2007

Options upto
March 31, 2007

Lapsed
Exercised

I /
Tranche I :
/ August
22, 2000

83,317

26.64

83,317

97


() / Schedules forming part of Accounts (Contd.)

Grant
dates

Number
of options

(.)

Exercise
Price (Rs.)

31 2006

.. 06-07 .. 06-07 31 2007

Options
Outstanding
as of March
31, 2006

Exercised
Lapsed
Options
During the During the Outstanding
FY 06-07
FY 06-07 as of March
31, 2007

31 2007

Options upto
March 31, 2007

Lapsed

Exercised

II /
Tranche II :
/ Oct.
1, 2000

14,26,035

28.49

35,258

13,511

21,747

9,41,424

4,62,864

1,67,599

30.54

1,28,867

38,732

21,34,225

29.73

94,746

58,946

1,126

34,674

15,65,268

5,34,283

4,20,127

26.20

7,289

4,998

2,291

2,94,928

1,22,908

32,23,415

23.88

74,602

42,797

498

31,307

24,77,143

7,14,965

54,127

28.50

47,881

6,246

21,47,669

30.30

2,39,234

1,90,884

48,350

14,55,526

6,43,793

16,41,549

50.95

6,47,689

2,48,349

1,58,871

2,40,469

7,50,975

6,50,105

3,16,902

58.06

2,81,691

35,211

8,85,000

98.11

8,85,000

2,78,650

6,06,350

2,78,650

III /
Tranche III :
/ January
1, 2001

IV /
Tranche IV :
/ April
1, 2001

V/
Tranche V :
/ Oct.
1, 2001

VI/
Tranche VI :
/ April
1, 2002

VII/
Tranche VII :
/ Dec.
1, 2002

VIII/
Tranche VIII :
/ April
1, 2003

IX/
Tranche IX:
/ April
1, 2004

X/
Tranche X :
/ July
1, 2004

XI/
Tranche XI :
/ Oct.
1, 2005
98

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
17. () / Earnings per Share (EPS)

31 2007

31 2006

Year ended
March 31, 2007

Year ended
March 31, 2006

630,30,94

560,88,74

72,43,54,088

72,31,56,760

8.70

7.76

3,46,727

10,74,000

72,47,00,815

72,42,30,959

8.70

7.74

10

10

( )
Net profit considered for EPS calculation (Rs. Thousand)

Weighted average number of equity shares considered for basic EPS

() (.) / EPS (Basic) (Rs.)

:
Add: Dilutive impact of ESOP granted

Weighted average number of equity shares considered for diluted EPS

() (.) / EPS (Diluted) (Rs.)

(.) / Face value per Equity share (Rs.)
18. / /
Provision for Income/ Wealth/ Fringe Benefit Tax

( . / Rs. 000)
(i) () Deferred Tax (Net)

31 2006

31 2007

31 2007

Balance as
on March
31, 2006

For the
year ended
March 31, 2007

Balance as on
March 31, 2007

56,35,13

-8,88,28

47,46,85

79,10,10

79,10,10

/ Deferred tax liability

( )
Depreciation on fixed assets
(including Lease equilisation reserve)

, 1961 36(1)(viii)

Deduction allowed u/s. 36(1)(viii) of the Income-tax
Act, 1961

99


() / Schedules forming part of Accounts (Contd.)
31 2006

31 2007

31 2007

Balance as on
March 31, 2006

For the
year ended
March 31, 2007

Balance as on
March 31, 2007

56,35,13

70,21,82

126,56,95

35,14,98

19,06,50

54,21,48

Disallowance u/s. 43B, 40(a)(ia) etc. of

the Income-tax Act, 1961

43,99,27

28,36,20

72,35,47

() / Total (B)

79,14,25

47,42,70

126,56,95

(22,79,12)

22,79,12

NIL

() / Total (A)
/ Deferred tax asset
, 1961

NPA provisions not allowed under
Income tax Act, 1961

, 1961 43,
40 ()()

/ ()()() - ()
Deferred tax liability/ (asset) (net) (A) (B)

(ii) / Income Tax

31 2006

31 2007

For the year ended

March 31, 2006

For the year ended

March 31, 2007

59,80,00

66,00,00

(40,00,00)

59,80,00

26,00,00

14,40,00

3,25,00

20,00

27,23

:
Less: Reversal of tax provision of earlier years

/ Net provision for income tax

(iii) / Fringe Benefit Tax
(iv) / Wealth Tax

19. , , .
Figures for the previous year have been regrouped and rearranged wherever considered necessary.
20. / Figures in brackets pertain to the previous year.

100

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
19 - -
SCHEDULE 19 - DISCLOSURES AS PER RBI GUIDELINES
I

/ Capital

/ Items

( / Rs. in Crore)

Current Year Previous Year

(i) (%)
CRAR (%)

13.73%

14.80%

(ii) - I (%)
CRAR - Tier I Capital (%)

9.11%

11.71%

(iii) - II (%)
CRAR - Tier II Capital (%)

4.62%

3.09%

52.71%

52.75%

1418.80

851.50

(iv)
Percentage of the shareholding of the Government of India
(v) II
Amount of subordinated debt raised as Tier II Capital

101


() / Schedules forming part of Accounts (Contd.)
II

/ Investments
/ Items

( / Rs. in Crore)


Current Year Previous Year

(1)
Value of Investments
(i)
Gross Value of Investments

()
(a)

In India

25896.27

25596.99

1.05

6.65

222.01

253.11

0.00

0.00

25674.26

25343.88

1.05

6.65

224.90

43.83

22.71

197.69

42.18

16.62

205.43

224.90

28.21

41.70

16.58

5.00

28.21

18.49

16.58

28.21

()
(b)

Outside India,

(ii)
Provisions for Depreciation

()
(a)

In India

()
(b)

Outside India,

(iii)
Net Value of Investments

()
(a)

In India

()
(b)

Outside India,

(2)

( )
Movement of provisions held towards depreciation on investments
(excluding bonds & debentures in the nature of advance).
(i)

Opening balance

(ii)

:
Add: Provisions made during the year

(iii)

: /
Less: Write-off/ write-back of excess provisions during the year

(iv)

Closing balance

(3)

Movement of provisions held towards depreciation on investments in bonds
& debentures in the nature of advance.
(i)

Opening balance
(ii) :
Add: Provisions made during the year
(iii) : /
Less: Write-off/ write-back of excess provisions during the year
(iv)
Closing balance

102

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
III

( / Rs. in Crore)

Repo Transactions

31

2007

Minimum Maximum
Daily
outstanding outstanding
Average
during
during outstanding
the year
the year
during
the year

As on
March
31, 2007

Securities sold under repos

31.50

1680.00

38.98

1207.50

14.70

2887.50

120.89

0.00

Securities purchased under reverse repos
IV

-
Non- SLR Investment Portfolio

(i)

( / Rs. in Crore)

Issuer composition of Non-SLR investments

Sr. No.

Issuer

Amount

'


Extent of
Extent of
Private
Below
Placement Investment
Grade
Securities

(1)
(i)

(2)

(6)

(7)

545.32

104.64

45.00

50.00

57.51

660.02

611.97

45.26

114.36

352.43

390.72

102.76

0.00

0.00

0.00

6218.60

1361.77

400.16

3251.72

3571.57

357.02

357.02

0.00

0.00

357.02

1511.14

1511.14

0.00

45.36

695.77

216.14

XXX

XXX

XXX

XXX

9466.68

4049.30

490.42

3461.44

5034.30

Others

(vii)

(5)

/
Subsidiaries / Joint ventures

(vi)

(4)

Private corporate

(v)

(3)

Banks

(iv)

Extent of
Unlisted
Securities

FIs

(iii)

Extent of
Unrated
Securities

PSUs

(ii)

- ` '

Provision held towards depreciation

/ Total

103


() / Schedules forming part of Accounts (Contd.)
(ii) - - ( )
( )
Non-performing Non-SLR investments (including bonds and debentures in the nature of advance)
advance)(Rs. in Crore)

Particulars

Amount

/ Opening balance

525.26

/ Additions during the year

110.95

/ Reductions during the year

145.89

/ Closing balance

490.42

( - 52.42 )
Total provisions held (excluding provision of Rs.52.42 crore for diminution
in the value of performing Non SLR investments)

163.73

V / Derivatives
() /
(a) Forward Rate Agreement/ Interest Rate Swap

/ Items
(i)
The notional principal of swap agreements
/ Hedging
/ Trading
(ii)

( / Rs. in Crore)


Current Year

Previous Year

5598.24
59825.21

7241.61
29682.18

620.12

312.04

NIL

NIL

Losses which would be incurred if counterparties failed to fulfil their
obligations under the agreements
(iii) ( 1 )
Collateral required by the bank upon entering into swaps
(refer note 1)
(iv) ( 2 )
Concentration of credit risk arising from the swaps
(refer note 2 below)
(v)
The fair value of the swap book

,
Foreign Banks, Private Banks
& Corporates

(245.98)

(204.35)

1. () ( )

.
Margin by way of cash deposit is required to be maintained by clients, in case Mark to Market (MTM) loss
exceed the approved limit (set by the Bank)
2. 31 2007 ( )

49.57% .
Concentration of credit risk (positive MTM to the Bank) to top 5 corporate clients as at March 31, 2007 is at
49.57% of the total positive MTMs from corporate clients to the Bank.
3. / 10 .
Terms of the forward rate agreement/ interest rate swap are upto 10 years.
104

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
.
(b) Exchange Traded Interest Rate Derivatives

Sr. No.

Particulars

(i)

(ii)

(iii)

(iv)

( / Rs. in Crore)

Amount

(-)

Notional principal amount of exchange traded interest rate derivatives undertaken

during the accounting year (instrument-wise)

NIL

31 2007 (-)

Notional principal amount of exchange traded interest rate derivatives outstanding

as on March 31, 2007 (instrument-wise)

NIL

`` '' (-)

Notional principal amount of exchange traded interest rate derivatives outstanding

and not highly effective (instrument-wise)

NIL

`` '' -- (-)

Mark-to-market value of exchange traded interest rate derivatives outstanding and

not highly effective (instrument-wise)

NIL

() -
(c ) Disclosures on risk exposure in derivatives- Qualititave disclosures
(i) .

, , , .
The Bank uses derivatives for Hedging as well as for Trading purposes. The use of such derivatives gives rise to
various risks like credit risk, market risk, operational risk, legal risk etc.
(ii) , ,

, .
. , , ,
, .

.
The Bank has a well defined structure to manage these risks, consisting of risk policy, risk management organisation,
risk measurement and monitoring process, limit structure and system infrastructure. The Bank has an independent
Risk Management Group headed by a Chief General Manager. The Risk Management Group is functionally
responsible for measurement, monitoring and reporting of risks in accordance with the policies, processes,
parameters and limits defined by the Board as well as the applicable regulatory guidelines. Risk is managed under
the overall supervision of Asset Liability Management Committee with regular reporting to Risk Management
Committee of the Board as well as to the Board.
(iii) , ,

/ . -
/ () ,
/ - . , - ,
, , , , .
.
.
Risk exposures in derivatives transactions are measured/assessed in both quantitative and qualitative terms to
capture credit risk, market risk and operational & legal risk. Prior to the execution of derivative transaction, it
105


() / Schedules forming part of Accounts (Contd.)
is ensured that credit risk exposure to the client/counterparty, measured in terms of Loan Equivalent Risk (LER),
is within the approved limit and the client/counterparty has the necessary understanding of the transaction. Market
risk exposure is measured and managed in terms of positions, duration or tenor, sensitivities to market rates, gaps,
Greeks, Value-at-Risk, stop loss etc. measures. Operational risks are addressed by having adequate system
infrastructure and control mechanism in place. Legal risks are taken care of by execution of necessary legal
agreements and documentation.

() -

( )
(Rs. in Crore)

(d) Disclosures on risk exposure in derivatives- Quantitative disclosures

Sr. No. Particulars

(i)

Currency
Derivatives

Interest Rate
Derivatives

5598.24

6671.80

59825.21

65.99

18.69

18.57

264.67

289.01

764.02

111.50

0.31

11.37

/ Maximum

182.89

/ Minimum

111.50

/ Maximum

0.71

11.37

/ Minimum

0.07

0.15

( )
Derivatives (Notional principal amount)

()
(a)

For hedging

()
(b)
(ii)

For trading

--
Marked to Market Positions

() (+)
(a)

Assets (+)

() (-)
(b)
(iii)

Liability (-)

Credit exposure

(iv)

1 (100* 01)
Likely impact of one percent change in interest rate (100*PV01)

()
(a)

On hedging derivatives

()
(b)
(v)

On trading derivatives

100*01
Maximum and minimum of 100* PV01 observed during the year

On hedging

On trading

106

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
VI / Asset Quality

) - ( , )
a) Non-Performing Asset (Includes Loans & Advances, interest accrued thereon and bonds &
debentures in the nature of Loan)

( / Rs. in Crore)
/ Items

Current Year Previous Year

(i)

(%)
Net NPAs to Net Advances (%)

1.12%

1.01%

1115.52

1215.89

() * / (b) Additions during the year*

930.74

1883.20

() / (c) Reductions during the year

814.40

1983.57

1231.86

1115.52

() / (a) Opening balance

563.12

847.49

() * / (b) Additions during the year*

528.37

694.41

() / (c) Reductions during the year

369.56

978.78

() / (d) Closing balance

721.93

563.12

() / (a) Opening balance

552.41

368.40

() / (b) Provisions made during the year

528.65

1502.65

571.13

1318.64

509.93

552.41

(ii) ()
Movement of NPAs (Gross)

() / (a) Opening balance

() / (d) Closing balance

(iii) -
Movement of Net NPAs

(iv) -
Movement of provisions for NPAs

( )
(excluding provisions on standard assets)

() /
(c) Write-off / write-back of excess provisions

()
(d) Closing balance
* ` .' .
*includes NPAs pertaining to erstwhile The United Western Bank Ltd.

107


() / Schedules forming part of Accounts (Contd.)
)
b) Details of Loan Assets subjected to Restructuring

( / Rs. in Crore)

/ Items
(i)

Current Year

Previous Year

218.54
18.32

1601.61
802.34

211.63
18.32

1532.89
763.69

1.15
0.00

28.50
0.00

5.76
0.00

40.22
38.65

, , :
-
Total amount of loan assets subjected to restructuring,
rescheduling, renegotiation;
- of which under CDR

(ii)

, , :
-
The amount of Standard assets subjected to restructuring,
rescheduling, renegotiation;
- of which under CDR

(iii) , , :

-
The amount of Sub-Standard assets subjected to
restructuring, rescheduling, renegotiation;
- of which under CDR
(iv) , , :

-
The amount of Doubtful assets subjected to restructuring,
rescheduling, renegotiation;
- of which under CDR

/ Note: [(i) = (ii) + (iii) + (iv)]

)
c) Details of Loan Assets of SMEs subjected to Restructuring

( / Rs. in Crore)

/ Items

Current Year

Previous Year

(i) [(i)=(ii)+(iii)+(iv)]
Total amount of assets of SMEs subjected to restructuring [(i)=(ii)+(iii)+(iv)]

4.46

14.30

(ii)
The amount of standard assets of SMEs subjected to restructuring

3.81

10.70

(iii)
The amount of sub-standard assets of SMEs subjected to restructuring

0.65

3.60

(iv)
The amount of doubtful assets of SMEs subjected to restructuring

0.00

0.00

)
d) Corporate Debt Restructuring during the year

/ Items
/ Standard
/ Sub-Standard
/ Doubtful
/ Total
108

( / Rs. in Crore)
/ No.
3
0
0
3

/ Amount /Sacrifice
18.32
0.00
0.00
18.32

0.00
0.00
0.00
0.00

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
) /
e) Details of financial assets sold to Securitisation/Reconstruction Company for Asset Reconstruction

( / Rs. in Crore)
/ Items

Current Year Previous Year

(i)

No. of accounts

14

Aggregate value (net of provisions) of accounts sold to SC / RC

856.17

190.68

(iii)

/ Aggregate consideration

972.75

190.27

(iv)

0.00

0.00

116.58

(0.41)

(ii)

/ ( )

Additional consideration realised in respect of accounts

transferred in earlier years
(v)

/
Aggregate gain / loss over net book value

)
f) Provision on Standard Assets

( / Rs. in Crore)

Items

Current Year

Previous Year

318.84

220.85

Provisions towards Standard Assets

VII
Business Ratios

/ Items

(i)

1.55%

0.97%

0.97%

0.67%

0.68%

138716

171824

844

1245

( ) ( )
Business (deposits plus advances) per employee [in 000s]

(vi)

1.10%

Return on assets

(v)

6.51%

Operating profit as a percentage to working funds

(iv)

6.77%

-
Non-interest income as a percentage to working funds

(iii)

Previous Year

Interest income as a percentage to working funds

(ii)

Current Year

( )
Profit per employee [in 000s]

109


() / Schedules forming part of Accounts (Contd.)
VIII / Asset Liability Management

Maturity Pattern of certain items of assets & liabilities
1
14

( / Rs.in Crore)

15 29
3
6
1
3
28
3
6
3 5
1

1to 14 15 to 28
days
days

29 days
to
3 months

Over 3
months
& up to
6 months

Over 6
months
& up to
1 year

Over 1
year
& up to
3 years

Over 3
years &
up to
5 years

Over 5
years

Total

Deposits

3976.79

1854.58

7686.85

5225.17

9973.79

12895.15

1185.30

303.28

43100.91

3329.81

1154.69

3912.49

2383.09

4283.31

12905.52

8193.11

22745.79

58907.81

69.08

696.70

770.05

485.95

803.27

4175.49

2844.96

15829.81

25675.30

621.50

966.11

365.47

3081.87

3741.49

11053.70

7076.53

14984.78

41891.45

1242.83

98.01

759.32

435.41

2841.67

913.87

381.69

844.25

7517.04

21.91

2.85

918.15

271.95

2474.29

3319.60

225.00

26.78

7260.53

Advances

Investments

*
Borrowings *

Foreign Currency
Assets

Foreign Currency
Liabilities

* 5270.71 ( II ) .
* Includes capital raised through Subordinated Bonds (Tier II Bonds) of Rs.5270.71 Crore.

IX
Lending to Sensitive Sectors

)
a) Exposure to Real Estate Sector

( / Rs.in Crore)
/ Category

Current Year

Previous Year

9256.19

7399.44

4418.36

3898.93

)
a)

Direct exposure
(i)

Residential Mortgages

, / ,
:
Lendings fully secured by mortgages on residential property
that is or will be occupied by the borrower or that is rented

15
Of above individual having loans upto Rs.15 lakh

110

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
(ii)

Commercial Real Estate

Lendings secured by mortgages on commercial real estates

2130.89

741.42

/ Nil

/ Nil

-
Of above non-fund based (NFB) limits;
(iii)

()
Investments in Mortgage Backed Securities (MBS) and
other securitised exposures

.
a. Residential

41.62

/ Nil

0.00

/ Nil

2368.90

1912.30

13797.60

10053.16

.
b. Commercial Real Estate

b)

Indirect Exposure

/ Total

)
b) Exposure to Capital Market

( / Rs.in Crore)

/ Items
(i)

Current Year

Previous Year

1992.17

1193.14

1.03

71.31

194.93

7.00

248.13

72.33

163.50

134.55

2599.76

1478.33

(v) ,

Of (v) above, the total finance extended to stockbrokers for margin trading

NIL

NIL

Investments made in equity shares

(ii)

/
Investments in bonds/convertible debentures

(iii)

- /
Investments in units of equity-oriented mutual funds /VCF funds

(iv)

(/ ), , -

Advances against shares to individuals for investment in equity
shares (including IPOs/ESOPS), bonds and debentures, units of
equity oriented mutual funds

(v)

Secured and unsecured advances to stockbrokers and
guarantees issued on behalf of stockbrokers and market makers

(i)+(ii)+(iii)+(iv)+(v)
Total Exposure to Capital Market (i)+(ii)+(iii)+(iv)+(v)
(vi)

111


() / Schedules forming part of Accounts (Contd.)
) -
c) Risk Category-wise Country Exposure
*

31 2007
()

Risk Category*

Exposure
(net) as at
March 31, 2007

/ Insignificant
/ Low
/ Moderate
/ High
/ Very High
/ Restricted
- / Off-credit
/ Total

( / Rs.in Crore)
31 2007
31 2006
()
Provision held
as at
March 31, 2007

31 2006

Exposure
(net) as at
March 31, 2006

Provision
held as at
March 31, 2006

257.48

253.66

14.63

77.10

16.13

10.27

2.78

1.00

0.43

0.00

345.24

288.24

X
Prudential Exposure Limits

31 2007
, 6 , 15%
1 40%
. 31 2007 (- ) :
During the year ended March 31, 2007, the Banks exposure to single borrowers and group borrowers were
within the prudential exposure limits prescribed by RBI, except in 6 cases where single borrower limit of 15%
was exceeded, and in 1 case where group borrower limit of 40% was exceeded, with the approval of the Board
of Directors. In respect of these cases, the sanctioned limits and outstanding (including non-funded exposure)
were as follows, as on March 31, 2007:
/

31 2006
% 31 2007

31 2006
% 31
2007

Name of the single borrower/ group

Sanctioned limits
as on March 31, 2007, as
% of Capital Fund as
on March 31, 2006

Outstanding as on
March 31, 2007, as
% of Capital Fund as
on March 31, 2006

(i) /Name of the single borrower

./Ispat Industries Ltd.

25.70

25.70

22.81
16.94
15.81
14.56
13.64

21.94
16.94
3.58
14.56
11.35

43.18

34.54

. .
Ratnagiri Gas & Power Co. Ltd.
. / Essar Oil Ltd.
/IFFCO
./Indian Oil Corporation Ltd.
./Reliance Petroleum Ltd.
(ii) /Name of the group

( . )
Reliance ( Mukesh D.Ambani Group )

112

Industrial Development Bank of India Limited

() / Schedules forming part of Accounts (Contd.)
XI (1 2001 , )
Finance lease transactions (entered into on or after April 1, 2001, included in Advances)

()
(a) Reconciliation of gross investment and present value of minimum lease payments receivable.

( / Rs.in Crore)

/ Maturity profile

31 2007

Particulars

Balance
as at
March
31, 2007

1 5

1
Less than
1 year

Between
1 to 5 years

More than
5 years

6.83

3.30

3.53

(0.56)

(0.39)

(0.17)

6.27

2.91

3.36

Gross investment outstanding

Unearned finance income

Present value of minimum lease
payments outstanding

() 31 2007 0.56 .
(b) Unearned finance income as at March 31, 2007 is Rs.0.56 cr.

() .
(c) There are no unguaranteed residual values accruing to the benefit of the Bank.

() .
(d) There are no uncollectable minimum lease payments receivable.

() 31 2007 - .
(e) No contingent rent has been recognised in the profit and loss account for the period ended March 31, 2007

() .
(f) The bank has financed computers under the above lease transactions.
XII -
Break up of 'Provisions and Contingencies' shown under the head Expenditure in Profit & Loss Account:

( / Rs.in Crore)
/ Particulars

Current Year Previous Year

/ Provisions for depreciation on Investment

(11.40)

38.73

- / Provision towards NPA

139.24

131.69

84.10

35.59

Provision made towards Income/ Deferred / Wealth / Fringe Benefit Tax

52.31

27.46

/ Other Provision and Contingencies

12.09

6.50

276.34

239.97

/ Provision towards Standard Asset

/ / /

/ Total

113


() / Schedules forming part of Accounts (Contd.)
XIII /
Disclosure of Complaints/Awards
A.

Customer Complaints
() .
(a)

No. of Complaints at the beginning of the year

109

() .
(b)

No. of Complaints received during the year

()

(c )

No. of Complaints redressed during the year

()

(d)

No. of Complaints pending at the end of the year

9124
9068
165

.
B.

Awards passed by the Banking Ombudsman

() .
(a)

No. of unimplemented awards at the beginning of the year

() .

114

(b)

No. of Awards passed by the Banking Ombudsmen during the the year

()

(c )

No. of Awards implemented during the year

()

(d)

No.of unimplemented Awards at the end of the year

1
2
0

Industrial Development Bank of India Limited

31 2007
[ ]
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2007
[Pursuant to the Listing Agreement with Stock Exchanges]

( / Rupees in 000s)
31 2007*

31 2006

Year ended
31-Mar-07*

Year ended
31-Mar-06

682 62 29

588 34 74

(178 62 27)
121 99 51

(6 34 90)
143 54 77

224 02 34

(212 51 34)

13 74 95

(13 96 12)

(1 15 97)

862 60 85

( 92 50)

498 14 64

(313 38 68)

(295 83 43)

(10045 17 72)

(7112 98 58)

(1750 74 69)

276 98 18

(5125 83 01)

(2475 33 83)

17353 12 51

10898 27 80

(636 71 41)

(1627 76 29)

Cash flow from Operating Activities

Net profit before tax and extra-ordinary items

Adjustments for

()/ ()
(Profit) / Loss on sale of Fixed Assets ( Net )
/ Depreciation

/ /
Provisions/Write off of Loans/Investments & other provisions

()
VRS Expenses incurred (net)

Staff welfare Expenses

()/
Adjustments for (increase)/decrease in

Investments

Advances

Other Assets

/ ()
Adjustments for increase/(decrease) in

Borrowings

Deposits

Other liabilities and provisions

()
Payment of taxes ( Net )

(143 24 42)

(266 72 38)

/
Net Cash used in/generated from Operating activities

200 63 42

(105 23 89)

153 07 29

(58 68 16)

153 07 29

(58 68 16)

Cash Flow from Investing activities

/ ()
Purchase of/Advance towards fixed assets ( Net )

/
Net cash used in / raised from Investing activities

115


( / Rupees in 000s)
31 2007*

31 2006

Year ended
31-Mar-07*

Year ended
31-Mar-06

2 58 60

8 85 48

1466 36 11

(73 48 00)

(123 79 60)

(61 83 35)

(150 55 01)

Cash Flow from Financing activities

Issue of Equity Shares

( )
Issue of subordinated debt ( Net of repayments made )

Dividend and dividend tax paid

Net Consideration for amalgamation of UWB

/
Net cash used in / raised from Financing activities

1194 60 10

/ ()

(126 45 87)

1548 30 81

(290 37 92)

5362 78 14

5653 16 06

6911 08 95
=============
211 04 28

5362 78 14
=============
117 55 80

6700 04 67

5245 22 34

NET INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS

OPENING CASH & CASH EQUIVALENTS

CLOSING CASH & CASH EQUIVALENTS

, /of which Cash in Hand

/Balance with RBI and other Banks
* 3 , 06 .

* After taking into consideration the impact of the UWB merger with effect from 3rd Oct., 06.

, .
Figures for the previous period have been regrouped, whenever considered necessary.

BY ORDER OF THE BOARD

(. )

(. . )

( )

(K. Narasimha Murthy)

(O.V. Bundellu)

(Jitender Balakrishnan)

Director

Dy. Managing Director

Dy. Managing Director

(. . )
(V. P. Shetty)

Chairman & Managing Director

As per our report attached of even date

For Suresh Chandra & Associates

Chartered Accountants

Chartered Accountants

( . )

( )

(Shivji K. Vikamsey)

(Ved Prakash Bansal)

Partner

Partner

. 2242

. 500369

Membership No. 2242

Membership No. 500369

, 20 2007
Mumbai, April 20, 2007
116

For Khimji Kunverji & Co.

(. . )
(L. P. Aggarwal)

-
Corporate Head - Financial Officer

Industrial Development Bank of India Limited

To

The Board of Directors

Industrial Development Bank of India

Limited

1.

1.

We have audited the attached Consolidated

()

Balance Sheet of Industrial Development Bank

31 2007

of India Limited (the Bank) and its Subsidiaries

and its Joint Venture as at March 31, 2007, the

Consolidated Profit and Loss Account and the

Consolidated Cash Flow statement for the

year ended on that date annexed thereto.

These financial statements are the responsibility

of the Banks management and have been

prepared by the management on the basis of

separate financial statements and other financial

information regarding components. Our

responsibility is to express an opinion on

these financial statements based on our audit.

2.

2.

We conducted our audit in accordance with

generally accepted auditing standards in India.

Those Standards require that we plan and

perform the audit to obtain reasonable

assurance about whether the financial

statements are prepared, in all material respects
in accordance with an identified financial
reporting framework and are free of material
misstatement. An audit includes examining on

a test basis, evidence supporting the amounts

and disclosures in the financial statements. An

audit also includes assessing the accounting

principles used and significant estimates made

by management, as well as evaluating the

overall financial statement presentation. We

believe that our audit provides a reasonable

basis for our opinion.

117


3.

() 31

3.

2007 2714.54

Statements (CFS) are assets of Rs 2714.54

234.52

crores as at March 31, 2007, revenues of

Rs.234.52 crores and net cash inflow of

227.93

Rs.227.93 crores for the year then ended,

which have not been jointly audited by us.

These financial statements have been audited

4.

Included in these Consolidated Financial

by other auditors whose reports have been

furnished to us and our opinion, insofar as it

relates to the amounts included in respect of

the subsidiaries, is based solely on the report

of those respective auditors.

4.

We report that the consolidated financial

statements have been prepared by the Bank in

accordance with the requirements of Accounting

() 21

Standard (AS) 21 Consolidated Financial

, 23

Statements, AS 23 Accounting for Investments

27

in Associates in Consolidated Financial

Statements and AS 27 Financial Reporting of

Interests in Joint Ventures, issued by the Institute

of Chartered Accountants of India and on the

basis of the separate audited financial statements

of Industrial Development Bank of India Limited

and its Subsidiaries included in the consolidated

financial statements.

5.

5.

Based on our audit and on consideration of

reports of other auditors on separate financial

statements/ management certification and on

the other financial information of the

,


:

components and to the best of our information

and according to the explanations given to us,
we are of the opinion that the attached
consolidated financial statements give a true
and fair view in conformity with generally
accepted accounting principles in India:

118

Industrial Development Bank of India Limited

) , 31 2007

a)

in the case of the consolidated balance

sheet, of the state of affairs of the Bank

and its Subsidiaries and its Joint Venture

as at March 31, 2007;

() - ,

b)

in the case of the consolidated profit and

loss account, of the profit for the year
ended on that date; and

() ,

c)

in the case of the consolidated cash flow

statement, of the cash flows for the year
ended on that date

.

.

: 2242

20 2007

: 500369

For Khimji Kunverji & Co. For Suresh Chandra & Associates
Chartered Accountants

Chartered Accountants

Shivji K. Vikamsey

Ved Prakash Bansal

Partner
Membership No. 2242

Partner
Membership No. 500369

Mumbai
April 20, 2007

119


31 2007 / Consolidated Balance Sheet as at March 31, 2007
( / Rupees in 000s)

31 2007

31 2006

Schedule

As on 31-Mar-07

As on 31-Mar-06

724 35 41
7802 00 51

723 79 46
5935 21 33

40 13
43305 81 84
44225 63 53
9882 27 67
------------------------------105940 49 09
============

87 59
25853 91 06
48910 62 08
8877 82 84
------------------------------90302 24 35
============

5405 52 76

2680 09 94

7
8
9
10
11

1922 68 90
25362 55 36
64367 33 54
2803 13 21
6079 25 32
------------------------------105940 49 09
============

2871 87 60
25472 89 39
54103 51 30
838 53 03
4335 33 09
------------------------------90302 24 35
============

12

108530 03 43

77022 73 78

2405 15 12

1519 43 60

CAPITAL AND LIABILITIES

/ Capital
/ Reserves and Surplus
()

1
2

Employees Stock Options (Grants) Outstanding

/ Deposits
/ Borrowings
/ Other Liabilities and Provisions

3
4
5

/ TOTAL
/ ASSETS

Cash and balances with Reserve Bank of India

Balances with banks and money at call and short notice
/ Investments
/ Advances
/ Fixed Assets
/ Other Assets

/ TOTAL
/ Contingent Liabilities
/ Bills for collection

Significant Accounting Policies and Notes to accounts
form an integral part of the accounts

17 &18

BY ORDER OF THE BOARD

(. )

(. . )

( )

(K. Narasimha Murthy)

(O.V. Bundellu)

(Jitender Balakrishnan)

Director

Dy. Managing Director

Dy. Managing Director

(. . )
(V. P. Shetty)

Chairman & Managing Director

As per our report attached of even date

For Suresh Chandra & Associates

Chartered Accountants

Chartered Accountants

( . )

( )

(Shivji K. Vikamsey)

(Ved Prakash Bansal)

Partner

Partner

. 2242

. 500369

Membership No. 2242

Membership No. 500369

, 20 2007
Mumbai, April 20, 2007
120

For Khimji Kunverji & Co.

(. . )
(L. P. Aggarwal)

-
Corporate Head - Financial Officer

Industrial Development Bank of India Limited

31 2007 -
Consolidated Profit and Loss Account for the year ended March 31, 2007
( / Rupees in 000s)

31 2007

31 2006

Schedule

Year ended
31-Mar-07

Year ended
31-Mar-06

13
14

6556 43 95
960 38 15
----------------------------7516 82 10
==========

5543 64 79
1271 06 59
----------------------------6814 71 37
==========

15
16

5830 36 61
813 46 43

5115 05 46
904 18 43

2029 31 00

(2029 31 00)

284 67 57
----------------------------6928 50 61
==========

251 55 86
----------------------------6270 79 75
==========

588 31 49
1021 90 19

543 91 63
781 40 88

392 00 00

1 69 15
----------------------------1611 90 83
==========

----------------------------1717 32 51
==========

158 00 00
11 00 00
(4 11 20)

149 46 14

392 00 00

61 04 90

108 65 31
19 87 50
1257 44 32
----------------------------1611 90 88
==========

56 90 00
4 46 48
3 50 00
10 83
108 56 92
20 03 93
982 28 22
----------------------------1717 32 51
==========

I. / INCOME
/ Interest earned
/ Other income

/ TOTAL
II. / EXPENDITURE
/ Interest expended
/ Operating expenses

( 18 5 )
Adjustment of floating provision (Refer Schedule 18 note 5)

-
Non-performing assets adjusted

:
Less: withdrawn from Floating Provision

Provisions and contingencies

/ TOTAL
III. / PROFIT / LOSS
/ () / Net profit / (loss) for the year
/ () / Profit / (loss) brought forward

- ,
Investment Fluctuation Reserve, balance transferred

() ,
IDBI EXIM (J) Special Fund, balance transferred

/ TOTAL
IV. / APPROPRIATIONS
/ Transfer to Statutory Reserve
/ Transfer to Capital Reserve
/ Transfer to General Reserve

, 1961 36(1) (viii)

Transfer to Special Reserve under section 36(1)(viii) of the Income Tax Act, 1961
/ Transfer to other reserves
/ Transfer to Staff Welfare Fund
/ Dividend for previous financial year
/ Proposed dividend
/ Tax on proposed dividend
/ Balance carried over to balance sheet

/ TOTAL

121


31 2007 - ()
Consolidated Profit and Loss Account for the year ended March 31, 2007 (Contd.)
( / Rupees in 000s)

31 2007

31 2006

Schedule

Year ended
31-Mar-07

Year ended
31-Mar-06

8.12
8.12

7.52
7.51

Significant Accounting Policies and Notes
to Accounts form an intergal part of the accounts

17 & 18

(.) ( 18 9 )
Earnings per share (Rs.) (refer Schedule 18 note 9)
- / Basic
- / Diluted

BY ORDER OF THE BOARD

(. )

(. . )

( )

(K. Narasimha Murthy)

(O.V. Bundellu)

(Jitender Balakrishnan)

Director

Dy. Managing Director

Dy. Managing Director

(. . )
(V. P. Shetty)

Chairman & Managing Director

As per our report attached of even date

For Suresh Chandra & Associates

Chartered Accountants

Chartered Accountants

( . )

( )

(Shivji K. Vikamsey)

(Ved Prakash Bansal)

Partner

Partner

. 2242

. 500369

Membership No. 2242

Membership No. 500369

, 20 2007
Mumbai, April 20, 2007

122

For Khimji Kunverji & Co.

(. . )
(L. P. Aggarwal)

-
Corporate Head - Financial Officer

Industrial Development Bank of India Limited

/ Schedules forming part of Consolidated Accounts
( / Rupees in 000s)
31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

1250 00 00
-----------------------------

1250 00 00
-----------------------------

724 35 41

723 79 46

----------------------------724 35 41
==========

----------------------------723 79 46
==========

1 -
SCHEDULE 1 - CAPITAL

10 125 00 00 000
Authorised Capital
125 00 00 000 Equity Shares of Rs.10 each

,
Issued, Subscribed and Paid-up Capital

10 : 72 43 54 088 (72 37 94 603)

72 43 54 088 (72 37 94 603) Equity Shares of Rs.10 each-fully paid up

( 5 59 485 (20 19 581)

)
(5 59 485 (20 19 581) Equity Shares alloted during the year against ESOPs excercised)

/ TOTAL
2 -

31 2007

31 2006

SCHEDULE 2 - RESERVES AND SURPLUS

As on 31-Mar-07

As on 31-Mar-06

481 62 40
158 00 00
1
----------------------------639 62 39
==========

332 16 26
149 46 14

----------------------------481 62 40
==========

210 42 66
11 00 00

----------------------------221 42 66
==========

178 32 66
32 10 00

----------------------------210 42 66
==========

2063 91 00

----------------------------2063 91 00
==========

----------------------------
==========

1810 70 48
2 02 65
54 56 96
----------------------------1758 16 17
==========

1749 29 96
61 40 52

----------------------------1810 70 48
==========

I. / Statutory Reserve
/ Opening Balance
/ Additions during the year
/ Deductions during the year

II. / Capital Reserve

/ Opening Balance
/ Additions during the year
/ Deductions during the year

III. / Revaluation Reserve

/ Opening Balance

( 18 6 )
Additions during the Year (Refer Schedule 18 note 6)
/ Deductions during the Year

IV. / Share Premium

/ Opening Balance
/ Additions during the year
/ Deductions during the year

V. / Revenue and other reserves

()
(a) General Reserve
123


()/ Schedules forming part of Consolidated Accounts (Contd.)
( / Rupees in 000s)
2 - ()

31 2007

31 2006

SCHEDULE 2 - RESERVES AND SURPLUS (Contd.)

As on 31-Mar-07

As on 31-Mar-06

2159 19 19

1858 85 56

1 69 15

396 46 48

648 62 52
----------------------------1512 25 82
==========

98 70 13
----------------------------2159 19 19
==========

34 73 09
1 04 02
2 20 00
----------------------------33 57 11
==========

32 15 59
5 94 23
3 36 73
----------------------------34 73 09
==========

169 15

169 15
----------------------------
==========

1 69 15

----------------------------1 69 15
==========

----------------------------
==========

392 00 00

392 00 00
----------------------------
==========

635 04

----------------------------635 04
==========

6 35 04

----------------------------6 35 04
==========

248 21 10
61 04 90

----------------------------309 26 00
==========

191 31 10
56 90 00

----------------------------248 21 10
==========

1257 44 32
----------------------------7802 00 51
==========

982 28 22
----------------------------5935 21 33
==========

/ Opening Balance

Additions during the year

( 18 3 )
Deductions during the year (Refer Schedule 18 note 3)

()
(b) Staff Welfare Fund
/ Opening Balance
/ Additions during the year
/ Deductions during the year

() ()
(c) IDBI EXIM (J) Special Fund
/ Opening Balance
/ Additions during the year
/ Deductions during the year

() -
(d) Investment Fluctuation Reserve
/ Opening Balance
/ Additions during the year
/ Deductions during the year

() 1961 36(1) (viii)

(e) Special Reserve under Section 36(1)(viii) of the Income Tax Act, 1961
/ Opening Balance
/ Additions during the year
/ Deductions during the year

() , 1961 36 (1) (viii)

(f)

Special Reserve created and maintained under

Section 36(1)(viii) of the Income Tax Act, 1961
/ Opening Balance
/ Additions during the year
/ Deductions during the year

VI. -
Balance in Profit and Loss Account

/ TOTAL (I+II+III+IV+V+VI)

124

Industrial Development Bank of India Limited

()/ Schedules forming part of Consolidated Accounts (Contd.)
( / Rupees in 000s)
3 -

31 2007

31 2006

SCHEDULE 3 - DEPOSITS

As on 31-Mar-07

As on 31-Mar-06

119 99 35
6863 40 15
-------------------------------6983 39 50
-------------------------------4034 42 00

78 34 39
5096 32 21
-------------------------------5174 66 60
-------------------------------2498 96 49

2111 85 01
30176 15 33
-------------------------------32288 00 34
-------------------------------43305 81 84
============

1255 13 68
16925 14 29
-------------------------------18180 27 97
-------------------------------25853 91 06
============

43305 81 34

25853 91 06

-------------------------------43305 81 84
============

-------------------------------25853 91 06
============

. I.

A.

Demand Deposits
i) / From banks
ii) / From others
II.

/ Saving Bank Deposits

III. / Term Deposits
i) / From banks
ii) / From others
/ TOTAL

i)

B.

Deposits of branches in India

ii)

Deposits of branches outside India

/ TOTAL
4 -

31 2007

31 2006

SCHEDULE 4 - BORROWINGS

As on 31-Mar-07

As on 31-Mar-06

2473 47 86

2850 84 58

6 70 12

7 23 45

2130 50 00

2130 50 00

115 00 00

130 00 00

5412 51 35

5419 36 35

28303 81 55

32362 26 02

5783 62 65
-------------------------------44225 63 53
============

6010 41 68
-------------------------------48910 62 08
============

I.

/ Borrowings in India
i)

/ Reserve Bank of India

ii)

/ Other banks

iii) / Other institutions and agencies

)
a)

Government of India borrowings

) I
b) Tier I bonds issued to Government of India

)
c)

Commercial Paper

)
d) Bonds guaranteed by Government of India

)
e) Others
II.

Borrowings outside India

/ TOTAL
I II - 3984,97,86 (2913,07,68 )

Secured borrowings included in I and II above - Rs.3984,97,86 Thousand (Rs.2913,07,68 Thousand)

125


()/ Schedules forming part of Consolidated Accounts (Contd.)
( / Rupees in 000s)
5 -

31 2007

31 2006

SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS

As on 31-Mar-07

As on 31-Mar-06

/ Bills payable
- () / Inter-office adjustment (net)
/ Interest accrued
( II )

498 95 75
0
1336 48 39

659 27 30
7 68 00
1445 10 61

Unsecured Redeemable Bonds

(Subordinated for Tier II Capital)

5350 71 06

3929 34 95

318 92 19

220 84 90

128 52 81

126 25 37

19 27 17
0
2229 40 30
-------------------------------9882 27 67
============

29 42 32
40 00
2459 49 39
-------------------------------8877 82 84
============

6 -

31 2007

31 2006

SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIA

As on 31-Mar-07

As on 31-Mar-06

213 32 23

117 56 25

5192 20 53
0
-------------------------------5405 52 76
============

2562 53 69
0
-------------------------------2680 09 94
============

31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

129 17 63

117 13 50

452 08 61

984 75 43

279 00 00

800 00 00

50 00 00
-------------------------------910 26 24
============

360 00 00
-------------------------------2261 88 93
============

I.
II.
III.
IV.

V.
Prudential provisions against standard assets
VI.
Dividend and dividend tax payable on Equity Shares
VII.
Receipts in respect of cases transferred to SASF
VIII. / Application Money for OMNI
IX. / Others

/ TOTAL

I.
II.

( )
Cash in hand (including foreign currency notes)
/ Balances with Reserve Bank of India
i) / in Current Account
ii) / in Other Accounts

(I II) / TOTAL (I and II )

7 -

SCHEDULE 7 - BALANCES WITH BANKS
AND MONEY AT CALL AND SHORT NOTICES
I.

/ In India
i) / Balances with banks
) *
a)

in Current Accounts*

)
b) in Other Deposit Accounts
ii)

/ Money at call and short notice

)
a)

with banks

)
b) with other institutions

I / TOTAL I

126

Industrial Development Bank of India Limited

()/ Schedules forming part of Consolidated Accounts (Contd.)
( / Rupees in 000s)

II.

31 2007

31 2006

As on 31-Mar-07

As on 31-Mar-06

/ Outside India
i) / in Current Accounts
ii) / in Other Deposit Accounts
iii) / Money at call and short notice
II / TOTAL II
(I II) / GRAND TOTAL (I and II)

119 27 19

134 88 61

22 96 81

111 54 12

870 18 66
-------------------------------1012 42 66
-------------------------------1922 68 90
============

363 55 94
-------------------------------609 98 67
-------------------------------2871 87 60
============

* 14,28,62 (38,40,41 ) .
* includes Rs.14,28,62 Thousand (Rs.38,40,41 Thousand) remitted by branches through non correspondent banks.

8-

31 2007

31 2006

SCHEDULE 8 - INVESTMENTS

As on 31-Mar-07

As on 31-Mar-06

I.

/ Investments in India in
i) / Government securities
16192 38 92
17 24 41
ii) / Other approved securities
iii) / Shares
3433 36 31
iv) / Debentures and Bonds
3630 87 83
v) / / Subsidiaries and / or joint ventures
357 02 20
vi) ( , ) / Others (CPs, units in MFs etc.) 1730 61 16
------------------------------- I / TOTAL I
25361 50 83

16571 61 57

2141 63 24
4372 42 68
346 98 49

============

2033 58 80
-------------------------------25466 24 78
============

II. / Investments outside India in

i)

( )
Government securities (including local authorities)

ii)

/
Subsidiaries and / or joint vebtures abroad

iii) () / Others investments (shares)

II / TOTAL II
(I II) / GRAND TOTAL (I and II)

1 04 53
-------------------------------1 04 53
-------------------------------25362 55 36
============

6 64 61
-------------------------------6 64 61
-------------------------------25472 89 39
============

25583 51 72

25719 36 26

222 00 89
-------------------------------25361 50 83
============

253 11 48
-------------------------------25466 24 78
============

1 04 53

6 64 61

-------------------------------1 04 53
============

-------------------------------6 64 61
============

III. / Investments in India

i)

/ Gross value of investments

ii) / Aggregate provision for depreciation
iii) / Net investment
IV. / Investments outside India

/ Gross value of investments

ii) / Aggregate provision for depreciation
iii) / Net investment
i)

127


()/ Schedules forming part of Consolidated Accounts (Contd.)
( / Rupees in 000s)
9-

31 2007

31 2006

SCHEDULE 9 - ADVANCES

As on 31-Mar-07

As on 31-Mar-06

2294 18 26

2203 20 37

5432 56 96

2556 28 36

56640 58 32
-------------------------------64367 33 54
--------------------------------

49344 02 57
-------------------------------54103 51 30
--------------------------------

56234 60 00

44395 96 58

1025 97 80

1506 20 01

7106 75 74
-------------------------------64367 33 54
--------------------------------

8201 34 71
-------------------------------54103 51 30
--------------------------------

. i)

A.

Bills purchased and discounted / rediscounted

ii)

,
Cash credits, overdrafts and loans repayable on demand

iii) / Term Loans

/ TOTAL
. i)

B.

Secured by tangible assets*

ii)

/ **
Covered by bank / government guarantees**

iii) / Unsecured

/ TOTAL
. I.

C.

Advances in India
i)

/ Priority Sector

9290 40 85

8007 70 00

ii)

/ Public Sector

6682 80 65

4640 83 40

808 26 51

83 27 15

47585 85 53
-------------------------------64367 33 54
============

41371 70 75
-------------------------------54103 51 30
============

iii) / Banks
iv) / Others

/ TOTAL
II.

/ Advances outside India

i)

/ Due from banks

ii)

/ Due from others

-------------------------------0
-------------------------------64367 33 54
============

-------------------------------0
-------------------------------54103 51 30
============

() ,
(a) Bills purchased, discounted and rediscounted

()
(b) Syndicated loans

()
(c) Others

/ TOTAL
( I II) / GRAND TOTAL ( C I and C I I )
*
**
* includes Advances secured against book debts
** includes Advances secured against Letters of Credit issued by other banks

128

Industrial Development Bank of India Limited

()/ Schedules forming part of Consolidated Accounts (Contd.)
( / Rupees in 000s)
10 -

31 2007

31 2006

SCHEDULE 10 - FIXED ASSETS

As on 31-Mar-07

As on 31-Mar-06

370 63 10
264 88 90

372 67 67
61 73 72

99 93 66
2063 91 00
1 62 22
-------------------------------2597 87 12
============

63 78 29

86 51 99
-------------------------------284 11 11
============

417 49 09
100 84 03
36 89 13
327 51 95
-------------------------------153 92 04
============

351 39 28
74 21 25
8 11 44
243 65 94
-------------------------------173 83 15
============

I. / Premises
/ Opening balance
/ Additions during the Year
* / Deductions during the Year*

( 18 6 )
Revaluation during the year (Refer Schedule 18 note 6)
/ Depreciation to date

II. ( )
Other fixed assets (including furniture & fixtures)
/ Opening balance
/ Additions during the Year
/ Deductions during the Year
/ Depreciation to date
III. / Assets given on Lease
/ Opening balance
/ Additions during the Year
/ Lease adjustment net of provisions
/ Deductions during the Year
/ Depreciation to date

1521 39
1 76
4 54
708 34
768 92

82
51
72
06
69

1728 22 40

36 70 39
206 82 58
1177 58 19

10 26 51
-------------------------------40 17 79
============
11 16 26
-------------------------------2803 13 21
============

8 50 00
-------------------------------372 02 02
============
8 56 75
-------------------------------838 53 03
============

-
Provisions for non-performing assets
IV. Capital work-in-progess

(I+II+III+IV) / TOTAL (I+II+III+IV)

* 31 2007 97,06,81
* Includes accumulated depreciation of Rs. 97,06,81 Thousand upto March 31, 2007 set off against original cost, upon revaluation.

11 -

31 2007

31 2006

SCHEDULE 11 - OTHER ASSETS

As on 31-Mar-07

As on 31-Mar-06

11 94 07
827 53 38

695 77 26

2110 33 23
1 02 52

2014 46 31
41 98

122 60 60

10 77 50

9 09 46

33 04 81

46 79 77

2 03 17
3082 56 64
-------------------------------6079 25 32
============

21 56 77
1424 60 94
-------------------------------4335 33 09
============

I. - () / Inter-office adjustment (net)

II. / Interest accrued
III. / ()
Tax paid in advance / tax deducted at source (net)
IV. / Stationery and Stamps
V. -
Non-banking assets acquired in satisfaction of claims
VI. /
Expenses / Disbursements in respect of cases transferred to SASF
VII.
VRS expenses not written-off
VIII. ()
Deferred Tax Assets (Net)
IX. / Others

/ TOTAL

129


()/ Schedules forming part of Consolidated Accounts (Contd.)
( / Rupees in 000s)
12-

31 2007

31 2006

SCHEDULE 12 - CONTINGENT LIABILITIES

As on 31-Mar-07

As on 31-Mar-06

680 91 90

385 86 98

17708 91 00

19570 55 09

8081 45 05

4022 88 64

121 44 62

4 58 64

V. ,
Acceptances, endorsements and other obligations

8227 54 14

5829 20 69

VI. - / Currency Swaps

7134 77 73

6740 62 38

VII. / Options

5299 32 20

6551 05 01

58948 78 00

31374 37 92

712 36 62

635 88 99

18 17 48

30 46 43

1584 94 69

1556 67 97

11 40 00
---------------------------------------108530 03 43
==============

320 55 04
---------------------------------------77022 73 78
==============

I.

Claims against the Bank not acknowledged as debts

II.

:
Liability for partly paid investments

III.
Liability on account of outstanding forward exchange contracts
IV.
Guarantees given on behalf of constituents

)
a)

in India

)
b) outside India

VIII. / Interest Rate Swaps

IX. / Forward Rate Agreements
X. / Capital commitment
XI. , , *
On account of disputed Income tax, Interest tax, penalty and interest demands*
XII.
Other items for which the bank is contingently liable

/ TOTAL

* 3290,42,22 (3441,63,08 ) . 1705,47,53

(1884,95,11 ) .
1584,94,69 (1556,67,97 ) .
* Additional demands raised on account of disputed tax liabilities is Rs.3290,42,22 thousand (Rs. 3441,63,08 Thousand). The
demand includes Rs.1705,47,53 thousand (Rs. 1884,95,11 Thousand) in respect of which the Bank has favourable appellate
decisions in its own cases in earlier years. The net contingent liability is Rs. 1584,94,69 thousand (Rs. 1556,67,97 Thousand).

130

Industrial Development Bank of India Limited

()/ Schedules forming part of Consolidated Accounts (Contd.)
( / Rupees in 000s)
13 -

31 2007

31 2006

SCHEDULE 13 - INTEREST EARNED

Year ended
31-Mar-07

Year ended
31-Mar-06

I.

/ / / Interest / discount on advances / bills

5411 63 46

4502 06 20

II.

/ Income on investments

1000 37 78

824 65 66

83 37 81

120 65 93

61 04 90
-------------------------------6556 43 95
============

96 27 00
-------------------------------5543 64 79
============

31 2007

31 2006

Year ended
31-Mar-07

Year ended
31-Mar-06

III. /
Interest on balances with RBI and other inter-bank funds
IV. / Others

/ TOTAL

14 -
SCHEDULE 14 - OTHER INCOME
I.

, / Commission, exchange and brokerage

280 11 41

283 57 20

II.

() / Profit on sale of investments (net)

255 27 07

664 43 30

III. / () ()
Profit / (Loss) on revaluation of investments (net)

(19 55 92)

IV. , / () ()
Profit / (Loss) on sale of land, bulidings and other assets (net)

178 45 39

6 11 03

39 57 37

59 01 68

11 69 14

22 42 88

214 83 69
-------------------------------960 38 15
============

235 50 50
-------------------------------1271 06 59
============

31 2007

31 2006

Year ended
31-Mar-07

Year ended
31-Mar-06

1993 34 16

911 75 97

246 13 18

224 76 02

3590 89 27
-------------------------------5830 36 61
============

3978 53 46
-------------------------------5115 05 46
============

V. / () / Profit on exchange transactions/Derivatives (net)

VI. / /

Dividend income from subsidiary companies and/or
joint ventures abroad / in India
VII. ( )
Miscellaneous Income (including lease income)

/ TOTAL
15 -
SCHEDULE 15 - INTEREST EXPENDED
I.

Interest on deposits

II.

/
Interest on Reserve Bank of India / inter-bank borrowings

III. / Others

/ TOTAL

131


()/ Schedules forming part of Consolidated Accounts (Contd.)
( / Rupees in 000s)
16 -

31 2007

31 2006

Year ended
31-Mar-07

Year ended
31-Mar-06

Payments to and provisions of employees( including

VRS expenditure written off)*

295 50 10

328 86 40

, ** / Rent, taxes and lighting**

75 71 27

69 96 73

III. / Printing and stationery

16 42 60

16 53 60

IV. / Advertisement and publicity

11 71 44

17 69 70

V. / Depreciation on banks property

68 53 03

51 41 10

VI. / Depreciation on leased assets

60 52 93

96 02 08

38 42

33 28

VIII. / Auditors fees and expenses

1 23 32

1 21 34

IX. / Law Charges

5 71 94

7 58 73

X. , , / Postage, Telegram, Telephone, etc.

32 69 79

29 74 36

XI. / Repairs and maintenance

35 81 24

28 85 06

XII. / Insurance

32 02 66

17 02 85

177 17 69
-------------------------------813 46 43
============

238 93 22
-------------------------------904 18 43
============

SCHEDULE 16 - OPERATING EXPENSES

I.

II.

(
)*

VII. , / Directors fees, allowances and expenses

XIII. / Other expenditure

/ TOTAL
*

1 ,2002 110, 20, 00 .

* Previous years figure includes provision of Rs.110,20,00 Thousand for revision of pay scales w.e.f. November 1, 2002

** .
** Includes operating lease rentals for office and employee related residential premises.

132

Industrial Development Bank of India Limited

()/ Schedules forming part of Consolidated Accounts (Contd.)
17 :
SCHEDULES 17 : SIGNIFICANT ACCOUNTING POLICIES

. ,
, : ,
/ . :
.
Most of the accounting policies of the Reporting Company and those of its Subsidiaries are similar. However,
since certain Subsidiaries are in businesses that are distinct from that of the Reporting Company and function
in different regulatory environments, certain accounting policies in respect of investment, depreciation/
amortisation etc. differ. The accounting policies of all the Companies are in line with generally accepted accounting
principles in India.

18 :
SCHEDULES 18: NOTES FORMING PART OF THE ACCOUNTS
1.

Principles of consolidation:

() 21 ``
'' . ( - ``'')
. /
31 2007
.
The consolidated financial statements include the accounts of Industrial Development Bank of India Ltd. (parent
company the Bank) and all of its subsidiaries as defined in Accounting Standard (AS) 21 Consolidated
Financial Statements issued by the Institute of Chartered Accountants of India. The financial statements of the
subsidiaries/joint ventures used in the consolidation are drawn upto the same reporting date as that of the Bank
i.e. year ended March 31, 2007.

, , -
-- .
The financial statements of the Bank and its subsidiaries have been combined on a line by line basis by adding
together the book values of like items of assets, liabilities, income & expenses.

:
The subsidiaries considered in the consolidated financial statements are:

133


()/ Schedules forming part of Consolidated Accounts (Contd.)

Name of the company

31 2007
%

Country of
Incorporation

% of equity
capital held as at
March 31, 2007

. ()

IDBI Capital Market Services Ltd. (ICMS)

India

. ()

IDBI Intech Ltd. (IIL)

India

. ()

IDBI Homefinance Ltd. (IHL)

India

. ()

IDBI Gilts Ltd. (IGL)

India

100

100

100

100

20% , 23
.
23 ` '
.
Though the Bank holds more than 20% of voting power in certain entities, the same are not treated as investment
in an Associate under AS 23, mainly either due to lack of significant influence or such investments are not
considered as material investments requiring consolidation as an Associate under AS 23 Accounting for
Investments in Associates in Consolidated Financial Statements.
2.

Changes in composition of the group

31 2007 :
The following changes have taken place in the composition of the group during the year ended March 31, 2007:-

/ ICMS
, 1956 (
) , 1999 10 58
100 : ( - 10 321 :
27 ) : . , 1956 77
, 1000 ( - 3210 ),
. 4800 (
-5457 ) , , :
.
The Company, during the year, bought back 100 Lakhs fully paid up equity shares of face value of Rs. 10 each at
Rs. 58 per equity shares (Previous Year Rs 321 Lakhs fully paid up equity shares of face value of Rs. 10 each
at Rs. 27 per equity shares) in accordance with the provisions of the Companies Act, 1956 and the Private

134

Industrial Development Bank of India Limited

()/ Schedules forming part of Consolidated Accounts (Contd.)
Limited Company and Unlisted Public Limited Company (Buy Back of Securities) Rules, 1999. Accordingly, a
sum equal to the nominal value of the shares purchased aggregating Rs. 1000 Lakhs (Previous Year Rs 3210
Lakhs) has been transferred from free reserve to Capital Redemption Reserve Account as required by Section
77A of the Companies Act, 1956. Further, free reserves aggregating Rs. 4800 Lakhs (Previous Year Rs 5457
Lakhs) representing premium amount have been utilized for payment of buy-back of shares.

/ IIL
. 10/- .
(35,00,000) , , (- ),
10/- . (15,28,200)
.
During the year, the company has allotted Nil (35,00,000) equity Shares of Rs.10/- each to IDBI Ltd. on
account of advance received towards subscription to equity share capital and NIL (15,28,200) equity shares of
Rs.10/-each in settlement of advance received towards rent, taxes, salaries (including those of ex-deputationists),
reimbursement & other similar administrative expenses

/ IGL
.
. .
During the year the Bank promoted a wholly owned subsidiary, IDBI Gilts Ltd. to undertake the business of
Primary Dealer. IGL is yet to commence its operations pending regulatory and other formalities.

WITECL

3 2006 .
. () 71% . ,
49% ., 40% , .
.
Consequent to merger of The United Western Bank Ltd. with the Bank with effect from October 3, 2006, the
Bank was vested with 71% of the equity of The Western India Trustee and Executor Company Ltd. (WITECL)
Subsequently, the Bank disposed of 49% of the equity of WITECL to IDBI Trusteeship Services Ltd., an entity
in which the Bank holds 40% of the equity. WITECL has consequently ceased to be a subsidiary of the Bank.

/ Joint Venture
. 23 2006
. ..
. 31 2008
.
IDBI Fortis Life Insurance Ltd., a company incorporated in India pursuent to memorandum of understanding
dated November 23, 2006, in which the Bank is a shareholder jointly with The Federal Bank Ltd. and Fortis
Insurance International N. V., has been considered as a Joint Venture. Since, the company has not commenced
operations and its first accounting year shall be for the period ending on March 31, 2008, no disclosure has
been made for the preliminary expenses incurred by the company during the period.

135


()/ Schedules forming part of Consolidated Accounts (Contd.)
3.

.
Amalgamation of The United Western Bank Ltd.

, 1949 45(7)
, .( ) .
( ) () 3 2006
.

a.

In exercise of powers under Section 45(7) of the Banking Regulation Act, 1949, Government of India
(GOI) has sanctioned the Scheme of Amalgamation (the Scheme) of The United Western Bank Ltd.,
(the Transferor Bank), with the Industrial Development Bank of India Ltd. (the Transferee Bank), both
banking companies, and specified October 3, 2006 as the prescribed date, which is the effective date of
amalgamation for accounting purposes.

. 3
,
:
b.

In terms of the Scheme all business, assets and liabilities of the Transferor Bank have been transferred to
the Transferee Bank with effect from the prescribed date at the following values, as certified by an
independent firm of Chartered Accountants, and after giving effect to the adjustments described in paragraph
3.e hereunder:

Liabilities

Rs. 000

Deposits

5625,61,96

Rs. 000

Cash & Balances with RBI

526,34,70

26,08,63

Other Liabilities & Provisions

Borrowings

Assets

Balances with Banks &Money

at call & short notice

187,53,36

603,11,48

Investments

1838,72,94

( )
Advances (net of provisions)

2988,03,30

Fixed Assets

99,05,75

Other Assets

/ Total

6254,82,07

/ Total

125,42,17
5765,12,22

Excess of liabilities over assets

Contingent Liabilities

753,30,53

Bills for collection

136

331,51,80

489,69,85

Industrial Development Bank of India Limited

()/ Schedules forming part of Consolidated Accounts (Contd.)
.

14 `` ''
.

c.

The amalgamation is accounted on the basis of Purchase Method specified in AS 14 Accounting for
Amalgamation.

150,55,00 : 28
( ) .

d.

As per the Scheme, the Transferee Bank made a payment of Rs.28 (Rupees Twenty Eight) in respect of
every fully paidup share to the registered shareholders of the Transferor Bank on the prescribed date, in
partial satisfaction of their claim amounting to Rs.150,55,00 Thousand towards their interest in such
shares.

`` '' ``
/ ''
. `` /
'' 364,00,00 . ``
/ ''
. `` / ''


.

e.

The Scheme provides for classification of the Transferor Banks advances into two categories namely,
Advances considered good and readily realizable and Advances considered not readily realizable and/
or bad or doubtful of recovery. Provision of Rs.364,00,00 Thousand has been made against advances that
have been considered not readily realizable and/or bad or doubtful of recovery, based on the report of
an independent firm of Chartered Accountants. Bank is maintaining memorandum records for ascertaining
the ultimate realization against the Advances considered not readily realizable and/or bad or doubtful of
recovery. In the event of ultimate realization from the Advances considered not readily realizable and/
or bad or doubtful of recovery being in excess of the value at which they are taken over and after
considering the effect of items specified in the Scheme, the surplus will be distributed to the erstwhile
shareholders of the Transferor Bank after a period of twelve years or earlier, as prescribed under the
Scheme.

(489, 69,85 )
(150,55,00 ) 640,24,85 3 2006
.

f.

Pursuant to approval of the RBI, the aggregate of the excess of liabilities over assets (Rs.489,69,85 Thousand)
and upfront consideration (Rs.150,55,00 Thousand) aggregating to Rs.640,24,85 Thousand has been adjusted
against the balance available in General Reserve of the Transferee Bank as on October 3, 2006.

:
.

g.

Figures of the current year include those relating to the Transferor Bank and hence are strictly not
comparable with the figures of the previous year.

137


()/ Schedules forming part of Consolidated Accounts (Contd.)
4.

Basis of accounting

:
.
. /
, / .
The financial statements are prepared as per historical cost convention in accordance with the statutory
provisions and accounting principles generally accepted in India. The consolidated financial statements have
been prepared using uniform accounting policies for like transactions and other events in similar circumstances.
Where it is not practicable, in view of statutory/regulatory requirements, accounting policies as mandated by
respective statutes/regulatory authorities have been followed.
5.

Utilisation of floating provision

1 2004 31 2005
2029,31,00 . 2005-06
/
: .
As on March 31, 2005, a sum of Rs.2029,31,00 Thousand was available as floating provision for provisioning
towards any possible decline in value of the assets created prior to October 1, 2004. With the concurrence of
RBI, during the previous year 2005-06, the floating provision was fully utilized for making specific provisions/
write-offs and reversal of unrealized income for certain assets.
6.

/
31 2007
. 31 2007 529 02 00 2592 93 00
2063 91 00 .
During the year, the Bank has revalued its properties comprising Freehold Land & Residential/ Office building
and accounted it on March 31, 2007, based on valuations made by professionally qualified independent Valuers
at market value. The net appreciation of Rs.2063 91 00 Thousand arising on revaluation, being the difference
between the net book value of Rs.529 02 00 Thousand and revalued amount of Rs.2592 93 00 Thousand as on
March 31, 2007, has been credited to Revaluation Reserve.

7.

Segment Reporting

- , .
, ,
17 .
. :
.
The Bank operates in three segments Wholesale Banking, Retail Banking and Treasury Services. These segments
have been identified in line with AS 17 on Segment Reporting after considering the nature and risk profile of the
products and services, the target customer profile, the organization structure and the internal reporting system
of the Bank. The Bank has disclosed business segment as the Primary Segment. Since the Bank operates in India,
138

Industrial Development Bank of India Limited

()/ Schedules forming part of Consolidated Accounts (Contd.)
the Bank is considered to operate only in the domestic segment and as such there are no reportable geographical
segments

, ,
.
.
Segment revenue, results, assets and liabilities include the amounts identifiable to each of the segments as also
amounts allocated, as estimated by the management. Assets and liabilities that cannot be allocated to identifiable
segments are grouped under unallocated assets and liabilities.
( . / Rs. '000)

Sr.
No.

Particulars

/ Segment Revenue

31 2007

31 2006

Year ended
March 31, 2007

Year ended
March 31, 2006

/ Wholesale Banking

6064,81,30

6006,50,00

/ Retail Banking

2194,88,46

1403,54,95

/ Treasury

2452,18,31

1396,19,49

/ Others

46,91,71

22,86,00

/ TOTAL

10758,79,78

8829,10,45

:- - / Less :- Inter-segment revenue

3241,97,68

2014,39,08

/ Net income from operations

7516,82,10

6814,71,37

/ Wholesale Banking

321,47,07

353,99,10

/ Retail Banking

225,04,36

158,12,69

/ Treasury

85,16,16

68,36,16

/ Others

13,80,86

22,78

/ TOTAL

645,48,44

580,70,73

645,48,44

580,70,73

/ Income taxes

57,16,95

36,79,10

/ Net profit

588,31,49

543,91,63

77361,72,00

72250,74,34

- - / ()
Segment Results -Profit/(loss) before tax

:
Less : Other unallocable expenditure net of unallocable income

- / Total profit before tax

/ Segment assets
/ Wholesale Banking

139


()/ Schedules forming part of Consolidated Accounts (Contd.)
( . / Rs. '000)

31 2007

31 2006

Sr.
No.

Particulars

Year ended
March 31, 2007

Year ended
March 31, 2006

22074,63,64

13214,03,51

4082,09,48

2735,36,04

309,67,57

66,07,36

2112,36,40

2036,03,09

105940,49,09

90302,24,35

/ Wholesale Banking

72838,67,97

68403,79,12

/ Retail Banking

20585,54,69

12461,59,19

3994,13,33

2329,73,96

/ Others

(4,22,80)

448,11,29

/ Unallocated corporate liabilities

33,57,11

36,42,24

97447,70,29

83679,65,80

339,12,13

100,32,40

23,55,49

22,62,61

3,82

2,16

/ Others

3,01,49

12,97,80

/ TOTAL

365,72,92

135,94,97

/ Wholesale Banking

98,07,00

118,74,63

/ Retail Banking

25,29,13

25,33,23

17,45

69,12

/ Others

5,52,38

2,66,20

/ TOTAL

129,05,96

147,43,18

/ Retail Banking
/ Treasury
/ Others
/ Unallocated corporate assets
/ TOTAL ASSETS
4

/ Segment liabilities

/ Treasury

/ TOTAL LIABILITIES
5

/ Capital Expenditure
/ Wholesale Banking
/ Retail Banking
/ Treasury

/ Depreciation

/ Treasury

140

8.

-18 `` ''
:

8.

As required by Accounting Standard AS-18 Related Parties Disclosure, the disclosure of details pertaining to
related party transactions are as follows:

Industrial Development Bank of India Limited

()/ Schedules forming part of Consolidated Accounts (Contd.)
. / IDBI Ltd.
.
A.

Key Management Personnel:

.. ,

a.

Shri V. P. Shetty, Chairman & Managing Director

. .. ,
b.

Shri O. V. Bundellu, Deputy Managing Director

c.

Shri Jitender Balakrishnan, Deputy Managing Director

.
B.

Transactions with Key Management Personnel:

.. , : 19,55,761 . (6,13,176 .)
a.

Gross Salary including Perquisites: Rs.19,55,761 (Rs.6,13,176)

. : 1,64,167 . (10,829 .)
b.

Interest on loans: Rs.1,64,167 (Rs.10,829)

10,71,499 . (20,50,463 .)

c.

Outstanding balance of loans: Rs.10,71,499 (Rs.20,50,463)

C.

There are no transactions with relatives of Key Management Personnel.

. / IDBI Capital Market Services Ltd.

Key Management
Personnel

Nature of Transaction

( ,
)
,
,
( .
)

S. Muhnot
Managing Director

Remuneration (includes pay,

allowances and reimbursements)
Gratuity contribution
Pension scheme
contribution
Perquisites & benefits
(as reimbursements
to IDBI Ltd.)

2006-07

2005-06

( )

( )

(Rs. lakh)

(Rs. lakh)

10.20*
0.74

4.87
0.54

2.98

2.60

*
* Excluding arrears of salary paid during the year for the previous years.
141


()/ Schedules forming part of Consolidated Accounts (Contd.)
. / IDBI Homefinance Ltd.
/ Key Management Personnel:
, / Mr. Melwyn Rego, Managing Director and C.E.O
/ Transactions with Key Management Personnel:
, : 12,22,534 * (7,70,088 )
Gross Salary including Perquisites: Rs. 12,22,534* (Rs.7,70,088)
* .
* Excluding arrears of salary paid during the year for the previous years.

. / IDBI Gilts Ltd.

: .. , / Key Management Personnel: N.S.Venkatesh, Managing Director
- / Transactions with Key Management Personnel: NIL
- .
Joint Venture IDBI Fortis Life Insurance Company Ltd.

- 3,70,000

a)

Contribution to capital: Rs.3,70,000

. - 7,20,00,000

9.

b)

Advance for share capital: Rs.7,20,00,000

- 6,79,337

c)

Preliminary Expenses : Rs.6,79,337

()
Earnings per Share (EPS)

31 2007

31 2006

Particulars

Year ended
March 31, 2007

Year ended
March 31, 2006

588 33 21

543 91 63

72 43 54

72 31 57

() (.) / Earning per share (Basic) (Rs.)

: ( )

8.12

7.52

Add: Dilutive impact of employee stock options granted (in 000s)

3 47

10 74

72 47 01

72 42 31

8.12

7.51

10.00

10.00

( )
Net profit considered for EPS calculation (Rs. thousand)

( )
Weighted average number of equity shares considered for
basic EPS (in 000s)

( )
Weighted average number of equity shares considered
for diluted EPS (in 000s)

() (.) / Earnings per share (Diluted) (Rs.)

(.) / Face value per Equity share (Rs.)

142

Industrial Development Bank of India Limited

()/ Schedules forming part of Consolidated Accounts (Contd.)
10. -

, .
.
() . ( ) /
31 2007 ( ) .
(27300.00 ) / 31 2007
(10804.36 ) . 31 2007
298.53 ( ) .
ICMS has been raising Demand Loan under the scheme of Liquidity Support to Primary Dealers and availing
Liquidity Adjustment Facility, both from the Reserve Bank of India from time to time against the pledge of
Dated Govt. Securities and Treasury Bills. The Company has also been raising resources under Collateralised
Borrowing and Lending Obligations (CBLO) from the Clearing Corporation of India Ltd, against the pledge of
Dated Govt. Securities and Treasury Bills. The outstanding Demand Loan and Liquidity Adjustment Facility as
on March 31, 2007 is Rs. Nil (Rs. Nil) against the pledge of Dated Govt. Securities / Treasury Bills for face value
of Rs. Nil (Rs. Nil). The outstanding CBLO borrowing on March 31, 2007 is Rs. Nil lakhs (Rs. 10804.36 lakhs)
against the pledge of Dated Govt. Securities / Treasury Bills for face value of Rs. Nil lakhs (Rs. 27300.00 lakhs).
The outstanding CBLO lending as on March 31, 2007 is Rs. 298.53 lakhs (Rs. Nil)
11. . 80,00,00,000 ( 60,00,00,000 )

() . ,
16 2003 .4/2003 () 2001

-
.
During the year, IDBI Homefinance Ltd. has issued Unsecured Redeemable Non Convertible Subordinated
Bond in the nature of Debentures (NCD) amounting to Rs. 80,00,00,000 (Previous year Rs. 60,00,00,000/-)
on a private placement basis. Ministry of Finance & Company affairs, Department of Company Affairs, vide
their general circular no. 4/2003 dated 16.01.2003 clarified that no Debenture Redemption Reserve is required
in the case of privately placed debentures by Housing Finance Companies registered with National Housing
Bank under Housing Finance Companies (NHB) Directions 2001, and hence no Debenture Redemption Reserve
has been created by company for the above referred Non Convertible Subordinated Bond in the nature of
Debentures (NCD).
12. . () 7 2003 ( )

3 - .
. .
5,00,00,000 .

, .
For IDBI Home Finance Ltd, the erstwhile holding company Tata Finance Ltd. (TFL) has agreed to indemnify
company against any loan sanctioned upto September 7, 2003 (date of divesting the investment by TFL)
becoming a non performing asset within three years from the effective date. The claims in respect of the
above can be made by company only after completion of five years from the effective date. This indemnity
includes expenses related to recovery action and shortfall in the realisation of amount, subject to an overall

143


()/ Schedules forming part of Consolidated Accounts (Contd.)
cap of Rs. 5,00,00,000/-. Financial Statements are not adjusted to reflect any impact of this indemnity and will
be recognised as and when the amounts are indemnified.
13. -

,
- .
Additional statutory information disclosed in separate financial statements of the parent and the subsidiaries
having no bearing on the true and fair view of the consolidated financial statements and also the information
pertaining to the items which are not material have not been disclosed in the consolidated financial statement
in view of the general clarification issued by ICAI.
14. , .
Figures for the previous year have been regrouped and adjusted wherever considered necessary.
15. .
Figures in brackets pertain to the previous year.

144

Industrial Development Bank of India Limited

31 2007
[ ]
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2007
[Pursuant to the Listing Agreement with Stock Exchanges]

( / Rupees in 000s)

31 2007*

31 2006

Year ended
31-Mar-07*

Year ended
31-Mar-06

645 48 44

631 62 42

(178 45 39)
129 05 96

(5 95 85)
147 42 37

227 50 62

(206 97 21)

13 74 96

(13 96 12)

(1 15 98)
-------------------------------836 18 61
--------------------------------

(92 50)
-------------------------------551 41 23
--------------------------------

121 73 92

(275 07 73)

(10580 72 75)

(7577 33 74)

(1805 71 37)

583 45 55

(4684 98 55)

(2089 99 20)

17451 90 78

10748 49 10

(705 66 17)

(1589 87 55)

(153 03 87)
--------------------------------

(273 92 55)
--------------------------------

479 70 60
--------------------------------

77 15 11
--------------------------------

147 98 26
--------------------------------

(66 28 86)
--------------------------------

147 98 26
--------------------------------

(66 28 86)
--------------------------------

Cash flow from Operating Activities

Net profit before tax and extra-ordinary items

Adjustments for

()/ ()
(Profit) / Loss on sale of Fixed Assets ( Net )
/ Depreciation

/ /
Provisions/Write off of Loans/Investments & other provisions

()
VRS Expenses incurred (net)

Staff welfare Expenses

()/
Adjustments for (increase)/decrease in

Investments

Advances

Other Assets

/ ()
Adjustments for increase/(decrease) in

Borrowings

Deposits

Other liabilities and provisions

()
Payment of taxes ( Net )

/
Net Cash used in/generated from Operating activities

Cash Flow from Investing activities

/ ()
Purchase of/Advance towards fixed assets ( Net )

/
Net cash used in / raised from Investing activities

145


( / Rupees in 000s)
31 2007*

31 2006

Year ended
31-Mar-07*

Year ended
31-Mar-06

2 58 60

8 85 48

1421 36 11

(73 48 00)

(124 84 43)

(83 91 19)

(150 55 01)
--------------------------------

--------------------------------

1148 55 27
--------------------------------

(148 53 71)
--------------------------------

1776 24 13

(137 67 46)

5551 97 53

5689 64 99

-------------------------------7328 21 66
============

-------------------------------5551 97 53
============

213 32 23

117 56 25

7114 89 43

5434 41 28

Cash Flow from Financing activities

Issue of Equity Shares

( )
Issue of subordinated debt ( Net of repayments made )

Dividend and dividend tax paid

Net Consideration for amalgamation of UWB

/
Net cash used in / raised from Financing activities

/ ()
NET INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS

OPENING CASH & CASH EQUIVALENTS

CLOSING CASH & CASH EQUIVALENTS

:
of which : Cash in Hand

Balance with RBI and other Banks

* 3 06 .
* After taking into consideration the impact of the UWB merger with effect from 3rd Oct., 06.

.
Figures for the previous period have been regrouped, whenever considered necessary.

BY ORDER OF THE BOARD

(. )

(. . )

( )

(K. Narasimha Murthy)

(O.V. Bundellu)

(Jitender Balakrishnan)

Director

Dy. Managing Director

Dy. Managing Director

(. . )
(V. P. Shetty)

Chairman & Managing Director

As per our report attached of even date

For Suresh Chandra & Associates

Chartered Accountants

Chartered Accountants

( . )

( )

(Shivji K. Vikamsey)

(Ved Prakash Bansal)

Partner

Partner

. 2242

. 500369

Membership No. 2242

Membership No. 500369

, 20 2007
Mumbai, April 20, 2007
146

For Khimji Kunverji & Co.

(. . )
(L. P. Aggarwal)

-
Corporate Head - Financial Officer

APPENDICES
Appendix I : Auditors Report to the Members of
IDBI Capital Market Services Limited
1.

2.

3.

4.

We have audited the attached Balance Sheet of

IDBI Capital Market Services Limited as at 31st
March 2007 and also the Profit & Loss Account
for the year ended on that date annexed thereto
and the cash flow statement for the year ended
on that date. These financial statements are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing
standards generally accepted in India. Those
Standards require that we plan and perform the
audit to obtain reasonable assurance about whether
the financial statements are free of material
misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audit provides
a reasonable basis for our opinion.
As required by the Companies (Auditors Report)
Order, 2003 issued by the Central Government
of India in terms of sub-section (4A) of section
227 of the Companies Act, 1956, we enclose in
the Annexure a statement on the matters specified
in paragraph 4 and 5 of the said order.

report are in agreement with the books of

account;
(d) In our opinion the Balance Sheet, Profit and
Loss Account and Cash Flow Statement are
prepared in accordance with Accounting
Standards issued by the Institute of Chartered
Accountants of India referred to in section
211(3C) of the Companies Act, 1956.
(e) On the basis of the written representations
received from the Directors, as on March
31st, 2007 and taken on record by the Board
of Directors we report that none of the
Directors is disqualified as on March 31st, 2007
from being appointed as a director of the
Company under clause (g) of sub-section (1)
of section 274 of the Companies Act, 1956.
(f)

In our opinion and to the best of our

information and according to the explanations
given to us, the said Financial Statements, read
with the notes thereon give the information
required by the Companies Act, 1956 in
the manner so required and give a true and
fair view in conformity with the accounting
principles generally accepted in India:
i)

in the case of the Balance Sheet of the

state of affairs of the Company as at
31st March, 2007;

Further to our comments in the Annexure

referred to in paragraph 3 above we report that:

ii)

(a) We have obtained all the information and

explanations which to the best of our
knowledge and belief were necessary for
the purposes of our audit;

in the case of the Profit and Loss

Account, of the loss for the year ended
on that date; and

iii)

in the case of Cash Flow Statement, of

the cash flows for the year ended on
that date.

(b) In our opinion, proper books of account

as required by law have been kept by
the company so far as appears from our
examination of such books;
(c) The Balance Sheet, Profit and Loss Account
and Cash Flow Statement referred to in this

For B. D. Jokhakar & Co.

Chartered Accountants
Place : Mumbai
Dated : 17.04.2007

Raman Jokhakar
Partner
Membership No. 103241
147

Annexure to the Auditors Report on IDBI Capital Market Services Ltd.

(Referred to in paragraph 3 of our report of even date)
1.

(b) The Company has not taken any secured or

unsecured loans, from companies, firms or
other parties listed in the register maintained
under Section 301 of the Companies Act,
1956 except repayment of the outstanding
loans taken in earlier years from 2 parties to
the extent of Rs. 48 crores.

(a) The Company has maintained proper records

showing full particulars including quantitative
details and situation of fixed assets on the
basis of information available.
(b) According to the information and explanations
given to us, the fixed assets have been physically
verified by the management once during the
year, which in our opinion is reasonable, having
regard to the size of the Company and nature
of the assets. No material discrepancies were
noticed on such verification.

(c) The rate of interest and other terms and

conditions, in our opinion, of such loan are
not prima facie prejudicial to the interest of
the company.

(c) During the year the company has not disposed

off a substantial part of its fixed assets.
2.

In respect of securities held as stock-in-trade:

(a) The securities held as stock-in-trade in
Subsidiary General Ledger Account of the
Reserve Bank of India, settlement guarantee
fund and in depository account have been
confirmed by the Reserve Bank of India,
Clearing Corporation of India and Depository
Participant respectively as at 31st March 2007.
In our opinion the frequency of verification /
confirmation is reasonable.
(b) In our opinion, the procedures of physical
verification / confirmation of securities held as
stock-in-trade followed by the management
are reasonable and adequate in relation to the
size of the Company and the nature of the
business.
(c) On the basis of our examination of the
records of the company relating to securities
held as stock-in-trade, in our opinion the
Company has maintained proper records of
stock-in-trade and no material discrepancies
between the book records and the physical
inventory have been noticed.

3.

4.

In our opinion, and according to the information

and explanation given to us, there are adequate
internal control procedures commensurate with
the size of the Company and the nature of its
business for the purchase and sale of securities
held as stock-in-trade and purchase of fixed assets.
In our opinion and according to the information
and explanations given to us, there is no continuing
failure to correct major weaknesses in internal
control.

5.

To the best of our knowledge and belief and as

explained to us, the company has not entered into
transactions required to be entered in the Register
pursuant of section 301 of the Act except in the
normal course of business which are reasonable
having regard to the prevailing market prices.

6.

In our opinion, and according to the information

and explanations given to us, the Company has
not accepted any deposits from public.

7.

On the basis of the reports made by the internal

auditors to the management, in our opinion, the
internal audit system is commensurate with the
size of the company and the nature of its business.

8.

The Rules made by the Central Government for

the maintenance of cost records under Section
209 (1) (d) of the Companies Act, 1956 are not
applicable to the company.

In respect of Loans:
(a) We are informed that the Company has not
granted any loans, secured or unsecured, to
companies, firms or other parties listed in
the register maintained under Section 301 of
the Companies Act, 1956.

148

(d) In respect of above loans the payment of

principal amount and interest are as stipulated
and regular.

9.

(a) Based on our examinations of books of

account and records produced, the company
has been regular in depositing undisputed
statutory dues payable in respect of Provident
Fund, Income-tax, Wealth Tax, Service tax,
cess and other material statutory dues as
applicable with the appropriate authorities
during the year. There were no arrears as at
31st March, 2007 for a period of more than six
months from the date they became payable.
(b) According to information and explanations
given to us, there are no disputed dues in
respect of income tax, wealth tax, and service
tax that have not been deposited.

10. The Company is registered for more than five

years and its accumulated losses at the end of
financial year are less than the fifty percent of its
net worth. Company has made cash losses in the
current financial year but not in the immediately
preceding financial year.

given to us, no term loan was obtained by the

Company during the year.
17. According to the Cash Flow Statement and other
records examined by us and the information and
explanations given to us, on an overall basis, no
funds were raised on short term basis, which have
been used during the year for long term
investments except the use of working capital funds
for purchase of fixed assets.
18. According to the information and explanations
given to us, no allotment of shares has been made
by the company.
19. The Company has not issued any secured
debentures during the year.
20. The Company has not raised any money through
a public issue during the year.
21. According to the information and explanations
given to us, no fraud on or by the Company has
been noticed or reported during the year.

11. According to the information and explanations

given to us the company has not defaulted in
repayment of dues to a financial institution, bank
or debenture holder.
12. According to the information and explanations
given to us the Company has not granted loans
and advances on the basis of security by way of
pledge of shares, debentures and other securities.
13. The Company is not a chit fund or a nidhi mutual
benefit fund /society. Therefore, the provisions of
clause 4(xiii) of the Companies (Auditors Report)
Order 2003, is not applicable to the Company.
14. The Company has kept adequate records of its
transactions and contracts in shares, securities and
other investments and timely entries have been
made therein. The shares, securities, and other
investments are held in the name of the Company
except to the extent of exemption granted under
section 49 of the Act.
15. According to the information and explanations
given to us, the Company has not given any
guarantee for loans taken by others from banks
or financial institutions.
16. To the best of our knowledge and belief and
according to the information and explanations

Further as required by the Non Banking Financial

Companies Auditors Report (Reserve Bank)
Directions 1998 we report that :
1.

The Company has been granted certificate of

Registration No. 13.01273 on July 29, 1999.

2.

The Company has not accepted public deposits

failing under the preview of the Non-Banking
Financial Companies Acceptance of Public Deposits
(Reserve Bank) Directions, 1998 since its
registration as NBFC on July 29, 1999.

3.

The Board of Directors has passed a resolution

on April 17, 2006 to accept any public deposits.

4.

The Company has complied with prudential norms

relating to income recognition, accounting
standards, asset classification and provisioning for
bad and doubtful debts as applicable to it.
For B. D. Jokhakar & Co.
Chartered Accountants

Place : Mumbai
Dated : 17.04.2007

Raman Jokhakar
Partner
Membership No. 103241
149

Appendix II : Auditors Report to the Members of

IDBI Homefinance Ltd.

1.

2.

3.

4.

We have audited the attached Balance Sheet of

Ltd., as at 31st March 2007,
IDBI Homefinance Ltd.
the Profit and Loss Account and also the Cash
Flow Statement for the year ended on that date
annexed thereto. These financial statements are
the responsibility of the Companys management.
Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with the
auditing standards generally accepted in India. Those
Standards require that we plan and perform the
audit to obtain reasonable assurance about whether
the financial statements are free of material
misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audit provides
a reasonable basis for our opinion.
As required by the Companies (Auditors Report)
Order, 2003 issued by the Central Government
of India in terms of sub-section (4A) of section
227 of the Companies Act, 1956, we enclose in
the Annexure a statement on the matters specified
in paragraphs 4 and 5 of the said Order.

In our opinion, the Balance Sheet, Profit and

Loss Account and Cash Flow Statement dealt
with by this report comply with the
mandatory accounting standards referred to
in sub section (3C) of section 211 of the
Companies Act, 1956;

v.

On the basis of written representation

received from the directors, as on 31st March
2007 and taken on record by the Board of
Directors, we report that none of the
directors is disqualified as on 31st March 2007
from being appointed as a Director in terms
of clause (g) of sub-section (1) of section 274
of the Companies Act, 1956;

In our opinion and to the best of our information

and according to the explanations given to us, the
said accounts read together with the significant
accounting policies and notes thereon, give the
information required by the Companies Act, 1956,
in the manner so required and give a true and fair
view in conformity with the accounting principles
generally accepted in India:a)

in the case of the Balance Sheet, of the state

of affairs of the company as at 31st March
2007;

b)

in the case of the Profit and Loss Account, of

the Profit for the year ended on that date;
and

c)

in the case of Cash Flow Statement, of the

cash flows for the year ended on that date.

Further to our comments in the Annexure

referred to in paragraph 3 above, we report that:i.

We have obtained all the information and

explanations, which to the best of our
knowledge and belief were necessary for the
purposes of our audit;

ii.

In our opinion, proper books of account, as

required by law, have been kept by the
company so far as appears from our
examination of those books;

iii.

150

5.

iv.

The Balance Sheet, Profit and Loss Account and

Cash Flow Statement dealt with by this report
are in agreement with the books of account;

For CHATURVEDI & SHAH

Chartered Accountants
R. KORIA
(Partner)
Membership No: 35629
Place: Mumbai
Date: 17 April, 2007

Annexure to Auditors Report on IDBI Homefinance Ltd.

(Referred to in paragraph 3 of our report of even date)
i

In respect of its fixed assets:

iv.

In our opinion and according to the information

and explanations given to us, there are adequate
internal control procedures commensurate with
the size of the company and the nature of its
business with regard to purchases of fixed assets
and sale of services. During the course of audit
we have not observed any continuing failure to
correct major weaknesses in internal controls. The
activities of the Company do not involve purchase
of inventory and sale of the goods.

v.

In respect of transactions entered in the register

maintained in pursuance of Section 301 of the
Companies Act, 1956:

(a) The Company has maintained proper records

showing full particulars, including quantitative
details and situation of fixed assets.
(b) As explained to us, all the fixed assets have
been physically verified by the management
during the year in accordance with the
programme of verification, except in respect
of assets lying at employees residence as hard
furnishing assets for which confirmations have
been obtained at the year-end, which in our
opinion is reasonable, considering the size
and the nature of its assets. According to the
information and explanations given to us, the
discrepancies noticed on such verification
were not material and same have been dealt
with in the books of account.

(a) To the best of our knowledge and belief and

according to the information and explanations
given to us, transactions that needed to be
entered in the register have been so entered.

(c) In our opinion and according to the

information and explanations given to us, the
Company has not disposed off substantial part
of fixed assets during the year and the going
concern status of the Company is not affected.
ii.

iii.

The nature of the business of the Company is such

that provisions of clause 4 (ii) of the Companies
(Auditors Report) (Order), 2003 is not applicable
to the Company.
In respect of loans, secured/unsecured granted or
taken by the Company to /from Companies , firms
or other parties covered in the Register maintained
under section 301 of the Companies Act, 1956:
(a) The Company has not granted any loans to
such parties.
(b) The Company has taken loans from a company.
The maximum amount outstanding during the
year was Rupees Three Hundred Ten Crores
and year-end balance of such loans was Rupees
Two Hundred Fifty Five Crores
(c) According to information and explanations
given to us, we are of the opinion that rate
of interest and other terms and conditions
of such loans are not prima facie prejudicial
to the interest of the Company.
(d) The company is regular in payment of
principal and interest as per the terms of the
loans taken by it.

(b) According to the information and

explanations given to us, these contract or
arrangements with IDBI Ltd. are mainly in
the nature of reimbursement of cost incurred
by IDBI Ltd. for IDBI Homefinance Limited
and vice-versa and hence the prices for these,
are reasonable.
v.

In respect of transactions entered in the Register

vi.

The Company has not accepted deposits from public

and hence directions issued by Reserve Bank of
India and the provisions of Sections 58A and 58AA
or any other relevant provisions of the Companies
Act, 1956 and the rules framed thereunder are not
applicable for the year under audit.

vii. In our opinion, the Company has an internal audit

system commensurate with its size and nature of
its business.
viii As the company is not a manufacturing concern,
the clause 4 (viii) of the Companies (Auditors
Report) Order, 2003 is not applicable.
ix.

According to the information and explanations

given to us in respect of statutory and other dues:
(a) The company has been regular in depositing
with appropriate authorities undisputed
statutory dues, including Provident Fund,
Employees State Insurance, Income-tax,
Wealth-tax, Service tax and other statutory
151

dues. During the year under audit, there were

no dues against Investor Education and
Protection Fund, Sales tax, Custom Duty,
Excise duty and Cess.
(b) There are no undisputed amounts payable in
respect of the aforesaid statutory dues as at
31st March 2007 for a period of more than
six months from the date they became
payable.
(c) According to the information and
explanations given to us, there are no dues
of sales tax, income tax, custom tax, wealth
tax, service tax, excise duty or cess which
have not been deposited on account of any
dispute.
x.

The Company neither have accumulated losses at

the end of the year, nor incurred any cash losses
during the financial year covered by our audit or
in the immediately preceding financial year.

xi.

Based on audit procedures and according to the

information and explanations given by the
management, we are of the opinion that the
Company has not defaulted in repayment of dues
to financial institutions, banks and debenture
holders.

xii. In our opinion and according to the explanations

given to us and based on the information available,
no loans and advances have been granted by the
Company on the basis of security by way of pledge
of shares, debentures or other securities.
xiii. In our opinion, the Company is not a chit fund or
a nidhi / mutual benefit fund / society. Therefore,
the provisions of clause 4 (xiii) of the Companies
(Auditors Report) Order, 2003 is not applicable
to the company.
xiv. Based on our examination of the records and the
information and explanations given to us, the
Company has not dealt/traded in shares, debentures
and other investments during the year. As informed
and explained to us, proper records have been
maintained of the transactions and contracts relating
to dealing/trading in securities (Mutual Funds) and
timely entries have been made therein. There are
no securities as on Balance Sheet date.
xv. As per the information and explanations given to
us, the Company has not given any guarantee for
loans taken by others from banks and financial
152

institutions.
xvi. To the best of our knowledge and belief and
according to the information and explanations
given to us, the term loans raised during the year
and those, which were outstanding at the beginning
of the year, were prima facie been either used for
the purposes for which they were raised or
pending utilisation been temporary placed as fixed
deposits with banks.
xvii. According to the information and explanations
given to us and on an overall examination of the
Balance sheet of the Company as at 31st March
2007, related information as made available to us
and represented to us by the management, we
are of the opinion that the fund raised on short
term basis by way of commercial papers and bank
borrowings aggregating to Rs. 762,99,58,810 /have been utilized for long term purpose for
housing loans. All other short-term borrowings
have not been utilized for long-term purposes.
xviii. The Company has not made any preferential
allotment of shares during the year, however the
company has allotted shares to its 100% holding
Company.
xix. During the year, the Company has issued
debentures, which are unsecured, and hence the
question of creating security does not arise.
xx. The Company has not raised any money by way
of public issue during the year.
xxi. To the best of our knowledge and belief and
according to the information and explanations
given to us, no material fraud on or by the company
was noticed or reported during the year, although
there have been few instances of loans becoming
doubtful of recovery consequent upon fraudulent
misrepresentation by borrowers, the amount
whereof are not material in the context of the
size of the Company and nature of its business
and which have been provided for.
For CHATURVEDI & SHAH
Chartered Accountants
R. KORIA
(Partner)
Membership No: 35629
Place: Mumbai
Date: 17 April, 2007

Appendix III : Auditors Report to the Members of

IDBI Intech Limited
1.

2.

3.

4.

We have audited the attached balance sheet of

IDBI Intech Limited as at March 31, 2007, and
also the profit and loss account for the year ended
on that date annexed thereto. These financial
statements are the responsibility of the Companys
management. Our responsibility is to express an
opinion on these financial statements based on our
audit.
We conducted our audit in accordance with the
auditing standards generally accepted in India. Those
Standards require that we plan and perform the
audit to obtain reasonable assurance about whether
the financial statements are free of material
misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit
also includes assessing the accounting principles
used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. We believe that our audit provides
a reasonable basis for our opinion.
As required by the Companies (Auditors Report)
Order, 2003 issued by the Central Government
of India in terms of sub-section (4A) of section
227 of the Companies Act, 1956, we enclose in
the Annexure a statement on the matters specified
in paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure
referred to above, we report that:
i.

ii.

iii.

We have obtained all the information and

explanations, which to the best of our
knowledge and belief were necessary for the
purposes of our audit;
In our opinion, proper books of account as
required by law have been kept by the
Company so far as appears from our
examination of those books;
The Balance Sheet and Profit and Loss
Account and Cash Flow Statement dealt with
by this report are in agreement with the
books of account;

iv.

In our opinion, the balance sheet and profit

and loss account dealt with by this report
comply with the accounting standards
referred to in sub-section (3C) of section 211
of the Companies Act, 1956;

v.

On the basis of written representations

received from the directors, as on March 31,
2007 we report that none of the directors is
disqualified as on March 31, 2007 from being
appointed as a director in terms of clause (g)
of sub-section (1) of section 274 of the
Companies Act, 1956;

vi.

In our opinion and to the best of our

information and according to the explanations
given to us, the said accounts read together
with the notes thereon give the information
required by the Companies Act, 1956, in the
manner so required and give a true and fair
view in conformity with the accounting
principles generally accepted in India:
a.

In the case of the Balance Sheet, of the

state of affairs of the Company as at
March 31, 2007;

b.

In the case of the Profit and Loss

Account, of the profit for the year ended
on that date; and

c.

In the case of Cash Flow statement, of

the cash flows for the year ended on
that date.

For RMJ & Associates

( formerly Desai Bhavsar & Associates)
Chartered Accountants

(Rakesh Upadhyaya)
Partner
Membership Number: 46271
Mumbai
Date : April 11, 2007
153

Annexure to the Auditors Report on

IDBI Intech Limited
( Referred to in paragraph 3 of our report of even date )

1.

a.

The Company has maintained proper records

showing full particulars including quantitative
details and situation of fixed assets.

b.

As informed and represented to us, fixed

assets have been physically verified by the
management during the year and no material
discrepancies were noticed on such
verification.

c.

4.

5.

154

The Company has neither granted nor taken any

loans, secured or unsecured, to or from
companies, firms or other parties covered in the
register maintained under section 301 of the
Companies Act, 1956. As the Company has not
granted/taken any loans clause (iii)(b), (iii)(c),
(iii)(d), (iii)(f) and (iii)(g) of paragraph 4 of the said
order are not applicable to the Company.
In our opinion and according to the information
and explanations given to us, there are adequate
internal control procedures commensurate with
the size of the Company and the nature of its
business with regard to purchase of fixed assets
and sale of goods and services. During the course
of our audit, we have not observed any continuing
failure to correct major weakness in internal
controls.
a.

b.

According to the information and

explanations given to us, we are of the opinion
that the transactions that need to be entered
into the register maintained under section

The transactions made in pursuance of such

contracts or arrangements have been made
at the prices which are reasonable having
regards to the prevailing market prices at the
relevant time.

6.

In our opinion and according to the information

and explanations given to us, the Company has
not accepted any deposits from the public within
the meaning of section 58A and 58AA of the
Companies Act, 1956 and the rules framed there
under.

7.

The Company has appointed a firm of Auditors to

carry out the internal audit. The internal audit is
commensurate with the size of the company and
the nature of its business.

8.

The Central Government has not prescribed

maintenance of cost records under section
209(1)(d) of the Companies Act, 1956 for any of
the activities of the Company.

9.

a.

The Company is generally regular in

depositing with appropriate authorities
applicable undisputed statutory dues including
Provident Fund, ESIC, Income-tax and other
material statutory dues applicable to it.
However, there were few delays observed
in deposit of the Provident Fund dues and
Navi Mumbai Municipal Cess.

b.

According to the information and

explanations given to us, no undisputed
amounts payable in respect of Income tax,
Sales tax, Customs duty and other material
statutory were outstanding, as at March 31,
2007 for a period of more than six months
from the date they became payable. Except
for employers contribution to Provident
Fund of Rs. 1,463/- and Navi Mumbai
Municipal Cess of approximately Rs. 2,200/-

In our opinion and according to the

information and explanations given to us, the
Company has not disposed off a substantial
part of fixed assets during the year thereby
affecting the going concern assumption.

2. The Company is a service company, primarily

rendering information technology services.
Accordingly it does not hold any physical
inventories. Thus, paragraph 4(ii) of the order is
not applicable.
3.

301 of the Companies Act, 1956 have been

so entered.

. The said outstanding dues have been

subsequently paid on 7th April, 2007.

guarantee for loans taken by others from bank or

financial institutions.

According to the records of the Company,

there are no dues of Sales tax, Income-tax,
wealth tax, excise duty, service tax, cess and
Customs duty which have not been deposited
on account of any dispute.

16. According to the information and explanations

given to us, the Company has not raised any term
loans and therefore paragraph 4(xvi) of the said
Order relating to application of term loan for the
purpose for which it was obtained is not applicable.

10. In our opinion the accumulated losses of the

Company as at 31st March, 2007 are not more
than 50% of its net worth. During the year,
Company has not incurred the cash loss.
However, in the immediately preceding financial
year, the Company had incurred the cash loss of
Rs. 337.21 lacs.

17. The Company has not raised any funds on short

term basis.

c.

11. The Company did not have any outstanding dues

to any financial institution, banks or debenture
holders during the year.
12. The Company has not granted any loans and
advances on the basis of security by way of pledge
of shares, debentures and other securities and
therefore paragraph 4(xii) of the said Order
relating to maintenance of documents and records
is not applicable.
13. In our opinion, the Company is not a chit fund or
a nidhi/mutual benefit fund/society. Therefore the
provisions of paragraph 4(xiii) of the said Order
relating to compliance with the provisions of
special statute relevant to chit fund and nidhi/
mutual benefit/societies are not applicable to the
Company.
14. In our opinion, the Company is not dealing in or
trading in shares, securities, debentures and other
investments. Accordingly, provisions of paragraph
4(xiv) of the said Order relating to maintenance
of proper records, timely entries and holding
investments in own name are not applicable to
the Company.
15. According to the information and explanations
given to us, the Company has not given any

18. According to the information and explanations

given to us, the Company has not made any
preferential allotment of shares to parties and
companies covered in the register maintained
under section 301 of the Companies Act, 1956.
19. According to the information and explanations
given to us, during the year covered by our audit
report, the Company has not issued any
debentures.
20. According to the information and explanations
given to us, the Company has not made any public
issue during the year and accordingly paragraph
4(xx) of the said Order relating to end use of
money raised is not applicable.
21. According to the information and explanations
given to us, no fraud on or by the Company has
been noticed or reported during the course of
our audit.

For RMJ & Associates

( formerly Desai Bhavsar & Associates)
Chartered Accountants

(Rakesh Upadhyaya)
Partner
Membership Number: 46271
Mumbai :
Date : 11 April, 2007

155

Appendix IV : Auditors Report to the Members of

IDBI Gilts Limited
We have audited the attached Balance Sheet of IDBI
GILTS LTD as at 31ST March, 2007, and the Cash flow
Statement of the Company for the year ended on that
date attached thereto. These financial statements are
the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
1.

2.

3.

We conducted our audit in accordance with

generally accepted auditing standards in India.
Those Standards require that we plan and perform
the audit to obtain reasonable assurance about
whether the financial statements are free of
material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements.
An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall
financial statement presentation. We believe that
our audit provides a reasonable basis for our
opinion.
This report does not include a statement on the
matters specified in paragraphs 4 of the Companies
(Auditors report) Order, 2003 issued by the
Department of Companies Affairs in terms of sub
section (4A) of section 227 of the companies Act,
1956, since the company has not commenced its
trading operations, hence paragraph 4 and 5 of
the said CARO, 2003 are not applicable.
Further to our comments in paragraph 2 above,
we report that:

(c) in our opinion the Balance Sheet and cash

flow statement dealt with by this report are
in agreement with the books of accounts
(d) in our opinion, the Balance Sheet and the
Cash Flow Statement dealt with by this report
are in compliance with the Accounting
Standards referred to in Section 211 (3C) of
the Companies Act, 1956, to the extent
applicable;
(e) On the basis of written representation
received from the directors, as on 31st March
2007 and taken on record by the Board of
Directors, we report that none of the
directors is disqualified as on 31st March,
2007 from being appointed as a director in
term of the clause (g) of sub section (1) of
section 274 of the Companies Act, 1956.
(f)

In our opinion and to the best of our

information and according to the explanations
given to us, the accounts together with the
notes thereon, give the information required
by the Companies Act, 1956, in the manner
so required and give a true and fair view in
conformity with the accounting principles
generally accepted in India:
(i)

in the case of the Balance Sheet, of the

state of affairs of the Company as at 31st
March, 2007;

(ii) in the case of the Cash Flow Statement,

of the cash flows for the year ended on
that date.

(a) we have obtained all the information and

explanations, which to the best of our
knowledge and belief were necessary for the
purposes of our audit;
(b) in our opinion, proper books of account as
required by law have been kept by the
Company, so far as it appears from our
examination of the books;

156

For A.T.JAIN & Co.,

Chartered Accountants
S.T. Jain
Partner
Membership No: 33809
Place : MUMBAI
Date : 18.04.2007