BRIEF HISTORY OF HDFC BANK:Housing Development Finance Corporation Limited, more popularly known as HDFC Bank Ltd,was established in the year 1994, as a part of the liberalization of the Indian Banking Industry byReserve Bank of India (RBI). It was one of the first banks to receive an in principle approvalfrom RBI, for setting up a bank in the private sector. The bank was incorporated with the nameHDFC Bank Limited, with its registered office in Mumbai. The following year, it started itsoperations as a Scheduled Commercial Bank. Today, the bank boasts of as many as 1412branches and over 3275 ATMs across India.AmalgamationsIn 2002, HDFC Bank witnessed its merger with Times Bank Limited (a private sector bankpromoted by Bennett, Coleman & Co. / Times Group). With this, HDFC and Times became thefirst two private banks in the New Generation Private Sector Banks to have gone through amerger. In 2008, RBI approved the amalgamation of Centurion Bank of Punjab with HDFCBank. With this, the Deposits of the merged entity became Rs. 1,22,000 crore, while theAdvances were Rs. 89,000 crore and Balance Sheet size was Rs. 1,63,000 crore..Tech-SavvyHDFC Bank has always prided itself on a highly automated environment, be it in terms ofinformation technology or communication systems. All the braches of the bank boast of onlineconnectivity with the other, ensuring speedy funds transfer for the clients. At the same time, thebanks branch network and Automated Teller Machines (ATMs) allow multi-branch access toretail clients. The bank makes use of its up-to-date technology, along with market position andexpertise, to create a competitive advantage and build market share.Capital StructureAt present, HDFC Bank boasts of an authorized capital of Rs 550 crore (Rs5.5 billion), of thisthe paid-up amount is Rs 424.6 crore (Rs.4.2 billion). In terms of equity share, the HDFC Groupholds 19.4%. Foreign Institutional Investors (FIIs) have around 28% of the equity and about17.6% is held by the ADS Depository (in respect of the banks American Depository Shares(ADS) Issue). The bank has about 570,000 shareholders. Its shares find a listing on the StockExchange, Mumbai and National Stock Exchange, while its American Depository Shares arelisted on the New York Stock Exchange (NYSE), under the symbol HDB.Products & services:Personal Banking:Savings Accounts, Salary Accounts, Current Accounts, Fixed Deposits, Demat Account, SafeDeposit Lockers, Loans, Credit Cards, Debit Cards, Prepaid Cards, Investments & Insurance,
Forex Services, Payment Services, Net Banking , Insta Alerts, Mobile Banking , Insta Query ,ATM & Phone Banking.NRI BankingRupee Current Accounts, Rupee Savings Accounts, Rupee Fixed Deposits ,Foreign CurrencyDeposits, Accounts for Returning Indians, Quickremit (North America, UK, Europe, SoutheastAsia), IndiaLink (Middle East, Africa), Cheque LockBox, Telegraphic / Wire Transfer, FundsTransfer through Cheques / DDs / TCs, Mutual Funds, Private Banking, Portfolio InvestmentSchemes, Loans, Payment Services, Net Banking , Insta Alerts , Mobile, Banking, Insta Query ,ATM ,Phone Banking.SHAREHOLDING PATTERN AS ON 30TH SEPTEMBER 2009:The shareholders are divided in to two categories : shareholding of promoter and promoter group public shareholdingUnder the first category (shareholding of promoter and promoter group) we have subcategoriesthey are: Indian ForeignUnder Indian, the corporate bodies are the promoters(total no.of shareholders are four)who holds82443000 shares which accounts to 19.29% of the total shares. There are no foreign promotersin this company. There has not been any change in the total no of shares when compared with theprevious two quarters.Under the second category (public shareholding) we have sub divisions they are : Institutions Non-institutionsUnder the institutions , the foreign institutional investors(total no of shareholders are 522) holdsthe major part i.e 120326279 shares which accounts to 28%.When compared with the previoustwo quarters it has been increased by 3%.The next major shareholders are the insurancecompanies(total no of shareholders are 27) that holds 33661939 shares which accounts to 7.88 %and when compared with previous two quarters there has been a negligible increase. Theinstitutional shareholders sum up to 40.62%.The non institutions are the other investors like the private corporate bodies who holds 39281016shares which accounts to 9.18% of the total shares and the others hold 80595303 shares whichaccounts to 18.86%.The shares with the general public is 45148741 which accounts to 10.565
and when compared with the previous two quarters there has been a slight decrease. The total noof shares are 427348828 and all the percentages sum up to 100. PERCENTAGE OF PARTICULARS SHARES PROMOTER GROUP 19.2913 MUTUAL FUNDS/UTI 4.5877 OTHERS 0.0903 INSURANCE COMPANIES 7.788 FOREIGN INSTITUTIONAL INVESTORS 28.1559 BODIES CORPORATE 9.1916 INDIVIDUALS- UPTO 1 LAKH 8.0176 INDIVIDUALS- ABOVE 1 LAKH 2.5471 NON RESIDENTS 1.4718 DEPOSITORY RECIEPTS 18.859 PERCENTAGE OF SHARES NON DEPOSITORY PROMOTER RESIDENTS RECIEPTS GROUP 1% 19% 19% MUTUAL INDIVIDUALS- FUNDS/UTI ABOVE 1 LAKH 5% 3% OTHERS INDIVIDUALS- 0% INSURANCE UPTO 1 LAKH COMPANIES 8% 8% BODIES CORPORATE 9% FOREIGN INSTITUTIONAL INVESTORS 28%
PROMOTER:HDFC is Indias premier housing finance company and enjoys an impeccable track record inIndia as well as in international markets. Since its inception in 1977, the Corporation hasmaintained a consistent and healthy growth in its operations to remain the market leader inmortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC hasdeveloped significant expertise in retail mortgage loans to different market segments and alsohas a large corporate client base for its housing related credit facilities. With its experience in thefinancial markets, a strong market reputation, large shareholder base and unique consumerfranchise, HDFC was ideally positioned to promote a bank in the Indian environment.CONTENTS OF THE ANNUAL REPORT-Director’s report-Service quality initiatives include the audit of services and improvement on the areas identified on thebasis of customer feedback on experiences at various touch-points. New elements were added andrenewed improvement schemes were installed using technology to ensure customer convenience, securityof transactions and reduce transaction cost.Risk Management & Portfolio Quality-The Bank in the course of its business is exposed to various risks, of which the most important are creditrisk, market risk (including liquidity risk and price risk) and operational risk. The identification,measurement, monitoring and control of risks remain key aspects of the Bank’s risk management system.Sound risk management supported by a balanced risk-reward trade-off is critical to achieving the Bank’sbusiness strategy for business and revenue growth. The Bank has distinct policies and processes in placefor the retail and wholesale businesses. TheINTERNAL AUDIT & COMPLIANCE-The Bank has Internal Audit & Compliance functions which are responsible for independently evaluatingthe adequacy of all internal controls and ensuring operating and business units adhere to internalprocesses and procedures as well as to regulatory and legal requirements. The audit function alsoproactively recommends improvements in operational processes and service quality. To ensureindependence, the Audit department has a reporting line to the Chairman of the Board of Directors andthe Audit & Compliance Committee of the Board and only indirectly to the Managing Director.CORPORATE SOCIAL RESPONSIBILITY-As its operations have grown your bank has retained its focus onvarious areas of corporate sustainabilitythat impact the socio economic ecosystem that we are part of. HDFC Bank’s focus in the area ofcorporate sustainability includes social sustainability & social welfare and financial inclusion.
Social Sustainability & Social Welfare-The bank has initiated a number of programs to encourage economic, social and educational developmentwithin the communities that it operates; while at the same time contributing to several grass root leveldevelopment programs across these geographies..STATUTORY DISCLOSURESThe information required under Section 217(2A) of the Companies Act, 1956. and the rules madethereunder, are given in the annexure appended hereto and forms part of this report.DIRECTORSMr. Vineet Jain resigned as a Director of the Bank with effect from December 27, 2008.Mr. Arvind Pande and Mr. Ashim Samanta retire by rotation atthe ensuing Annual General Meeting andbeing eligible offer themselves for re-appointment.AUDITORS-The Auditors M/s. Haribhakti & Co., Chartered Accountants will retire at the conclusion of theforthcoming Annual General Meeting and are eligible for re-appointment.AUDITOR’S REPORTThe attached Balance Sheet of HDFC Bank Limited audited (“the Bank”) as at 31 March 2009 and alsothe Profit and Loss Account of the Bank and the Cash Flow statement. We conducted our audit inaccordance with auditingstandards generally accepted in India.The An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements.INFORMATION OF ACCOUNTS OF THE COMPANY- Balance sheet on date 2008-09(In thousands)ITEMS 2009 2008Capital 4,253,841 3,544,329Equity share warrents 4,009,158 -Reseves and surplus 142,209,460 111,428,076 Total Assests 1,832,707, 1,331,766,032
Current assests 135,272,112 125,531,766Fixed assests 17,067,290 11,750,917The current year capital shows an increment with that of previous year by 16.67%About the deviation of equity share can’t be predicted du to insufficient data.the company showsa highamount of reserves and surplus which may due to the high percentage of general reseve andamalgamation reserve.INFORMATION ABOUT THE P&L ACCOUNT OF THE COMPANY(In thousands)ITEMS 2009 2008INCOME 196,228,646 123,981,512EXPENDITURE 173,779,254 108,079,582PROFIT 48,195,737 35,222,327APPROPRIATIONS 48,195,737 35,222,327EARNINGS PER EQUITY 52.85 46.22SHARE(Face value Rs. 10 per share)A) BasicThe income increased by 36.817% may be due to high operating income ratio.There is an considerableincrease inexpendeture in current year by 37.806% compared to last year.The company has also mainted agood profit increment for the current year which is almost 27%.INFORAMAION ABOUT THE CASH FLOW ACTIVITY OF THE COMPANY(In thousands)ITEMS 2009 2008Net cash flow from / (used in) (17,361,421) 27,231,256operating activitiesNet cash generated from 29,646,633 36,283,464financing activitiesNet cash used in investing (6,637,774) (6,197,812)The net cash flow in the current year shows a considerable increase by 56.88%.The financing activity ratio also increased by2256%.About the balance sheet-The company has Authoristed shares 55,00,00,000 ( 31 March, 2008 : 55,00,00,000) Equity Shares ofRs. 10/- each, out of which 42,53,84,109 (31 March, 2008 : 35,44,32,920) Equity Shares of Rs. 10/-eachare issued.The company comprises of following type of reseves-Types 2009 2008Statutory Reserve 22,987,291 15,193,539General Reserve 7,360,523 5,115,584
Amalgamation Reserve 10,635,564 145,218Capital Reserve 956,510 17,850Investment Reserve 276,250 414,800AccountThe company has a propose divedend 27,206,229 for the year 2009(figs are in thousands)Also it has a bill payable 29224,076 for the current year as current libillites.Next, the current assest i.e if u see the cash in hand for te current year is 15,861,868Gross block for the current year is 7,160,665, which is a 26.76% increment then the previous year.Net block for the current year is 11,311,063 and previous 7,322,171 which is a 9.352% increasedpercentage.Fixed assets are stated at cost less accumulated depreciation as adjusted for impairment, if any. Costincludes cost of purchase and all expenditure like site preparation, installation costs and professional feesincurred on the asset before it is ready to use. Subsequent expenditure incurred on assets put to use iscapitalized only when it increases the future benefit/functioning capability from/of such assets.Depreciation is charged over the estimated useful life of the fixed asset on a straight-line basis. Incometax comprises the current tax provision, the net change in the deferred tax asset or liability in the year andfringe benefit tax.Deferred tax assets and liabilities are recognised for the future tax consequences of timing differencesbetween the carrying values of assets and liabilities and their respective tax bases, and operating losscarry forwards..Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiaryCompaniesName of the subsidiary HDFC Securities Ltd. HDB Financial Services Ltd.Capital 1,500 10,501Reserves and Surplus 8,025 (1,288)Total Assets 20,599 19,588Total Liabilities 11,074 10,375Investments _ _Turnover 12,466 2,354Profit / (Loss) Before Taxation 2,809 (919)Provision for Taxation (1,152) (9)Profit / (Loss) After Taxation 1,657 (928)Proposed Dividend including tax 35 _The New Capital Adequacy Framework is applicable to HDFC Bank Limited (hereinafter referred to asthe Bank)and its two subsidiaries (HDFC Securities Ltd. and HDB Financial Services Private Ltd.) which togetherconstitutes the group in line with.CAPITAL STRUCTURE-Capital funds are classified into Tier I and Tier II capital under the capital adequacy framework. Tier Icapital includes paid-up equity capital, statutory reserves, other disclosed free reserves, capital reserves
and innovative perpetual debt instruments . Elements of Tier II capital include revaluation reserve, if any,general provision for standard assets,CAPITAL ADEQECY-The Bank has a process for assessing its overall Capital ,Adequacy in relation to their risk profile and astrategy for maintaining their capital level. The process provides an assurance that the Bank has adequatecapital to support all risk in its business and an appropriate capital buffer based on its business profile.The Bank has a structured management framework in the internal capital adequacy assessment process forthe identification and evaluation of the significance of all risks that the Bank faces, which may have anadverse material impact on its financial position. The Bank considers the following risks as material risks Credit Risk�Market Risk�Interest Rate Risk in the Banking Book�Liquidity Risk�Credit Concentration Risk�Business Risk�Strategic Risk�Compliance Risk�Reputation Risk�Operational RiskCredit Risk-Credit Risk is defined as the possibility of losses associated with diminution in the credit quality ofborrowers orcounterparties. In a bank’s portfolio, losses stem from outright default due to inability or unwillingness ofacustomer or counterparty to meet commitments in relation to lending, trading, settlement and otherfinancialtransactions.
Strength and Weakness of Wal-martTo conclude about the overall impression of the wal-mart’s performance over this period wecan say that the it is maintaining a good profitability and efficiency as we can observe thatgross profit ,net profit has increased over this period and even company has reduced itsoperating expenses to get more operating profits in the 2004 it has ability to reduce operatingexpenses . The company is able to generate the good net income over the sales and even theROE of the company is above 15 during years 2005 and 2006 so that we can say that companyis in very good position which also shows the company is able to generate the good incomeout of the shares holders equity .THE ROE is mainly increased due to the assets to equity whichis observed by the investors. This ROE very importantly is considered by many investors to takedecision in investing in a company rather than considering the EPS as it misguides the investors.Asset utilization is not that much good but it is not too bad .here it has used the fixed assetsvery well in the 2005 to generate more sales and the inventory is replenished very well in thisyear only. Then coming to collection period it is really good and even the they were ableconvince the creditors very well in having credit sales in the 2005.the company is also able toacquire more assets with the available equity in the year 2006.it has also increased its sharesholders equity from 2005 to 2006.It is able to attract the investors But the company has to improve a lot in its liquidity positionbecause it has been far below the ideal situation if it has to meet any short obligations it verymuch unable. The very important problem the company facing is that it not able to maintainthe balance between the liquidity and the profitability. It is much concentrating on theprofitability and not at all bothered about the liquidity where it has to be careful. Even it has toimprove in the inventory management .it has to give more assurance to the creditors ininterest payment .the company also has to be watchful in reducing financial leverage aspect sothat more risk is not provided to the share holders .the company has to reduce the operatingexpenses to get more net margins. Finally as a whole it is having good profitability efficiency and good ROE which isgood sigh for investors. So I advice fund manager to invest in this company