Financial reporting

Financial Reporting & Analysis sagar's Group no. 5
INTRODUCTION
Accounting policies followed by companies while preparing and presentation of
financial statements have a significant impact on the financial position of a
company. Disclosure of accounting policies followed is necessary if the view
presented by the company is to be properly appreciated by users of financial
statements. Proper disclosure of accounting policies facilitates a more meaningful
comparison between financial statements of two companies. The appropriate
application of Accounting Standards and Accounting Policies with
additional disclosure results in virtually all circumstances in financial
statements that achieve a fair presentation. The nature, quality and
degree of disclosure vary considerably in various companies. Some
companies disclose them as the foot note while some companies disclose as the last
note of the financial statements. However, it is more appropriate to disclose them as
the first note to the financial statements.
DISCLOSURE BY WAY OF NOTES
The disclosure of some of the accounting policies followed by the companies in
preparing and presenting of the financial statements is required by law in some
cases. The accounting standards require in many cases the disclosure of the
accounting policies such as segment accounting policies. Accounting standard
provides that all significant accounting policies adopted in the preparation and
presentation of the financial statements should be disclosed. The disclosure of the
significant accounting policies should form part of the financial statements and the
significant accounting policies should normally by disclosed in the place. For
example, schedule VI requires disclosure of mode of valuation of investments. The
word, significant, before accounting policies should include any accounting policy
that is useful for an understanding in the user of financial statement of the decision
of the user on financial aspect of a company is likely to change or influence because
of an accounting policy, it will become an obligation on the company to disclose it.
T.Y.B.B.I. 1

DISCLSOURE BY BANKING COMPANY – UTI BANK LTD.
UTI BANK LIMITED
Registered Office : ‘Trishul’, 3rd
Floor, Opp. Samartheshwar Temple,
Law Garden, Ellisbridge, Ahmedabad – 380 006.
BALANCE SHEET AS ON 31ST
MARCH, 2006
Schedule
No.
(Rs. In Thousands)
As on
31.03.2006
As on
31.03.2005
CAPITAL AND LIABILITIES
Capital 1 2,786,907 2,73,964
Reserves and Surplus 2 25,934,957 21,343,882
Employees’ Stock Options
Outstanding (Net)
17(4.13) 134,394 134,173
Deposits 3 401,135,313 317,120,001
Borrowings 4 26,809,318 17,814,115
Other Liabilities and Provisions 5 40,510,278 18,286,773
TOTAL 497,311,167 377,436,908
ASSETS
Cash & Balances with reserve Bank of
India
6 24,293,964 24,487,411
Balance with Banks and money at call
and short notice
7 12,124,458 10,541,953
Investments 8 215,273,513 150,480,194
Advances 9 223,152,304 156,029,219
Fixed Assets 10 5,677,131 5,184,358
Other Assets 11 16,799,797 20,713,773
TOTAL 497,311,167 377,436,908
Contingent Liabilities 12 985,653,794 531,857,401
Bills for Collection 43,322,052 36,169,839
Significant Accounting Policies and
Notes to Accounts
Schedules referred to above form an
integral part of the Balance Sheet
17
As per our report of even date
For BSR & CO. for UTI BANK LTD.,
Chartered Accountants, P.J. Nayak
Chairman & Managing Director
Akeel Master S. Chatterjee Surendra Singh N.C. Singhal R.B.L.
Vaish
Partner Executive Director Director Director
Director
P.J. Oza Date : 17 April 2006
Company Secretary Place: Mumbai
T.Y.B.B.I. 2

UTI BANK LIMITED
Registered Office: ‘Trishul’, 3rd
Floor, Opp. Samartheshwar Temple,
Law Garden, Ellisbridge, Ahmedabad – 380 006.
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST
MARCH, 2006
Schedule
No.
(Rs. In Thousands)
As on
31.03.2006
As on
31.03.2005
(I) INCOME
Interest Earned 13 28,887,904 19,241,582
Other Income 14 7,296,344 4,158,196
TOTAL 36,184,248 23,399,778
(II) EXPENDITURE
Interest Expended 15 18,105,560 11,929,808
Operating Expenses 18 8,140,507 5,813,789
Proisions and Contingencies 17(5.1.1) 5,087,344 2,310,404
TOTAL 31,333,411 20,054,001
(III) NET PROFIT FOR THE YEAR
(I-II) 4,850,837 3,345,777
Balance in Profit & Loss Account
Brought forward from previous yr 1,974,076 1,821,024
Transfer from Investment Fluctuation
Reserve 2,928,137 --
(IV) AMOUNT AVAILABLE FOR
APPROPRIATION 9,753,050 5,166,801
(V) APPROPRIATIONS :
Transfer to Statutory Reserve 1,212,709 836,445
Transfer to Capital Reserve 17(5.2.2) 104,471 478,747
Transfer to Investment Fluctuation
Reserve 1,000,000
Proposed Dividend (Includes tax on Div) 1,125,480 877,533
Balance in Profit & Loss Account C/f. 7,310,390 1,974,076
TOTAL 9,753,050 5,166,801
(VI) EARNINGS PER EQUITY SHARE 17(5.2.4)
(Face Value Rs.10/- per share) (Rupees)
Basic 17.45 14.32
Diluted 17.08 14.00
Significant Accounting Policies and
Notes to Accounts
Schedules referred to above form an integral
Part of the Profit and Loss Account
17
As per our report of even date
For BSR & CO. for UTI BANK LTD.,
Chartered Accountants, P.J. Nayak
Chairman & Managing Director
Akeel Master S. Chatterjee Surendra Singh N.C. Singhal R.B.L.
Vaish
Partner Executive Director Director Director
T.Y.B.B.I. 3

Director
P.J. Oza Date : 17 April 2006
Company Secretary Place : Mumbai
STATUTORY DISCLOSURES AS PER RBI
1.1 ‘Provisions and contingencies’ recognized in the profit and loss account include.
(Rs. In Crores)
For the year ended 31st
March, 2006 31st
March, 2005
Provision for Income Tax
- Current Tax for the year 296.11 155.94
- For Earlier years -- (2.22)
- Deferred Tax for the year (55.73) 23.98
- For Earlier years -- (8.58)
Provision for Fringe Benefit Tax 5.83 --
TOTAL 246.21 169.12
Provision for Wealth Tax 0.14 0.11
Provision for Non Performing Advances and
Investments, (including Bad Debts Written
Off and Write Backs)
127.06 3.04
Provision towards Standard Assets 44.76 13.12
Amortisation of Premium on Held to
Maturity Investments
87.55 48.27
Provision for Depreciation in Value of
Investments
3.41 (3.69)
Others (0.40) 1.07
Total 508.73 231.04
1.2 The capital adequacy ratio of the Bank, calculated as per RBI guidelines is set out
below:
(Rs. In Crores)
Assets 31st
March, 2006 31st
March, 2005
Capital Adequacy
Tier I 2,802.18 2,110.96
Tier II 1,476.08 902.19
Total Capital 4,278,26 3,013.15
Total Risk Weighted Assets and Contingents 38,598.25 23,799.52
Capital Ratios
Tier I 7.26% 8.87%
Tier II 3.82% 3.79%
Total Capital 11.08% 12.66%
1.3 Subordinated debt outstanding as at 31 March, 2006 is a long term unsecured
non-convertible debt aggregating Rs.1,788.60 crores (previous year Rs.788.60 crores).
T.Y.B.B.I. 4

This debt is subordinate to present and future indebtedness of the Bank and qualifies
as Tier II risk based capital under RBI’s gudelines for assessing capital adequacy.
During the year ended 31st
March, 2006, the Bank raised subordinated debt of
Rs.1,000 crores, the details of which are set out below :
Date of Allotment Period Coupon Amount
25 July 2005 84 Months Simple average of Mid of
Bid and Offer yield of the 1
year COI benchmark (i.e.
INBMK) + a margin of 65
basis points to be reset at
semi annual intervals.
Rs. 500 Crores
22 March 2006 87 Months 8.5% Rs. 125 Crores
87 Months 8.32% Rs. 5 Crores
1.4 The key business ratios and other information is set out below :
As at 31st
March 2006
%
31st
March 2005
%
Invest income as a percentage to working
funds (working funds represent average total
assets)
7.05
6.94
Non-interest income as a percentage to
working funds
1.78 1.50
Operating profit as a percentage to working
funds
2.43 2.04
Return on assets 1.18 1.21
Business (deposits less inter bank deposits
plus advances) per employee**
Rs. 10.20 Crores Rs.10.21 Cores
Profit per employee** Rs. 8.69 Lacs Rs. 8.02
Lacs
Net non performing assets as a percentage of
net customer assets*
0.75 1.07
Net non performing assets as a percentage of
net advances
0.98 1.39
* Net Customer assets include advances and
credit substitutes.
** Productivity ratios are based on average
employee numbers.
T.Y.B.B.I. 5

1.5 Movement in non performing advances is set out below:
(Rs. In Crores)
31 March, 2006 31st
March, 2005
Gross Net Gross Net
Opening Balance at the beginning of the
year
311.10 216.85 274.72 112.21
Additions during the year (net of
recoveries in respect of retail advances)
173.16 89.47 129.09 126.05
Reductions (including write offs) during
the year
(109.98) (88.72) (92.71) (21.41)
Closing balance at the end of the year 374.28 217.60 311.10 216.85
1.6 Movement in provisions for non performing assets is set out below :
(Rs. In Crores)
31 March, 2006 31st
March, 2005
Advance Investments Advances Investments
Opening balance at the
beginning of the year
94.25 4.44 162.51 3.04
Additions during the year 83.69 5.84 3.04 1.40
Recoveries/write-offs/ write
backs during the year
(21.26) 8.84) 71.30) (-)
Closing balance at the end of
the year
156.68 1.44 94.25 4.44
1.7 Movement in provisions for non performing assets is set out below :
(Rs. In Crores)
March 2006 31st
March 2005
Opening balance at the beginning of the year 15.28 18.97
Provisions made during the year 3.41 --
Write-offs/write back of excess provisions
during the year
- (3.69)
Closing balance at the end of the year 18.69 15.28
1.8 Movement in non-performing non SLR investments is set out below :
(Rs. In Crores)
March 2006 31st
March 2005
Opening balance at the beginning of the year 13.67 13.57
T.Y.B.B.I. 6

Additions during the year 6.70 --
Write-offs/recoveries during the year (16.70) --
Total provisions held 1.44 4.44
1.9 A summary of lending to sensitive sectors is set out below :
(Rs. In Crores)
As at 31st
March 2006 31st
March 2005
A) Exposure to Real Estate Sector
1) Direct Exposure
i) Residential mortgages 2,608.60 1,127.81
- of which housing loans upto
Rs. 15 lakhs 1,409.08 788.66
ii) Commercial real estate 1,660.76 455.70
iii) Investments in mortgage backed
Securities (MBS) and other
Securitised exposures -
a) Residential 0.06 0.01
b) Commercial real estate -- --
2) Indirect Exposure
Fund based and non-fund passed
Exposures on National Housing Bank
(NHB) and Housing finance companies
(HFCs) -- --
Total Exposure to real estate sector 4,269.42 1,583.71
As at 31st
March 2006 31st
March 2005
B) Exposure to Capital Market
1) Investments made in equity shares
(includes sanctioned application money
Of Rs.50.18 crores, previous year
Rs.0.18
Crores) 241.98 113.01
2) Investments in bonds/convertible
Debentures -- --
3) Investments in units of equity-oriented
Mutual funds (includes application
money
Of Rs.3.00 crores, previous year
Rs.4.50 crores) 3.00 22.93
4) Advances against shares to individuals
In equity shares (including IPOs/ESOPs),
Bonds and debentures, units of equity
T.Y.B.B.I. 7

Oriented mutual funds 0.02 0.61
5) Secured and unsecured advances to
Stockbrokers and guarantees issued on
Behalf of stockbrokers and market
Makers (including underwriting
Commitments) 232.69 273.29
Total Exposure to the Capital Market
(Total of 1 to 5) 477.69 410.10
6) Of (5) above, the total finance extended
To stock brokers for margin trading -- --
1.10 Details of loan assets subjected to restructuring are given below :
(Rs. In Crores)
31st
March 2006 31st
March 2005
(i) Total amount of loan assets subjected to
Restructuring, rescheduling,
renegotiation
- of which under CDR 330.11 101.90
(ii) The amount of Standard assets subjected
To restructuring, rescheduling,
Renegotiation 315.12 101.90
- Of which under CDR 37.70 18.52
(iii) The amount of Sub-Standard assets
Subjected to restructure rescheduling,
Renegotiation 3.93 --
- of which under CDR -- --
(iv)The amount of Doubtful assets subjected
To restructuring rescheduling,
Renegotiation 11.06 --
- of which under CDR -- --
1.11 Details of restructuring undertaken by the Bank during the year for SME
accounts are given below:
(Rs. In Crores)
31st
March 2006
(i) Total amount of assets of SMEs subjected to restructuring 109.00
(ii) The amount of standard assets of SMEs subjected to
Restructuring 104.41
(iii) The amount of sub-standard assets of SMES subjected to
Restructuring 3.93
(iv)The amount of doubtful assets of SMEs subjected to
Restructuring. 0.63
T.Y.B.B.I. 8

1.12 Details of issuer composition as at 31st
March 2006 of non-SLR investments is
set out below :
(Rs. In Crores)
Issuer Total
Amount
Extent of
Private
Placement
Extent of
“below
investment
grade”
securities
Extent of
“unrated”
securities
Extent of
“unlisted”
securities
Public sector unit 1,195.45 755.90 -- -- --
Financial Institutions 1,273.80 1,001.80 -- -- 11.00
Banks 304.68 108.50 5.00 -- 1.01
Private corporate 5,861.38 4,520.51 630.58 40.51 560.22
Others 1,122.36 -- -- -- --
Provision held
towards depreciation/
non-performing
investments
(20.12) -- -- -- --
Total 9,737.55 6,386.60 635.58 40.51 572.23
1.13 Details of securities sold/purchased during the year under repos/reverse repos
(excluding LAF transactions):
(Rs. In Crores)
Minimum
outstanding
Maximum
outstanding
Daily
average
outstanding
As at 31st
March,
2006
Securities sold under
repos
7.34 606.99 164.32 --
Securities purchased
under reverse repos
2.00 799.86 50.57 --
1.14 Details of securitisation transaction is undertaken by the Bank in the year are
as follows:
(Rs. In Crores)
As at 31st
March 2006 31st
March 2005
Number of loan assets securitised -- 20,501
Book value of loan assets securitised -- Rs.626.61 crores
Sale consideration for securitised assets -- Rs.653.95 crores
Gain/loss on account of securitisation -- Rs.29.54 crores
Cash collateral/Investment in PTCs -- Rs.69.37 crores
T.Y.B.B.I. 9

1.15 During the year, the Bank’s credit exposures to single borrowers and group
borrowers were within the prudential exposure limits prescribed by RBI except in 11
case where single borrower limit was exceeded upto an additional exposure of 5%
with the approval of the Board of Directors. These 11 cases represent credit and
investment exposures to financial institutions, multinationals and local corporates.
The total exposures outstanding in respect of these 11 cases as at 31st
March, 2006
was Rs. 3,911.99 crores. Further the total amount of exposure in excess of the
prudential limit as at 31st
March, 2006 was Rs. 323.80 crores.
1.16 A maturity profile of assets and liabilities at 31st
March, 2006 is set out below:
1 to 14
days
15 to 28
days
29 days
& upto
3 mths
Over 3
months
& upto
6 mths
Over 6
months
& upto
1 yr
Over 1yr
& upto
3 yrs
Over 3
yrs&
upto
5 yrs
Over 5
yrs
Lliabilities
Deposits
Borrowings
Assets
Investment
Advances
4964.76
330.00
4168.81
1035.85
1539.41
100.00
1178.05
83.62
5376.98
144.62
3847.60
852.63
3312.69
762.74
1313.07
1129.80
8407.45
201.26
2117.87
1696.36
15,347.34
1102.21
5480.61
8268.10
836.27
0.24
1500.19
4230.72
328.63
39.86
1921.15
5017.15
Classification of assets and liabilities under the different maturity buckets are
complied by the management based on the guidelines issued by RBI and are based
on the same estimates and assumptions as used by the Bank for compiling the return
submitted to the RBI.
1.17 A maturity profile of foreign currency assets and liabilities at 31st
March 2006 is
set out below:
1 to
14
days
15 to
28
days
29
days
&upto
3mths
Over 3
months
& upto
6 mths
Over 6
months
& upto
1 yr
Over
1yr &
upto 3
yrs
Over 3
yrs&
upto 5
yrs
Over
5 yrs
Total
Assets
Liabilities
67.96
104.9
2
21.3
7
8.92
60.56
91.50
322.56
508.35
66.03
450.86
105.1
4
195.7
2
49.09
100.3
3
3.67
-
696.38
1,460.60
T.Y.B.B.I. 10

Disclosure in respect of Interest Rate Swap (IRS) forward rate agreement (FRA)
and cross currency swap (CCS) outstanding at 31 march 2006 is set as below ;
Sr no Items As at 31 march
2006
As at 31 march
2006
1 National principal of swap
agreement
53,168.58 32,736.95
2 Losses which would be incurred
if counterparties fail to fulfil their
obligations under the agreements
573.40 294.94
3 collateral required by the bank
upon entering into swaps
4 concentration of credit risk
arising from the swaps
maximum single industry
exposure with banks ( previuos
year with banks )
- interest rate swaps /fra
- cross currency swaps
76.31 %
60.57 %
76.57 %
39.21 %
5 Fair value of the cross book
- interest rate swap/FRAs
(hedging and trading)
- currency swaps
0.80
26.78
( 1.51 )
6.65
The nature and the terms of the IRS are set out below;
Nature Nos Notional principal
( Rs . in crores )
Benchmark Terms
Hedging swaps 9 345.80 INBMK Fixed receivable v/s
floating payable
Hedging swaps 10 325.00 MIBOR Fixed payable v/s
floating receivable
Hedging swaps 8 290.00 MIBOR Fixed receivable v/s
floating payable
Hedging swaps 1 150.00 LIBOR Fixed payable v/s
fixed receivable
Hedging swaps 1 45.68 LIBOR Fixed payable v/s
floating receivable
Trading swaps 37 1,830.00 INBMK Fixed payable v/s
floating receivable
Trading swaps 40 1680.00 INBMK Fixed receivable v/s
floating payable
Trading swaps 538 15,195.00 MIBOR Fixed payable v/s
floating receivable
Trading swaps 547 14,845.70 MIBOR Fixed receivable v/s
floating payable
Trading swaps 1 50.00 LIBOR/
MIBOR
floating payable v/s
floating receivable
Trading swaps 273 6,925.00 MIFOR Fixed payable v/s
T.Y.B.B.I. 11

floating receivable
Trading swaps 273 6,925.00 MIFOR Fixed receivable v/s
floating payable
Trading swaps 38 394.04 LIBOR Fixed payable v/s
floating receivable
Trading swaps 200 361.48 LIBOR Fixed receivable v/s
floating payable
Trading swaps 2 87.44 LIBOR floating payable v/s
floating receivable
1,978 49,450.84
The nature and terms of the FRA’s are set out below
Nature Nos Notional
principal
( Rs . in crores )
Benchmark Terms
Trading swaps 1 10.00 MIBOR Fixed payable v/s
floating receivable
Trading swaps 2 50.00 INBMK Fixed payable v/s
floating receivable
Trading swaps 1 25.00 INBMK Fixed receivable v/s
floating payable
4 85.00
The nature and terms of the CCS are set out below
Nature Nos Notional
principal
( Rs . in crores )
Benchmark Terms
Trading
swaps
20 1,484.46 LIBOR Fixed receivable v/s
floating payable
Trading
swaps
26 1,557.29 LIBOR Fixed payable v/s floating
receivable
Trading
swaps
2 13.00 LIBOR floating receivable v/s
floating payable
Trading
swaps
15 255.31 PRINCIPAL
ONLY
Fixed receivable
Trading
swaps
20 321.78 PRINCIPAL
ONLY
Fixed payable
83 3,632.74
T.Y.B.B.I. 12

Disclosures on risk exposure in Derivatives
Sr.
No.
Particulars Currency Derivativ
e
Interst rate in
derivatives
CCS Option
1
2.
3.
4
5.
Derivatives
a) for hedging
b) for trading
market to market position#
a) assets(+)
b) liability(-)
credit exposure
likely impact of one % change in
interest rate
a) on hedging derivatives
b) on trading derivatives
maximum and minimum of 100*
PV01 observed during the year
a) on hedging
• minimum
• maximum
b) on trading
• minimum
• maximum
# only on trading derivatives
-
3,632.74
92.26
(65.48)
257.21
-
0.63
-
-
0.63
15.06
-
4,685.86
26.97
(26.67)
179.41
-
-
-
-
-
-
1,156.48
48,379.36
481.14
(463.53)
664.87
16.58
8.69
7.25
22.07
0.06
18.77
Earning per Share (EPS)
The details of EPS computation is set out below:
As at 31 March,2006 31 March,2005
Earning for the year(in crores)
Basic weighted average no. of shares(in crores)
Basic EPS (Rs.)
Diluted weighted average no. of shares (in crores)
Diluted EPS (Rs.)
485.08
27.80
17.45
28.40
17.08
334.58
23.37
14.32
23.80
14.06
T.Y.B.B.I. 13

Nominal value of shares-basic (in crores)
Nominal value of shares- diluted (in crores)
278.69
284.68
273.80
278.07
Employee Stock options Scheme (‘the scheme’)
In February 2001, pursuant to the approval of the shareholders at the Extraordinary
General Meeting, the bank approved an employee stock option scheme. Under the
scheme, the bank is authorized to issue about 13,000,000 equity shares to liable
employees. Eligible employees are granted an option to purchase shares subjecting
to vesting conditions. The option vest in a graded manner over three years. The
option can be exercised within 3 years from the date of vesting. Further, in june
2004, pursuant to the approval of the shareholders at Annual General meeting, the
bank approved an ESOP scheme for scheme for additional 10,000,000 options.
94, 82,905 options have been granted under the scheme till the previous year ended
31 March 2005.
On 10 June 2005, the bank granted 57, 08,240 stock options to its employees, the
Chairman and Managing Director and the Executive Director. These options can be
exercised at a price of Rs.232.10 per option.
The bank has not recorded any compensation cost on options granted during the year
ended 31 March 2001 and the current year 31 March 2006 as the exercise price was
more than or equal to the quoted market price of underlying equity shares on the
grant date.
The bank recorded a compensation cost of Rs.1.39 crores on options granted during
the year ended 31 March 2002, Rs. 1.99 crores on options granted during the year
T.Y.B.B.I. 14

ended 31 March 2004, Rs.24.21 crores on option granted during the year ended 31
March 2005, based on the excess quoted market price of the underlying equity
shares as of the date of the grant over the exercise price. The compensation is
amortized over the vesting period.
Compensation expense for all the grants under the scheme for the year ended 31
March 2006 is Rs. 6.32 crores.
Stock option activity under the scheme is set out below:
Dividend paid on shares issued on exercise of stock options
The bank may allot shares between the balance sheet date and record date for the
declaration of dividend pursuant to the exercise of any employee stock options.
These will be eligible for full dividend for the year ended 31 March 2006, if
approved at the ensuing Annual General Meeting. Dividend relating to these shares
has not been recorded in the current year.
Appropriation to proposed dividend during the year ended 31 March 2006, includes
dividend paid pursuant to exercise of the Green Shoe option in the form of
3,000,700 GDRs and 1,152,522 employee stock options after the previous year end
and record date declaration of divided for the year ended 31 March 2005.
Segmental Reporting
T.Y.B.B.I. 15
As at 31 March,
2006
31 March,
2005
Stock Options outstanding at the beginning of the
year.
Granted during the year
Forfeited during the year
Exercised during the year
5,694,445.
5,708,240
670.857
1,893,583
3,992,679
3,809,830
382,490
1,725,574
Stock options outstanding at the end of the year 8,838,245 5,694,574

The business of the bank is divided into two segments: Treasury and Other Banking
Operations. These segments have been identified and reported based on the RBI
guidelines on compliance with accounting standards by banks by vice circular no.
DBOD.BP. BC.89/21.04.018/2002/03 dated 29 March 2003.
The Treasury service segment undertakes trading operations on proprietary account,
foreign exchange operations and derivatives trading. Revenues of treasury service
segment primarily consist of fees and gains or losses from trading operations and
interest income on the investment portfolio.
Other banking operations principally comprise the lending activities like corporate
and retail of the bank. The corporate lending activities includes providing loans and
transaction services to corporate and institutional customers. The retail lending
activities includes raising of deposits form customers and providing loans and
advisory services to such customers though branch network and other delivery
channels. Revenue from corporate lending activity includes interest and fees earned
and loans given to corporate customers and interest earned on cash float and fees
arising from transaction services and fees from merchant banking activities as such
syndication and debenture trusteeship. Revenues from the retail lending activity are
derived from interest earned on retail loans and fees for banking and advisory
services. ATM interchange fees and interest earned from other segments for surplus
funds placed with those segments. Expenses of the lending activity primarily
comprise interest expenses on deposits, infrastructure and premises expenses for
operating the branch network and other delivery channels, personnel costs, other
direct overheads and allocated expenses.
Segment revenue includes earnings from external customers plus earnings from
funds transferred to the other segments.
Segments result includes revenues as reduced by interest expenses and operating
expenses and provisions if any, for the segment.
Segmental results are as below:
31st
March,2006
T.Y.B.B.I. 16

(Rs. In crores)
Treasur
y
Other
Banking
Operation
s
Unallocate
d
Total
Segment revenue
Gross interest income
Other income
1,360.08
206.46
1,528.71
521.98
-
1.19
2,888.79
729.63
Total income as per P & L
a/c
Add/(less) inter segment
interest income
1,566.54
4,061.65
2,050.69
1,071.48
1.19
-
3,618.42
5,133.13
Total Segment income
Less: interest expenses
Less: inter segment interest
exp.
Less: Operating Expenses
5,628.19
1317.20
3740.20
53.29
3,122.17
493.36
1,392.93
760.76
1.19
-
-
-
8,751.55
1,810.56
5,133.13
814.05
Operating profit
Less: provision for non
performing assets/other
517.50
101.96
475.12
160.42
1.19
0.14
993.81
262.52
Segment Result 415.54 314.70 1.05 731.29
Less: Provision for Tax
Net Profit
-
-
-
-
-
-
246.21
485.08
Segment Assets
Segment Liabilities
25,731.4
0
23,465.2
0
22,752.44
22,002.60
1,247.28
1,337.69
49.731.1
2
46,845.4
9
Net Assest 2,266.20 749.84 (130.41) 2,885.63
Fixed assets addition
Depreciation for fixed assets
-
-
-
-
148.66
92.19
148.66
92.19
Segmental results are as below:
31st
March, 2005
(Rs. In crores)
T.Y.B.B.I. 17

Treasury Other
Banking
Operations
Unallocated Total
Segment Revenue
Gross interest income
Other income
945.12
38.76
979.04
378.24
-
(1.18)
1,924.16
415.82
Total income as per P&L a/c
Add/(less) inter segment interest
income
983.88
2,336.08
1,357,28
763.05
(1.18)
-
2,339.98
3,099.13
Total Segment income
Less: interest expenses
Less: inter segment interest exp.
Less: Operating Expenses
3,319.96
759.18
2,295.16
29.34
2,120.33
433.80
803.97
552.04
(1.18)
-
-
-
5,439.11
1,192.98
3099.13
581.38
Operating profit
Less: provision for non
performing assets/other
236.28
44.58
330.52
17.23
(1.18)
0.11
565.62
61.92
Segment Result 191.70 313.29 (1.29) 503.70
Less: Provision for Tax
Net Profit
-
-
-
-
-
-
169.12
334.58
Segment Assets
Segment Liabilities
20,839.6
1
17,367.6
1
15,907.09
17,277.20
996.99
677.28
37,743.69
35,322.09
Net Assets 3,472.00 (1,370.11) 319.71 2,421.60
Fixed assets addition
Depreciation for fixed assets
-
-
-
-
180.75
81.58
180.75
81.58
Related party disclosure:
The related parties of the bank are classified as:
1 Promoter
Administrator of the Specified Undertaking of the Unit Trust of India (UTI-I). Based
on the RBI guidelines, details of transactions with promoter are not disclosed since
there is only one entity/ party in this category.
T.Y.B.B.I. 18

2 Key Management Personnel
Dr. P.J. Nayak (chairman and managing director and Shri. S. Chatterjee (Executive
Director).
Details of transactions with Key management Personnel are given below:
(Rs. in crores)
(Rs. in crores)
Items/Related
Party
Key Management Personnel Related Party to Key
Management Personnel
Outstanding as
at
31 March
2006
Maximum
Outstanding
during the year
2005-2006
Outstanding as
at
31 March
2006
Maximum
Outstanding
during the year
2005-2006
Placement of
deposits
Loans
1.14
0.23
1.17
0.62
0.52
_
0.7
_
Leases
Disclosure in respect of assets given on operating lease. Operation lease consists
leasing of power generating equipments. There is no power in it relating to
contingent rent. The terms of renewal/purchase options and escalation clauses are
T.Y.B.B.I. 19
Items/Related party Key Management
Personnel
Related Party to
Key Management
Personnel
Total
Managerial
Remuneration
Interest on deposits
Interest on loans
1.83
0.04
0.02
-
-
-
1.83
0.04
0.02

those normally prevalent in similar agreements. Operating lease of office
premises/ATMs, staff quarters and electronic data capturing machines.
Provisions and contingencies
1. Movement in provisions for frauds included in liabilities are set as under:
(Rs. In crores)
31 March,2006 31 March 2005
Opening balance at the beginning of the year
Additions during the year
Reductions on account of payments during the
year
Reductions on account of reversals during the
year
2.41
0.55
(1.01)
(0.95)
5.73
0.08
(3.30)
(0.10)
2. Movement in provision for credit enhancement on securitized assets is set out
below:
(Rs. in crores)
31 March 2006 31 March
2005
Opening balance at the beginning of the year
Additions during the year
Reductions during the year
1.07
-
(0.40)
-
1.07
-
Description of contingent liabilities:
(a) Claims against the Bank not acknowledged as debts.
These represent claims filed against the Bank in the normal course of business
relating to various legal cases currently in progress.
T.Y.B.B.I. 20

These also include demand raised by income tax and other statutory
authorities disputed by the Bank.
(b) Liability on account of forward exchange and derivative contracts.
The Bank enters into foreign exchange contracts, currency options/swaps and
forward rate agreements on its own account and for customers. Foreign
exchange contracts are commitments to buy or all foreign currency at a future
date at the contracted rate. Currency swaps are commitments to exchange cash
flows by way of interest in two currencies, based on ruling spot rates. Interest
rates swaps are commitments to exchange, fixed and floating interest rate cash
flows. All such option in the Bank’s book are on a back to back basis.
(c) Guarantees given on behalf of constituents.
As a part of its banking activities, the bank issues guarantees on behalf of its
customers to enhance their credit standing
(d) Acceptances, endorsements and other obligations.
These include documentary credit issued by the bank on behalf of its
customers and bills drawn by the banks customer that rate accepted by the
bank.
(e) Other items.
Other items represent bills rediscounted by the bank and the value of put
option provided by the bank to certain pass through certificate (PTC) holder
under an agreement wherein the banks act as an arranger.
T.Y.B.B.I. 21

ANALYSIS AND INTERPRETATION OF ANNUAL REPORT OF
COMPANIES.
Analysis and interpretation of financial statements refers to such a treatment of the
information contained in the Income statement and the Balance Sheet so as to give
full identification of the profitability and financial soundness of the company’s
business. Thus, financial statements are indicators of two significant factors such as
profitability and financial soundness. The term analysis means methodical
classification of the data given in the financial statements may not help the user
unless they are put in a simplified form.
The term interpretation means explaining the meaning and significance of the data
so simplified in the analysis.
The company’s act 1956, section 210 provides that the management of every
company should submit an annual report regarding the company’s operations and
financial position. The Annual Report information, which is required by the
company’s act. It includes profit and loss account, balance sheet and notes to
accounts. It also includes Auditors report. Director’s report and some more
information. The Analysis and interpretation of some important content of Annual
Report is given below:
Chairman’s Statements:
Annual Report of the company is required to be sent to every shareholder. It
contains financial statements, Directors report, auditor report etc. Chairman’s
T.Y.B.B.I. 22

statement is a letter addressed by the Chairman of the Company to its shareholders.
It is given at the beginning of the annual report. The Chairman’s statement becomes
impressive to the shareholders. They get the idea about the progress of the business,
future prospects etc. The shareholder can take a decision about the further
investment or disinvestment in the company. The chairman also expresses his about
value, vision, strategy and execution of policies in the statement. Finally the
chairman thanks the shareholder for their confidence in the company management
in the process of transformation.
Chairman Speech:
The chairman speech is the speech delivered by the chairman in the Annual General
Meeting. It gives complete account of affairs of the company during the year for the
information of its members. Chairman speech is different from chairman’s
statement. The chairman statement is printed in the Annual Report whereas
chairman speech is delivered by the chairman in the Annual General Meeting. A
Printed copy of the chairman speech may be distributed to the shareholders in the
annual general meeting. The chairman speech is also published in the newspaper
after the meeting for the information of the stockholders. The chairman’s speech
contains the future plans, development Opportunities Company's role in
implementation of national development plans and its international operations. Thus,
the chairman’s speech throws light on the following matters:
• Hearty welcome to the members.
• Current business conditions,(profits, dividends).
• Implementation of national plans.
• Future development plans of the company.
• Efforts made towards satisfaction of customers.
• Research & development plans.
• Future development opportunities.
• Labour and industrial relations.
• Acknowledgements.
• Thanks.
T.Y.B.B.I. 23

Director’s Report:
Section 217 of the company’s act 1956 provides that the balance sheet and profit &
loss account should be presented before the Annual General Meeting. It also
provides that the Directors report must be accompanied as a statutory requirement.
Section 217 has been amended with a view to widen the scope of Board’s report.
The additions relate to the accounts and are a welcome step. Board’s report besides
other matter shall includes a director’s responsibilities statement including thereon:
• That the preparation of the annual accounts, the applicable accounting standards
has been followed along with proper explanation relating to material departures.
• That the directors have selected such accounting policies and applied them
consistency and made judgements and estimates that are responsible and prudent
so as to give a true and fair view of the state of affairs of the company at the and
of the financial year and of the profit or loss of the company for that period.
• That the directors have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provision of the Act for
safeguarding the assets of the company and for preventing fraud and other
irregularities.
• That the directors have prepared the annual accounts on going concern basis.
While drafting this report following requirements shall be kept in mind:
• The report shall be titled as ‘director’s Report’.
• There shall be a solution like gentlemen or Dear shareholders.
• The matters “the directors of your company are presenting with pleasure
the…… Annual general report for the year ending….
• There shall be heading titled. “Financial Results”.
• there shall also be the heading titled ‘financial statements’ under head and
sub-heads, stating gross profits, depreciation, profit before tax provision
for tax, provision for dividend, net profit, transfer to general reserve
account etc.
T.Y.B.B.I. 24

• the particulars of information stating the name, age, post, salary drawn,
educational qualifications and experience, date of appointment etc. of
every employees of the company whose remuneration does not fall below
Rs.72000 during the financial year under report, be stated in the statutory
report.
• The director’s responsibility statement giving requisite information.
• On the approval of the Board, the report must be signed by the chairman
and the director’s who had signed on the balance sheet, profit & loss
account.
• The names of such employees may also be included in the report who were
appointed for a short period, under report and were drawing a monthly
salary of not less than Rs. 6000/-.
• the names of the following person shall also be given in the director’s
report as required under companies ( amendment) Act, 1988:
A. the name of such persons who have been drawing an honorarium not
less than that drawn by managing director of full- time director or the
manager.
B. The names of those who are holding at least two percent of the
company’s equity shares in the name of wife/husband/legitimate
children.
Management Discussion and Analysis:
Management discussion and analysis report forms the part of annual report. It
includes discussion on the matter as prescribed. The prescribed matters are industry
structure & developments, opportunities, and threat segment or product based
performance, outlook, risks, and concerns, internal control system and their
adequacy, financial performance vis-à-vis operational performance and material
developments in human resource and industrial relations. The auditor should
ascertain whether management discussion and analysis report forms part of the
annual report. The auditor should also ascertain prescribed disclosures by the
management to the board. The disclosure relates to all financial and commercial
transactions in which management have personal interest and which may have a
potential conflict with interest of the company at large. For example, dealing in
T.Y.B.B.I. 25

company shares, commercial dealings with bodies that have shareholders of
management and their relatives.
The auditor should have ascertained whether at the time of appointment of a new
director or reappointment of an existing director the shareholders have received the
following information:
• Brief resume of each director.
• Nature of his expertise in specific functional areas, and
• Names of companies in which he holds directorship and membership of Board
committees.
The auditor should ascertain whether this information finds place on the company’s
website. Alternatively, whether the company has sent this information to the stock
exchange such that the exchange may put its on its own website. The same would be
the case with other information requiring mandatory disclosure. The auditor should
ascertain whether the board has constituted this committee headed by a non
executive director and that the committee is indeed functioning to redress
complaints in respect of transfer of shares, non-receipt of balance sheet, declared
dividend etc. he should also verify from the committee records and certificates from
SEBI and stock exchange, the number of pending grievances.
The auditor should ascertain whether the entity has delegated the power of share
transfer to an officer, committee, registrar or transfer agents. He should also verify
whether the share transfer is quick and delegated authority attends to share transfer
formalities at least once or a fortnight. The auditor should ascertain whether the
board of director has in the annual report of the company, a detailed compliance
report on corporate governance. The report should highlight non-compliance of any
mandatory requirement, with reasons for the same.
Corporate governance Disclosure:
Corporate governance is a system of management under which direction and control
of the company is in the best interest of the stockholders and others ensuring greater
transparency and better and timely financial reporting. To implement Corporate
Governance SEBI has directed stock exchanges to insert a new clause 49 in their
T.Y.B.B.I. 26

listing agreement, under which the management of companies already listed and
having specified paid up capital/net worth will implement conditions of corporate
governance.
The auditor should see whether at least 50% of the directors are non-executive
directors that are not involved in day management of the company. Further, if the
company has a non-executive chairman, a least one third of the directors are
independent directors and in case of an executive chairman, at least half of the
directors are independent directors. An independent director is one who, expect for
receiving directors remuneration does not have any other material pecuniary
relationship or transactions with the company, its promoters, its management or its
subsidiaries which in the judgement of the Board, may affect independence of
judgement of the director.
The auditor should ascertain whether the company has disclosed in the compliance
report on corporate governance all pecuniary relationship or transactions of the non-
executive directors vis-à-vis the company. The auditor should ascertain form
minutes of the Board whether the company has set up an audit committee in
compliance with condition of corporate governance as laid down in clause 49 of the
listing agreement and Section 292 A of the companies act. This section provides that
every company with paid up capital of Rs. 5 crores or above should have an Audit
Committee. The committee should have minimum three non-executive directors,
majority of them being independent directors. The chairman himself should be an
independent director. At least one member of committee should have financial and
accounting knowledge. The auditor should verify whether the chairman of the Audit
committee was present at the last annual general meeting to answer shareholder’s
queries on corporate governance. The auditor should ascertain whether:
• the finance director and head of internal audit attended the committee meeting
by invitation.
• The company secretary if any had authority to act as secretary to Audit
Committee.
• A representative of the statutory auditor of the company attended the
committee meeting when required.
T.Y.B.B.I. 27

• The committee met at least thrice in a year and that the quorum was present at
each meeting.
The auditor should see whether the terms of reference of Audit Committee authorize
it to exercise the power granted to it under clause 49 of the listing agreement and
section 292A of the Companies Act. In addition whether the committee has
exercised those powers to carry out the role assigned to it. the auditor should
examine the Board report on corporate governance for inclusion in the annual report
of the company and ascertain whether it makes the required disclosure about
remuneration to directors whether executive or non-executive. He should also verify
whether the remuneration complies with section 309 of the Companies Act.
The auditor should ascertain whether Board meetings have taken place a required
that is at least four times a year, with a gap maximum four months between any two
meetings. He should also see whether minimum information as prescribed in clause
49 of the Listing Agreement was available to the Board. The auditor should also
ascertain form the information given by every director to the company about the
committee positions occupied by him in other companies. The Act provides that no
director can be member of more than 10 committees constituted by the Board or act
as a chairman of the more than five committees of the Board across all companies of
which he is a director. This limit is applied only to membership of audit committee
and not for other committees.
Compliance certificate in Corporate Governance Audit Report:
The auditor on his part will certify compliance of the conditions of corporate
governance applying the Auditing and Assurance Standard AAS and code of
conduct. The guidance Note on certificate of corporate governance issued by the
ICAI, seeks to guide in discharge of their responsibility to certify whether the
management has complied with the conditions of the corporate governance under
clause 49 of the Listing Agreement between the stock exchange and the company
under audit. In case the auditor finds the compliance with conditions of corporate
governance he would issue a certificate to the effect. If there is non-compliance with
any mandatory requirements, the auditor may give a qualified or adverse report.
T.Y.B.B.I. 28

Annexure to Auditor’s Report including CAR Balance Sheet: the Auditor is required
to make a report to the members of the company under section 227 (2) of the
companies act, 1956:
• On the accounts examined by him.
• On every balance sheet and profit and loss account which are laid before the
company in general meeting during his tenure of office, and
• On document declared to be a part of or annexed to the balance sheet or profit
and loss account.
The auditor report must state whether his opinion and to the best of his information
and according to the explanation given to him, the said accounts give the
information’s required by the act in the manner so required and give a true and fair
view:
• In the case of the balance sheet of the state of the company’s affairs as at the
end of the financial year, and
• In the case of profit and loss account of the profit or loss for the financial year.
• The auditor’s report should identify the persons to him it is addressed and the
financial statements to which it relates. The auditor should refer expressly in
his report to the following:
• Whether the financial statements have been audited in accordance with
generally accepted auditing standards and practices
• Whether in his opinion the financial statements give a true and fair view of the
state of affairs, profit and loss and where applicable, source and application of
funds.
• Any matter to be included in his report according to the relevant law or other
requirements.
The auditing standard as regard audit applies to all reports in which the auditor is
required to express his opinion on financial statements intended to give a true and fair
view of the state of affairs, profit and loss account etc. but it does not override the
T.Y.B.B.I. 29

statutory provisions regarding any other matters to be included in the report in the
case of any specified class of companies.
In addition to the requirements of section 227 (2) and (3), the auditor may also be
required to report his opinion in regard to certain other special matters. This can be
in respect of certain specified transactions of the company or special matters in case
of building, insurance electric supply, manufacturing and other companies.
A. Matters required to be included in audit report in certain cases:
Under section 227(1-A), the auditor is required to enquire and report on the
following matters:
• Loans and advances made by the company on the basis of security in
case these are not properly secured or if their terms are prejudicial to
the interests of the company.
• Transaction of the company represented merely by book entries in
case they are prejudicial to the interests of the company.
• Sale of shares, debentures and other securities by a non-investment
company, in case the sale price is less than the purchase price.
• Loans and advances made by the company though shown as deposits.
• Charging of personal expenses to revenue accounts.
• The amount of cash received against shares allotted for cash and the
amount of outstanding.
However, the auditor is not obliged to express his opinion on these matters, unless
he has any special comments to make about them.
B. Matters to be included in audit report in case of banking, insurance and
electric supply companies:
T.Y.B.B.I. 30

In case of audit of banking, insurance and an electric company, the auditor must also
state in his report the following matters:
In case of a banking company:
• Whether the auditor has obtained all the information and explanation which to
the best of his knowledge and belief were necessary for the purpose of his audit
and has found them to be satisfactory.
• Whether the transaction of the bank which have come to his notice, have been
within the powers of the bank.
• whether in his opinion proper books of accounts as required by the law have
been kept by the bank, so far as appears to him from his examination of these
books and proper returns adequate for the purpose of his audit have been
received from the branches of the bank.
• Whether the bank’s balance sheet and Profit and Loss Account dealt with by his
report are in agreement with the books of account and returns.
• Whether the report on the accounts of branches audited by the branch auditor has
been forwarded to him and the same have been considered by him in preparing
his own report.
• Whether in his opinion, and to the best of his information and according to the
explanations given to him, the said accounts give the information required in
respect of the banking companies, and on such basis the Balance sheet gives a
true and fair view of the state of affairs of the bank as on the last day of financial
year and the profit and loss accounts shows a true and fair view of the profit and
loss for the year ended on that date.
In case of insurance and electric companies:
In case of insurance and electric supply companies also, there are
provisions in the Insurance Act and the Electricity (supply) Act, specifying the
matters in respect of which auditor is required to report.
T.Y.B.B.I. 31

CARO Balance Sheet:
Central Government had issued the companies (Auditors Report) Order (CARO) 2003
under section 227 (4A) of the Companies Act. Earlier, the order under section 227
(4A) was manufacturing and other Companies Auditor’s report came into effect from
1st
July 2003. It was issued in consultation with the ICAI. The CARO is applicable to
the following companies:
• Chit Fund Company, Nidhi Company.
• Mutual Benefit Company.
• Finance Company.
• Investment Company
• Manufacturing Company.
• Processing Company.
• Service Company.
• Trading Company.
However, the CARO will not apply to the following companies:
T.Y.B.B.I. 32

• Banking Company
• Insurance Company.
• Private company, having a paid up capital and reserves upto Rs. 50 lakhs, which
has not accepted any Public deposit and does not have loan outstanding upto Rs.
10 lakhs or more from any bank or financial institution and does not have a
turnover exceeding Rs. 5 crore.
An Auditor’s report under CARO- 2003:
Under CARO 2003, the Auditor Report includes the following matters:
• Proper records showing full particulars regarding fixed assets, physical
verification, disposal, etc.
• Physical verification of inventory at reasonable intervals.
• Loans taken, security, registration of charges, etc.
• Adequate internal control procedure.
• The entry of transactions in the register for loans, reasonable price for
transactions exceeding Rs. 5 lakhs.
• Details about deposits accepted from the public under section 58A and 58AA.
• Internal audit system.
• Maintenance of cost records.
• Regularity in depositing undisputed statutory dues such as Provident Fund, ESI
Fund, Income Tax, Sales Tax, Wealth Tax, Custom Duties, etc.
• Whether the losses of the company for a period of at least five years,
accumulated losses more than 50% of its net worth and incurred cash losses in
the financial years.
• Whether the company has defaulted in repayment of dues to a financial
institution or a bank or debenture holders.
• Whether the company has maintained adequate documents and records for loans
granted and advances based on security by way of pledge of shares, debentures
etc.
• Whether the company has complied with the provisions of any special statute
applicable to unit fund.
T.Y.B.B.I. 33

• In case a company dealing in shares debentures and other instruments, whether it
has maintained proper records of the transactions and contracts.
• Whether the company has given any guarantee for the loans taken by others
from bank or financial institutions and the terms and conditions of which are
prejudicial to the interest of the company.
• Whether the company has applied the sums for the purposes for which it has
obtained them.
• The report should indicate the nature and amount of funds used, funds raised on
short-term basis for long-term investment and vice-versa.
• Whether the company has made any preferential allotment of shares to parties
and companies covered in the register maintained.
• Where there is creation of securities in respect of debentures issued.
• Whether the management has disclosed on the end-use of money raised by the
public issues.
• Whether there is any notice of fraud reported by the company during the year,
indicating the nature and amount of fraud.
Profit and Loss Account of a company:
Schedule VI part II of the Companies Act, 1956 provides that the following
information must be disclosed in the Profit and Loss accounts of the company:
• The amount provided for depreciation, renewals or diminution in value of fixed
assets. If no provision has been made, the fact shall be stated and the quantum of
arrears of depreciation computed in accordance with section 205 (2) of the Act,
shall be disclosed by way of a note.
• Debenture interest and interest on other fixed loans, stating separately the
amount of interest, if any paid or payable to managing director and the manager.
• Any amount provided for repayment of share capital or loan.
• The amount of charges of income tax.
• The amount of income from investments, distinguishing between trade
investment and other investments, profits or losses on investment should be
shown separately.
• Dividend from subsidiary companies and provisions for losses of subsidiary
companies.
T.Y.B.B.I. 34

• The amounts paid to the Auditor for audit fees, for taxation matters, company
law matters or management services as auditor or any other capacity.
• Details of managerial remuneration under section 198 of the Companies Act,
1956.
• Previous year’s figures relating to all items.
• Prior period adjustment should be shown separately from the current year’s
figures.
However, the following details should be shown by way of notes:
1. Calculation of managerial remuneration.
2. Particulars in respect of licensed and installed capacity and actual
production.
3. Details of finished goods, sales, and materials consumed nature of raw
materials spare parts and components used.
4. Earning in foreign exchange.
5. Value of imports (CIF basis).
6. Expenditure in foreign currency.
7. Remittances in foreign currency on account of dividend.
Balance Sheet of a Holding Company (s. 212):
Section 212 of the Companies Act, 1956 provides that there shall be attached to the
Balance Sheet of a holding company having a subsidiary or subsidiaries at the end of
the financial year as at which the holding company’s Balance sheet is made out, the
following documents in respect of such subsidiary or each of such subsidiaries as the
case may be:
• A copy of the balance sheet of subsidiary.
• A copy of its profit and loss account.
• A copy of the report of its Board of Directors.
• A copy of the report of its Auditors.
• A statement of the holding company’s interest in the subsidiary as
specified above.
The balance sheet and profit and loss account shall be made out in accordance with
the requirement of the act. Where the financial year of the subsidiary does not
coincide with that of the holding company, the financial year aforesaid of the
T.Y.B.B.I. 35

subsidiary shall not end on a day which proceeds the day on which the holding
company’s financial year ends by more than six months.
The statement under section 212 shall specify the extent of the holding company’s
interest in the subsidiary at the end of the financial year or at the last financial years of
the subsidiary. The net aggregate amount so far as it concerns members of the holding
company and with in the company’s accounts of subsidiary’s profits after deducting
its losses. The statement should also include the details on any material changes
which have occurred between the end of financial year and last of the financial years
of the subsidiary and the end of the holding company’s financial year in respect of :
1. The subsidiary’s fixed assets
2. Its investments.
3. The money lent by it
4. The amount of money borrowed by it for any purpose other than that of meeting
current liabilities.
T.Y.B.B.I. 36

Financial reporting

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