TRANSFORMING WITH PASSION Jeeef<e&keâ efjheesš& Annual Report 2005-06 CMD, Dr. Anil K. Khandelwal welcoming Rahul Dravid, Brand Hon’ble Finance Minister Mr. P. Chidambaram addressing the Ambassador of the Bank on 6th June 05 – Logo launch day. Board of Directors at Corporate Centre, Mumbai on 6th January 06. Hon'ble Finance Minister Mr. P. Chidambaram inaugurating new customer centric initiatives at Corporate Centre, Mumbai on 6th January 06. Mr. Vinod Rai, Director, inaugurating the state-of-the-art Mr. Keith Vaz, MP, Leicester East, inaugurating Bank's 8th branch in Data Centre of the Bank in Mumbai on 10th December 05. U.K. on 3rd August 05 with CMD, Dr. Anil K. Khandelwal & Baroness Usha Prashar of Runnymede CBE, the Guest of Honour. efJe<eÙe metÛeer Contents Jeeef<e&keâ efjheesš& Annual Report 2005-06 he=‰ DeOÙe#eerÙe JekeäleJÙe................................ 24 efveosMekeâeW keâer efjheesš& .............................. 26 «eeHeâ ............................................. 43 cenlJehetCe& efJeòeerÙe metÛekeâ.......................... 45 legueve-he$e ........................................ 48 ueeYe-neefve uesKee ................................. 49 vekeâoer-ØeJeen efJeJejCeer ............................ 81 uesKee hejer#ekeâeW keâer efjheesš& ........................ 83 mecesefkeâle efJeòeerÙe efJeJejefCeÙeeb ...................... 85 keâeheexjsš-efveÙeb$eCe................................ 113 veesefšme ......................................... 141 Page F&meerSme / Øee@keämeer Heâece& / GheefmLeefle heÛeea ........ 145 Chairman's Statement ................................5 Directors' Report .........................................7 Graphs ..................................................... 43 Key Financial Indicators ........................... 45 Balance Sheet.......................................... 48 Profit & Loss Account............................... 49 Cash Flow Statement............................... 81 Auditors' Report ....................................... 83 Consolidated Financial Statements ......... 85 Corporate Governance ........................... 113 Notice ..................................................... 141 ECS / Proxy Form / Attendance Slip ...... 145 Jeeef<e&keâ efjheesš& Annual Report 2005-06 efveosMekeâ ceb[ue Board of Directors [e@. Deefveue kesâ. Keb[sueJeeue DeOÙe#e SJeb ØeyebOe efveosMekeâ Dr. Anil K. Khandelwal Chairman & Managing Director ßeer S.meer. cenepeve ßeer efJeveeso jeÙe ßeer SÛe. Sve. Øemeeo keâeÙe&keâejer efveosMekeâ Shri Vinod Rai ShrI H. N. Prasad Shri A. C. Mahajan Executive Director ßeer šer. kesâ. yeeueemegyeÇceefCeÙeve ßeerceleer cemej&le Meeefno ßeer cee@efueve S. Jew<CeJe Shri T. K. Balasubramanian Smt. Masarrat Shahid Shri Maulin A. Vaishnav [e@. Øeoerhe Sve. Keeb[Jeeuee [e@. Oecexvõ Yeb[ejer ßeer ceves<e heer. cesnlee ßeer oerhekeâ yeer. Heâeškeâ Dr. Pradeep N . Khandwalla Dr. Dharmendra Bhandari Shri. Manesh P. Mehta Dr. Deepak B. Phatak Jeeef<e&keâ efjheesš& Annual Report 2005-06 ceneØeyebOekeâ General Managers Jeer. pes. mebleevece Jeer.Sme. nsieÌ[s V.J. Santhanam V.S. Hegde kesâ.kesâ. De«eJeeue [er.S. heejsKe K.K. Agarwal D. A. Parekh Sce.yeer. meeceble Sme.heer. De«eJeeue M.B. Samant S.P. Agarwal Deej.kesâ. ieie& Sme. JewÅeveeLeve R.K. Garg S. Vaidyanathan yeer.peer. yeeefjÙee [er.[er. ceensMJejer B.G. Baria D.D. Maheshwari pes.kesâ. Ûeboj Sme.meer. keâeefueÙee J.K. Chander S.C. Kalia yeer.S. ØeYeekeâj Sce.Sce. iee[efieue B.A. Prabhakar M.M. Gadgil šer.kesâ. ke=â<Ceve peer.peer. peesMeer T.K. Krishnan G.G. Joshi yeer.heer. Ûe›eâyeleea Deefmele heeue B.P. Chakraborty Asit Pal S.[er. he¤uekeâj Jeer.kesâ. Jecee& ([e@.) A.D. Parulkar V.K. Varma (Dr.) Sme.meer. cesnlee ([e@.) Jeer.kesâ. efJeie S.C. Mehta (Dr.) V.K. Vig uesKee hejer#ekeâ Auditors šer. Deej. Ûe[d{e Sb[ kebâ. Sme. JeWkeâšjece Sb[ kebâ. js Sb[ js meveoer uesKeekeâej meveoer uesKeekeâej meveoer uesKeekeâej T. R. Chadha & Co. S.Venkataram & Co. Ray & Ray Chartered Accountants Chartered Accountants Chartered Accountants peer. yeemeg Sb[ kebâ. peer.heer. keâheeefÌ[Ùee Sb[ kebâ. yeer.meer. pewve Sb[ kebâ. meveoer uesKeekeâej meveoer uesKeekeâej meveoer uesKeekeâej G. Basu & Co. G. P. Kapadia & Co. B. C. Jain & Co. Chartered Accountants Chartered Accountants Chartered Accountants HeÇOeeve keâeÙee&ueÙe yeÌ[ewoe keâeHeexjsš mesvšj efveJesMekeâ mesJeeSb efJeYeeie jefpemš^ej SJeb DevlejCe SpeWš yeÌ[ewoe neTme, meer-26, peer-yuee@keâ, Dee"Jeeb leue, yeÌ[ewoe keâejheesjsš meWšj, cewmeme& keâeJeea keâcHÙetšjMesÙej HeÇe. efue. ceeC[Jeer, JeÌ[esoje 390 006. yeevõe-kegâuee& keâe@cHeueskeäme, meer-26, peer-yuee@keâ, yeebõe-kegâuee& keâe@chueskeäme, 46, SJesvÙet 4, mš^erš veb. 1, yeevõe (Het.), cegbyeF& 400 051. yeebõe (het), cegbyeF& 400 051. yebpeeje efnume, nwojeyeeo 500 034. Head Office Baroda Corporate Centre Investor Services Department Registrars & Transfer Agent Baroda House, C-26, G-Block,8th Floor, Baroda Corporate Centre, M/s. Karvy Computershare Pvt. Ltd. Mandvi, Bandra-Kurla Complex, C-26, G-Block, 46 Avenue 4, Street No.1, Vadodara 390 006. Bandra (E), Bandra-Kurla Complex, Banjara Hills, Mumbai 400 051. Bandra (E), Mumbai 400 051. Hyderabad 500 034. Transforming with Passion Dr. Anil K. Khandelwal Chairman & Managing Director Dear Stakeholder, Fiscal 2005-06 was a momentous year for the Indian economy and for us at Bank of Baroda. We embarked on a major Brand identity change and launched Rahul Dravid as our Brand Ambassador, giving us improved visibility in the market place. We gave a big push to the transformational initiatives by signing up Hewlett Packard (HP) as System Integrator and Technology Partner, for roll out of Core Banking Solution and other technology applications. We launched a number of pioneering customer-centric initiatives like Flexi-timing Service and earned a reputation for being the market leader. Through a special savings campaign and launch of innovative products, we could add 2 million to our customer base. Bank of Baroda now enjoys the trust and confidence of over 27 million customers around the globe. The year was also momentous for us for many other reasons. We could reverse the trend and place the Bank firmly on growth trajectory. Credit growth in particular was robust with retail asset Transforming with Passion 5 The year also saw... A major Visioning Exercise to reclaim the leadership spot base given added thrust. With special efforts mounted, we of the country and transcending many national boundaries. It could sharply improve asset quality and bring down Gross NPA weathered many crises and emerged stronger with passage of and Net NPA. With Risk Management systems in place, the time. The Bank’s long journey through the banking landscape Bank is gearing for Basel-II compliance. has been a story scripted in vision, enterprise, financial prudence and corporate governance. It has also been a story Our International Operations have always been a comparative of ordinary bankers taking the Bank to the premier status in the advantage to the Bank. They posted robust growth and Indian banking industry that it occupies today, through their contributed handsomely to the Bank’s bottomline during the extra-ordinary contributions. year. We expanded our network abroad by adding 2 offices. Our ambition is to extend our global footprints to many more I am convinced in my mind that the best way we can pay tribute countries within the next few years. to our visionary founder is to architect and lay a strong foundation for creating a Bank of the Future for the next century. We have the advantage of competent and committed staff For this, we are preparing to quickly catapult the Bank into the across locations. With a view to harness their talent and provide top league and join the Global Banking community, adopting opportunities for career growth, we launched many employee- and implementing the best global practices, simplified centric initiatives, perhaps the first of their kind in the industry. processes, efficient delivery platforms, innovative business Innovations in HR Management were given a big momentum models and newer skill sets. We are also gearing up to quickly during the year. embrace high technology and transform the Bank into a customer-centric organization. To meet the emerging financial The year also saw us embarking on a major Visioning Exercise needs of diverse customer segments of the 21st century, the to catapult the Bank to the top league and reclaim the leadership Bank would organize and transform itself into a multi-specialist spot by doubling our business size by 2009-10. This exercise Bank and equally, as a One-Stop Shop for Financial Services, also seeks to lay a strong foundation for transforming the Bank delivering World-Class Banking Experience to the customers. into a modern financial conglomerate, enabled by high technology. For assisting us in this process, we commissioned The measures initiated thus far are modest and I am aware the services of a world-class Consultancy Firm. On their advice, that we have a long way to go in our journey to realize our a Unique Retail Loan Delivery Model is being implemented, in aspirations. Even as we embark on this journey, I would like to order to be an active player in the booming retail sector. place on record our gratitude for the contribution made by our yesteryear leaders and employees for the growth of the Bank. With the Indian banking industry slated to enter the phase of consolidation, Bank of Baroda will be exploring the opportunities Let me conclude by saying that the Bank is in good shape, with for inorganic