MIRA INFORM REPORT

Report Date :

25.07.2007

IDENTIFICATION DETAILS

Name :	BANK OF BARODA
Registered Office :	Bank of Baroda Building, Mandvi, Vadodara – 390 006, Gujarat, India
Country :	India
Financials (as on) :	31.03.2007
Date of Incorporation :	1908
Legal Form :	Subject is a Government of India bank. The bank’s shares are traded on the Stock Exchanges.
Line of Business :	Banking Activities

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large

Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well-established and reputed bank having fine track. The bank is progressing well. Directors are reported as experience of and respectable business. Trade relations are reported as fair. Business is active. Payments are usually correct and as per commitments. Fundamentals are strong and healthy. The bank can be considered normal for business dealings at usual trade terms and conditions. The bank can be regarded as a promising business partner in a medium to long-run.

LOCATIONS

Registered Office :	Bank of Baroda Building, Mandvi, Vadodara – 390 006, Gujarat, India
Tel. No.:	91-265-2330274 /2563932
Fax No.:	91-265-2330824 / 2562445
E-Mail :	info@bankofbaroda.com
Website :	http://www.bankofbaroda.com
Head Office :	Suraj Plaza -1, Sayaji Ganj, Baroda - 390005
Tel. No.:	91-0265-2361852 (10 Lines)
Fax No.:	91-0265-2362395 / 2361824/ 2361806
Corporate Office :	C-26, G-Block, Badra Kurla, Bandra, Mumbai-400051 India
Tel. No.:	91-22-66985000 / 04
Fax No.:	91-22-26523500
Central Office :	3, Walchand Hirachand Marg, Ballard Pier, Mumbai – 400 001, Maharashtra
Branches :	The bank has 2715 domestic branches and 39 foreign branches in all major cities in India and Overseas.

DIRECTORS

Name :	Mr. Anil K Khandelwal
Designation :	Chairman & Managing Director
Name :	Mr. V Santhanaraman
Designation :	Executive Director
Name :	Mr. Satish C Gupta
Designation :	Executive Director
Name :	Mr. G C Chaturvedi
Designation :	Nominee (Govt)
Name :	Mr. A Somasundaram
Designation :	Nominee (RBI)
Name :	Mr. Milind N Nadkarni
Designation :	Director
Name :	Mr. Amarjit Chopra
Designation :	Director
Name :	Mr. Masarrat Shahid
Designation :	Director
Name :	Mr. Maulin A Vaishnav
Designation :	Director
Name :	Mr. Dharmendra Bhandari
Designation :	Director
Name :	Mr. Manesh Prabhulal Mehta
Designation :	Director
Name :	Mr. Deepak Bhaskar Phatak
Designation :	Director
Name :	Mr. A Somasundaram
Designation :	Director
Name :	Mr. Milind Narayanrao Nadkarni
Designation :	Director
Name :	Mr. Satish Chander Gupta
Designation :	E D & Wholetime Director

KEY EXECUTIVE

Name :	Shri T.K. Balasubramanian
Designation :	Senior Manager
Address :	T. Nagar Branch, Bank of Baroda, 15- Gopalkrishnan Street, T. NAgar, Chennai – 600017
Date of Birth/Age :	11.06.1947 / 59 Years
Qualification :	M. Com., CAIIB-1
Name :	Mr. V. J. Sanmthanam
Designation :	General Manager
Name :	Mr. B. Samant
Designation :	General Manager
Name :	Mr. R. K. Garg
Designation :	General Manager
Name :	Mr. B. A. Prabhakar
Designation :	General Manager
Name :	Mr. A. D. Parulkar
Designation :	General Manager
Name :	Mr. V. B. L. Saksena
Designation :	General Manager
Name :	Mr. M. L. Rathi
Designation :	General Manager
Name :	Mr. B. D. Joshi
Designation :	General Manager
Name :	Mr. C. H. Palan
Designation :	General Manager
Name :	MR. S. Vaidyanathan
Designation :	General Manager
Name :	Mr. Amitav Sanyal
Designation :	General Manager
Name :	Mr. D. A. Parekh
Designation :	General Manager
Name :	Mr. A. C. Suri
Designation :	General Manager
Name :	Mr. Muneer Khan
Designation :	General Manager
Name :	Mr. D.Rajagopalan
Designation :	General Manager
Name :	Mr. R. K. Bansal
Designation :	General Manager
Name :	Mr. V. K. Sharma
Designation :	General Manager
Name :	Mr. D. D. Maheshwari
Designation :	General Manager
Name :	Mr. K. N. Suvarna
Designation :	General Manager
Name :	Mr. A. S. Khurana
Designation :	General Manager
Name :	Mr. M. S. Malhotra
Designation :	General Manager
Name :	Mr. K. K. Agarwal
Designation :	General Manager
Name :	Dr. K. C. Chakrabarty
Designation :	General Manager
Name :	Mr. R. Krishnamurthy
Designation :	General Manager
Name :	Mr. V. Chandrasekhar
Designation :	General Manager
Name :	Mr. B. G. Baria
Designation :	General Manager
Name :	Mr. J. K. Chander
Designation :	General Manager
Name :	Mr. T. K. Krishnan
Designation :	General Manager
Name :	Mr. B. P. Chakraborty
Designation :	General Manager
Name :	Mr. T. V. Lakshminarayanan
Designation :	General Manager
Name :	Dr. S. C. Mehta
Designation :	General Manager
Name :	Mr. R. P. Bansal
Designation :	General Manager
Name :	Mr. M. T. UDeshi
Designation :	General Manager
Name :	Mr. S. S. Kelkar
Designation :	General Manager
Name :	Mr. M. M. Gadgil
Designation :	General Manager
Name :	Mr. D. K. Govil
Designation :	General Manager
Name :	Mr. Manubhai Parekh
Designation :	General Manager
Name :	Mr. N. L. Khurana
Designation :	General Manager
Name :	Mr. S. P. Agarwal
Designation :	General Manager
Name :	Mr. R. K. Bhalla
Designation :	General Manager
Name :	Mr. S. K. Bansal
Designation :	General Manager
Name :	Mr. V. S. Hegde
Designation :	General Manager
Name :	Mr. G. G. Joshi
Designation :	General Manager
Name :	Mr. P. S. Joshi
Designation :	General Manager
Name :	Mr. M. P. Ranade
Designation :	General Manager
Name :	Mr. N. K. Kapoor
Designation :	General Manager
Name :	Mr. Asit Pal
Designation :	General Manager
Name :	Mr. A. R. Sugumaran
Designation :	General Manager
Name :	Mr. S. P. Garg
Designation :	General Manager
Name :	Mr. Cyril Patro
Designation :	General Manager
Name :	Mr. Prakash Jain
Designation :	General Manager
Name :	Mr. R. K. Velu
Designation :	General Manager
Name :	Mr. P. V. Desai
Designation :	General Manager
Name :	Mr. N. R. Badrinarayan
Designation :	General Manager
Name :	Mr. B. Krishna Kumar
Designation :	General Manager
Name :	Mr. P. L. Kagalwala
Designation :	General Manager
Name :	Mr. D. Sarkar
Designation :	General Manager
Name :	Mr. S. C. Kalia
Designation :	General Manager
Name :	Mr. V. K. Vig
Designation :	General Manager

SHAREHOLDING PATTERN

As on 30.06.2007

Names of Shareholders	No. of Shares	Percentage of Holding
SHAREHOLDING OF PROMOTER AND PROMOTER GROUP
INDIAN
Individuals/ Hindu Undivided Family
Central Government/State Government(s)	196000000	53.81
PUBLIC SHAREHOLDING
INSTITUTIONS
Mutual Funds / UTI	40746372	11.18
Financial Institutions / Banks	1026457	0.28
Insurance Companies	16174397	4.44
Foreign Institutional Investors	73314201	20.13
NON-INSTITUTIONS
Bodies Corporate	6788712	1.86
Individuals	26232870	7.20
Individuals holding nominal share capital in excess of Rs. 0.100 Million	650471	0.18
Non Resident Indians	2509368	0.69
Overseas Corporate Bodies	26200	0.00
Trusts	331654	0.10
Clearing Members	465298	0.13
TOTAL	364266000	100.00

BUSINESS DETAILS

Line of Business :

Banking Activities

GENERAL INFORMATION

No. of Employees :	38774
Bankers :	Ø State Bank of India, Madame Cama Road, Mumbai - 400 021 Ø Reserve Bank of India

Banking Relations :	Good
Auditors :
Name :	Ø B. C. Jain & Company Chartered Accountants Ø K. C. Khanna & Company Chartered Accountants Ø R. K. Khanna & Company Chartered Accountants Ø S. S. Kothari & Associates Chartered Accountants Ø Shah Gupta & Company Chartered Accountants Ø Kalyanwalla and Mistry Chartered Accountants
Associates :	q Indo Zambia Bank Limited, Zambia q Raebareli Kshetriya Gramin Bank q Sultanpur Kshetriya Gramin Bank q Allahabad Kshetriya Gramin Bank q Kanpur Kshetriya Gramin Bank q Pratapgarh Kshetriya Gramin Bank q Fatehpur Kshetriya Gramin Bank q Faizabad Kshetriya Gramin Bank q Bareilly Kshetriya Gramin Bank q Shahjahanpur Kshetriya Gramin Bank q Nainital Almora Kshetriya Gramin Bank q Marudhar Kshetriya Gramin Bank q Aravali Kshetriya Gramin Bank q Bundi Chittorgarh Kshetriya Gramin Bank q Bhilwara Ajmer Kshetriya Gramin Bank q Dungarpur Banswara Kshetriya Gramin Bank
Subsidiaries :	in india q Nainital Bank Limited q BOB Housing Finance Limited q BOB Asset Management Company Limited q BOB Capital Markets Limited q BOB Cards Limited overseas q Bank of Baroda (Kenya) Limited q Bank of (Uganda) Limited q BOB International Finance Limited, Hong Kong q Bank of Baroda (Guyana) Inc. q Bank of Baroda (Botswana) Limited q BOB (UK) Limited

CAPITAL STRUCTURE

Authorised Capital :

No. of Shares	Type	Value	Amount
1500,000,000	Equity Share	Rs.10/- each	RS.15000.000 Millions

Issued, Subscribed

No. of Shares	Type	Value	Amount
365,530,000	Equity Share	Rs.10/- each	RS.3655.300 Millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

PARTICULARS	31.03.2007	31.03.2006	31.03.2005
Capital	3655.300	3655.300	2945.300
Reserves and Surplus	82844.100	74789.100	53332.300
Deposits	1249159.800	936619.900	813334.600
Borrowings	11425.600	48022.000	16408.300
Other Liabilities	84377.000	70839.000	60621.800
Total	1431461.800	1133925.300	946642.300
Cash & Balance with RBI	64135.200	33334.300	27123.200
Balances with Banks & Money at Call & Short Notice	118668.500	101212.100	65418.800
Investments	349436.300	3511142.200	370744.400
Advances	836208.700	599117.800	434003.800
Fixed Assets	10888.100	9207.300	8608.000
Other Assets	52125.000	39911.600	40744.100
Total	1431461.800	1133925.300	94664.300

PROFIT & LOSS ACCOUNT

PARTICULARS	31.03.2007	31.03.2006	31.03.2005
Interest Earned	92126.400	71000.000	64314.200
Other Income	14340.300	12903.300	13443.900
Total Income	106466.700	83903.300	77758.100
Interest Expended	54265.600	38750.900	34521.500
Operating Expenses	27970.400	24828.600	20108.100
Provisions & Contingencies	13966.100	12054.200	163600.100
Total	96202.100	75633.700	70989.700
Net profit for the Year	10264.600	8269.600	6768.400

KEY RATIOS

PARTICULARS	31.03.2006	31.03.2005
Credit Deposit Ratio	59.04	51.20
Investment Deposit Ratio	41.25	48.67
Cash Deposit Ratio	3.45	3.74
Interest Expended / Interest Earned	54.58	53.68
Other Income / Total Income	15.38	17.29
Operating Expense / Total Income	29.59	25.86
Interest Income / Total Funds	6.83	7.16
Interest Expended / Total Funds	3.73	3.84
Net Interest Income / Total Funds	3.10	3.31
Non Interest Income / Total Funds	1.24	1.50
Operating Expense / Total Income	2.39	2.24
Profit Before Provision / Total Funds	1.95	2.57
Net Profit / Total Funds	0.79	0.75
Return On Net Worth (%)	12.28	12.58

STOCK PRICES

Face Value	Rs.10.00/-
High	Rs.319.40/-
Low	Rs.309.00/-

LOCAL AGENCY FURTHER INFORMATION

HISTORY

Bank of Baroda (BOB) was Incorporated in 1908 in the small town of Baroda by the visionary Maharaja, Sir Sayajirao Gaekwad III. Alone with other banks BOB was nationalised in 1969. The first branch of the Bank was opened in the city of Ahmedabad in 1910 while that in the city of Bombay in 1919.  

The bank is recognized as one of the largest providers of credit to domestic industries with a well diversified credit portfolio. It has also been at the forefront of providing trade related products such as export credit to Indian exporters. It provides lending, banking, financing rehabilitation, treasury and investment management services to consumers and to industries. It was the first to venture overseas. 

BOB entered the capital market with its maiden public offer of 100 Millions equity shares of Rs 10 each at a premium of Rs 75 per share aggregating to Rs 8500 Millions in end 1996. The offer is being made to augement the net worth of the bank and in the process take care of future capital adequacy requirements. 

Banks has taken various intitatives in information technology, it has launched OmniBoB providing banking services through Phone and over PC. The OmniBoB suite inculdes AnyBoB (Any Branch Banking), DialBoB (Centralised telebanking Service) and ConnectBoB (PC Banking Service). Bank plans to march ahead in the E-Millennium with renewed focus on the triad of 'Technology, People & Customer'. Its thrust for the future will be on Insurance, E-broking and Retail Banking. 

Further with a view to improve the operational efficiency, the bank has appointed Gartner Group as Consultants who will be looking into the bank's business as well as its IT strategy. International Debit Card project was luanched in 2002-03, in affiliation with VISA. The project envisages insatllation of 500 ATMs in the next financial year. Effective from 19th June,2002 the Benares State Bank was integrated with the Bank.  

The bank has signed an MOU with National Insurance Company Limited for selling their non- life insurance products under Corporate Agency Arrangement. The Bank has introduced five retail lending products they are Baroda Home Improvement loan, Baroda festival Loan, Baroda Professional Loan, Baroda Eco-friendly Gas Kit Loan, Loan to individual for subscribing to Public Issues of PSUs/Blue Chips companies, Advances against Future Rent Receivables and Baroda Loan for Executive Development. 

In the year 2004-05 the bank has expanded its interconnected ATM network to cross 501, spread over 180 centres in the country. The bank has also introduced 8AM to 8PM banking at 101 branches and 24-Hour banking at 5 branches in the country. Further the company has launched its new logo 'The Baroda Sun' in June 2005. The bank will roll out 125 branches in 2005-06 and over 600 branches in the next year.  

During 2004-05 the bank has merged its 11 branches (1- metro, 3- Urban,3- Semi-urban and 4- rural). Further the Bank has amalgamated South Gujarat Local Area Bank Limited with itself with effect from 24th June 2004, which is having 7 branches and the bank has opened 12 new branches during the year.  

The bank has commissioned global data centre during the year 2006 and also given inter-connectivity for over 1300 branches in the country. Another important initiative taken by the bank in the year 2006 was commissioning of new ATMs. The bank has commissioned 464 new ATMs across the country taking the tally to 634. 

During 2006-07, as part of Branch Conslidation Exercise 22 branches were merged with the Bank. The Bank opened 50 new branches during the year, while 3 Extension counters were upgraded into full-fledged branches, 5 Extension Counters were closed. As at March 2006-07, the Bank has a network of 2732 branches. 

The bank opened an offshore branch in Singapore and the Bank operations in Hong Kong through its subsidiary with Restricted Bank License were upgraded into a full service bank. Bank's 2 branches in Hongkong commenced full service banking operations from April 2007. 

The Bank has also got approval for opening branches/offices in Trinibad & Tobago, Ghana, Australia, Bahrain in the near future. The Bank is planning to upgrade/expand its existing network in countries like China, UK, Malayasia, South Africa, Tanzania, Kenya and Botswana. 

During the year under review, the bank also took a major initiative of unifying and integrating the entire Gujarat Operations by merging the erstwhile Central Gujarat and South Gujarat Zones with North Gujarat Zone to form a single entity with Headquarters at Ahmedabad.

MANAGEMENT DISCUSSION AND ANALYSIS:

Economic Environment:

Indian economy has been on a high growth trajectory. It is now the fastest growing economy in the world, next only to China. The India Growth Story continues to hog the headlines around the world.

The Economic Survey forecasts the GDP growth in FY-07 at around 9.2%. Industrial sector is expected to grow by a robust 10% mark. The good thing is that the manufacturing sector is poised to grow in double digit by 11.3%. Services sector is also estimated to grow in double digit by 11.2%. Within this, financial, real estate and business services are gearing up for an estimated growth of 11.1%. However, the growth in agriculture and allied activities - expected to be at just 2.7% - is a matter of concern. This slow growth has endangered stability in consumer prices and resultantly, northward movement in inflation.

During 2006-07, the Indian Capital market scaled newer heights. Three 1,000-point milestones were scaled by the SENSEX- 12,000 on April 20, 13,000 on October 30 and 14,000 on December 5 - during the year. The 30-share benchmark BSE index ended 2006-07 with a growth of 15.9%. Indian corporates raised Rs.1938230 Millions in 2006-07 through debt – 88% over the amount raised last year. Over 65% of the debt - Rs.1249230 Millions - was raised from overseas markets through bonds, foreign currency convertible bonds and syndicated loans.

The Foreign Direct Investment (FDI) target of USD 12 billion for 2006-07 was breached in the first week of February itself and by March 2007, it touched USD 15 billion. And if the reinvested earnings were taken into account, the total FDI in 2006-07 would touch USD 18 billion as against USD 7.5 billion in the previous year. In terms of direct investment, the current financial year has been a landmark, as FDI inflows for the first time overtook FII inflows, indicating robust confidence in India.

The domestic Foreign Exchange Reserves (FER) almost touched USD 200 billion (or precisely USD 199.179 billion) on March 30. In a record accumulation, the country’s FER has gone up by almost USD 50 billion in 2006-07 as compared to mere USD 10.41 billion in 2005-06. The Indian Rupee, which has been consistently gaining against the US$, closed at an 8-year high of 42.92 on 5^th of April. It has gained about 9.5% since reaching a three-year low in July last year.

At this juncture, macro fundamentals of the country’s economy are strong and India continues to be a favoured investment destination. Besides IT sector, in which the country has gained global reputation, India is fast becoming a favourite destination for biotechnology, nano technology and as a manufacturing hub.

India’s Services sector continues to grow, with knowledge economy contributing a lion’s share to this sector. The country’ status as an emerging economic and knowledge superpower is hitting the headlines around the world. India’s vision to be part of the league of developed economies by 2020 is increasingly becoming realizable.

Banking Sector: Key Developments, Opportunities & Challenges:

The Indian financial system is proving to be more than resilient in coping with the vagaries of liberalization and globalization. The Indian banking system has been showing a steady growth of around 15%. Expansionary phase of the Indian economy has brought in its wake unprecedented spurt in bank credit - around 30% last year. In tandem with such large credit growth, banks have been experiencing pressure on their resources. The northward direction in the movement of interest rates has begun to strain the banking sector’s bottomline. Banks have also been struggling to cope with the asset-liability mismatches. One relief granted by RBI is to allow banks to raise infrastructure bonds to balance their long term infrastructure financing.

Given the current upturn in the industrial cycle, the asset quality is improving. This is getting reflected in the declining gross and net NPA levels of many banks. Apart from corporate credit, retail credit has gained good momentum in the last 3-4 years. According to one estimate, India’s retail banking business is set to grow at over 15% in the next five years. Prospects for FY-08 are good despite continuous hardening of interest rates on retail loans.

However, some leading indicators point out early signs of overheating. Although RBI feels that these signs of overheating are transient, its concern largely centres around high credit growth in the realty sector. Rising credit card and personal loan default rates are also emerging as major areas of concern for the regulator. The pace at which growth in credit has been outstripping the deposit growth has led to growing fears of a credit crunch, sharply rising lending rates and a hard landing for the Indian economy. These conditions have forced the regulator in taking some tightening measures in the recent times. During the whole fiscal year, it hiked the Cash Reserve Ratio (CRR) thrice and Repo Rate four times. These have helped in moderating the extent of overheating to an extent. The growth rate of unproductive retail loans, especially loans for commercial real estate, capital markets, etc. has come down significantly. Responding to these changes in regulatory policies, banks are moving towards productive sectors like Small & Medium Enterprises (SME), Farm Sector and the productive segments of Retail Sector.

Barring these temporary glitches, the Indian banking sector has grown stronger and competitive in the recent times. In the matter of technology, Indian banks have taken steps forward for expanding the coverage of branches under Centralized Core Banking Solution (CBS), besides widening the network of alternate e-delivery channels like ATMs, Internet Banking, Phone Banking, Mobile Banking, Call Centre, etc. A large variety of e-products and services is being added by the day for facilitating convenience banking to the customers. Banks have begun to place the customer at the very centre of their strategies and transformation programmes, in their quest to become customer-centric organizations.

Indian banking sector has moved steadily, though slowly, towards consolidation in the form of mergers and alliances. Merger of United Western Bank Limited with IDBI Bank Limited, Sangli Bank Limited with ICICI Bank Limited and take over of some banks overseas by State Bank of India and Bank of India are some recent examples. Strategic alliance among 3 public sector banks for limited purposes such as sharing of ATM network, marketing of each other’s products, collaboration in financing of projects, etc. is another major event during the year, in the realm of cooperation and collaboration among the banks to acquire size and improve their competitive strength. These developments are a pointer towards the Indian banking sector gearing itself to face the challenges of the post-2009 scenario, when competition from foreign banks will intensify.

Regarding implementation of Basel-II standards, the banks, especially smaller banks, are facing challenges. Higher capital provisioning has started putting pressure on the profitability of the banks. Consolidation of banks can be a remedy in diversifying the asset and liability portfolio of the individual banks, as well as in creating banks with bigger asset base.

And for India to continue on its current growth trajectory, continuation of further consolidation and competitiveness of the banking system will be a critical issue. This will give vibrancy and strength to the industry, which is essential to fund the needs of the growing economy. Today India’s banking sector generates nearly 2.5% of GDP and employs 900,000 people. With full reform, according to an estimate by McKinsey & Co., it could generate up to 7.5% of GDP and employ 1,500,000 people, as well as boost investment and growth throughout the economy. And looking at the present initiatives, the banking system appears fully geared to achieve this potential.

Market Risk:

The overall responsibility for managing and monitoring the market risk rests with the “Assets Liability Management Committee” (ALCO) of the Bank. ALCO decides the size, composition, tenor of assets and liabilities. It also decides domestic term deposit rates; bulk deposit rates and changes in the Benchmark Prime Lending Rate (BPLR). ALCO also decides the Transfer Price Mechanism. ALCO also reviews inflow and outflow of funds on a static and dynamic basis at monthly intervals.

The primary responsibility of Asset Liability Management Cell is to manage liquidity and interest rate risks. Liquidity risk is measured on a continuous basis through “Structural Liquidity Gap” reports. Liquidity is also estimated on a dynamic basis through the “Short-term Dynamic Liquidity” reports. The ultimate objective is to maintain Optimum Liquidity and deploy all surplus funds profitably. The “Gap Reports” have also helped the Bank in matching short-term assets and short-term liabilities, medium term assets and medium term liabilities within the tolerance limit set in the ALM Policy. Further, it has also helped in identifying the size and tenor of assets and liabilities to support liquidity position on a continual basis.

Operational Risk:

The Bank’s “Operational Risk Management Committee” provides guidelines to identify and manage the Operational Risk. Operational Risk is measured through tracking of the loss data. Subsequently, suitable remedial measures are suggested to mitigate this risk.

Four critical Business Segments:In order to be able to transform into a “Multi-specialist Bank”, the Bank has redefined four critical Business Segments – which are redefined by products and service needs of distinct customer groups:

• Retail
• SME
• Wholesale (Mid-corporate & Large corporate)
• Rural/Agri. Businesses

Regrouping of Customers: Under the New Business Model, business – both on the liability and asset sides – of each segment will be driven by a General Manager at Corporate Centre. For this purpose, the existing customers will be regrouped along the 4 segments. The Annual Performance Budgeting Exercise will also be realigned along the New Business Segments.

Regrouping of Branches: Branches would also be regrouped under the 4 business segments, broadly on the following lines:

• Wholesale Banking Segment will be migrated from different branches in the country and housed and serviced in Corporate Financial Services Branches (CFS) at different centres (existing + new).
• Other branches in metro/urban centres will focus on Retail and/or SME Banking.
• Semi-urban branches will also focus on Retail and/or SME Banking, depending on the potential.
• Rural branches will largely focus on Rural and Agri. Banking.

New Performance Management System under implementation: The New Performance Management System is intended to help the Bank – across the organization – move to business orientation from the present largely functional orientation. It will also have to move from the present measurement based on geography and outstanding balances in deposits and advances to a mix of business segments and geography. In the next stage, the Bank will have to move towards measuring performance by revenue and eventually by profit. Towards implementing the new system, the Bank would also be taking steps to revamp and refine the MIS.

New Performance Appraisal System under implementation: The New Employee Performance Appraisal System, under implementation on pilot basis, for about 3,000 top business leaders, is intended to remove the weaknesses of the present system and progress towards evaluating performance of the employees by business performance parameters, which are measurable and output-driven. Number of performance metrics under the new system will be limited and focused. Monthly average balances will be used for performance evaluation.

The overall objective is to bring about better connect and synergy between the New Performance Management and Performance Appraisal Systems, in order that the Bank is enabled to raise the bar of its performance continually.

BUSINESS PERFORMANCE: Resource Mobilization:

The share of Bank’s deposits to total resources was at 87.26% as of 31st March 2007. Total deposits grew from Rs.936619.900 Millions to Rs.1249159.800 Millions, reflecting a growth of 33.37% over the previous year. Of this, Savings Bank Deposits - an important constituent of low cost deposits - grew by 16.26% - from Rs.271604.400 Millions to Rs.315772.800 Millions. Share of low cost deposits (Current & Savings) to Total Global Deposits was at 33.18% and to Domestic Deposits was at 38.67%. The banking industry as a whole witnessed a movement from low cost deposits to term deposits during the year, in view of sharp increase in the term deposit rates.

Baroda Swarojgar Vikas Sansthan (BSVS): The Bank added four more BSVS centers – Dungarpur, Banswara, Chittorgarh and Amethi – which are an exclusive institution of the Bank for training the youth and imparting them knowledge and skills required for taking up self-employment ventures. Total number of such centres has gone up to 11 as at end-March 2007 from 7 in March 2006. One of the centres - Ajmer in Rajasthan - was set up to provide focused training to the women entrepreneurs and is manned by the women employees of the Bank.

Treasury Operations: The year 2006-07 was eventful [H] for financial markets. The year witnessed a series of monetary measures taken by RBI. These included measures relating to rising inflation, rising interest rates, volatile stock market, appreciating rupee and tight liquidity. Together, these contributed to high uncertainty in the financial markets.

The second half of 2006-07 witnessed a series of liquidity tightening measures adopted by the RBI to bring price stability and to contain inflation to the targeted level of 5 to 5.5%. RBI intervened thrice to raise Cash Reserve Ratio from 5.00% to 6.50% in five steps, the last rise of 50 basis points being announced on 30th March 2007. Repo rate was raised from 6.5% to 7.75% during the year, widening the corridor between Repo and Reverse Repo rate from 100 basis points to 175 basis points. RBI also fixed a cap of Rs.30000 Millions on Reverse Repo transactions apart from other measures such as increase in provision for standard assets and increasing the risk weightage on credit to certain sensitive sectors. These measures resulted in tighter liquidity position and Call Money rate reached a peak of 80%, though briefly, in March 2007.

The Bank was, however, active in the Money Market, earning healthy income in the short-term operations, apart from exploiting arbitrage opportunities that existed between different markets, for augmenting its earnings.

The measures taken by RBI impacted the bond market quite adversely with yields in the short end rising by 100 basis points. While the annualized yield on 1 year G-sec moved from 6.69% to 7.70%, the yield on 10 year G-sec moved from 7.54% to 8.13%. The corporate bond yields also moved up in tandem with the G-sec yields, with the spread for “AAA” rated bonds over the one year G-sec going up to 256 basis points. With a view to insulate itself from the adverse effect of increasing interest rates in the Fixed Income portfolio, the Bank shifted additional SLR Securities from “Available for Sale (AFS)” to “Held to Maturity (HTM)” category in April 2006. This de-risking measure helped the Bank avoid further depreciation on the securities so transferred.

The Equity Market too witnessed high volatility during the year. The benchmark sensex, which was 11,280 on 31st March 2006, rose to 12,671 in May 2006 on the back of robust economic growth as reflected by GDP growth and good corporate results. However, it nosedived to 8,799 points in June 2006 as a result of global meLimitedown. During the latter part of the year, the market moved up quite sharply and reached a historic high of 14,723 points in February 2007, but subsequently retracted to close at 13,072 points on 31st March 2007. However, the Equity Desk of the Bank remained active and earned reasonable income through prudent market operations.

In the foreign exchange market, Indian rupee appreciated by 3.04% against US Dollar during the year. It moved from Rs.44.45 per USD to Rs.43.10 per USD mainly on account of accelerated inflows of foreign capital. It oscillated between a high of Rs.47.00 and a low of Rs.43.00 against US Dollar.

The Bank’s integrated Treasury continued to be a prominent market maker in USD/Euro. The Bank’s Foreign Exchange Dealing Room took advantage of the increasing foreign exchange volume triggered by steady foreign exchange inflows and enhanced the volume of merchant transactions to earn good profit for the Bank.

State-of-the-Art Dealing Room of the Bank at Mumbai handles the entire gamut of foreign exchange transactions and derivative products. The advanced technology environment is being leveraged by the Bank to offer a variety of products to its clients by way of hedging instruments such as Interest Rate Swaps, Currency Swaps and Options.

Through the Automated Dealing System, the Bank quotes auto generated real time foreign exchange rates to its customers at all authorized branches in India, thereby providing them the feel of the real time market. A new system to provide live rates to the customers is also on the anvil.

As part of its business reengineering, the Bank is in the process of implementing Global Treasury Solution across all locations in India and abroad. When implemented, the Global Treasury will link the branches of the Bank spread over major financial centers of the world and help the Bank in better Global Risk Management and effective deployment of resources.

The Derivative market in India is picking up quite fast and volumes are growing continuously, as corporates look for more and more customized products to hedge their exposure in volatile currency and money market environment. To cater to this requirement, the Bank has set up an active derivatives desk at its Treasury Branch, which offers custom-made derivative products to the clients.

The Market Risk Management plays a significant role in the Bank’s Treasury Operations. A full-fledged Mid-office in Treasury Division monitors and manages various exposures and limits fixed by the Board of Directors on real time basis, using advanced technology. The Risk Management Tool such as Value at Risk (VaR) is used to measure the Market risk on all portfolios. Furthermore, the back testing of VaR number is conducted on daily basis to confirm the veracity of the forecasted values. The Stress Testing of all portfolios is also done to complement the VaR analysis.

Repositioning of Gujarat Operations:

During the year, the Bank took a major initiative of unifying and integrating the entire Gujarat Operations, by merging the 2 erstwhile Central Gujarat and South Gujarat Zones with North Gujarat Zone, to form a single entity, with headquarters at Ahmedabad. The objective was for the Bank to emerge as a Primary Banker to the State of Gujarat. A 10-Point Agenda for Gujarat Operations is now under implementation. This initiative has received good response from the Govt. of Gujarat and has helped enhance the Bank’s image and improve its business performance in the State.

ISO Certification:

In its journey towards improving quality management, 616 branches and offices including 47 specialized branches were brought under ISO certification.

These include Bank’s Staff College at Ahmedabad, all Training Centres at different locations, Central Audit & Inspection Division, all Zonal Inspection Centres, Inter-Branch Operations/HO Demand Drafts Departments, Specialized Integrated Treasury Branch, Mumbai, International Division and Credit Operations Division, BCC, Mumbai.

Gen-Next Branch: To respond to the needs of the changing demographic profile of the country, the Bank has been endeavoring to customize delivery channels designed especially for Youth Segment. As part of these efforts, the Bank has setup an innovative branch – “Gen-Next Branch” dedicated to youth and young IT Professionals at Pune. Besides youth-specific products, the Branch will function as a model for fusion of “Hi-tech and Hi-touch Banking”.

INTERNATIONAL OPERATIONS:

True to the Bank’s strong presence in different geographies and markets around the world and in line with the tagline, “India’s International Bank”, to its logo, Bank’s international operations scaled a new high in business and profit performance during the year.

The expansion of branch network - opening of an offshore branch in Singapore, identification of new expansion opportunities around the globe, stress on increasing local business, active participation in overseas loan syndication, arranging of funds, assisting Indian corporates in accessing External Commercial Borrowings (ECB) and funding their requirements for Acquisition Finance, aggressive marketing campaigns and technology upgradation, were some of the landmark developments during the year.

Future Plans:

• In all, 1,919 domestic branches and 55 overseas branches will be brought on the CBS platform by March 2008.
• Many value added services are would be made available both on the Internet banking channel and the ATM channel. This will include utility bills payments, rail/air bookings, etc.
• To automate and centralize Bank’s internal functions, various other solutions like HRMS, Pay Roll, Mail & Messaging, e-Learning, etc. would be implemented.
• All the Forex Dealing Rooms of the Bank will be integrated through a Global Treasury System during the year.
• A robust Credit Risk Management System enabled to meet Basel-II norms, now on pilot, will made fully operational during the year.
• To help branches to focus totally on sales and service, a concept of Back Office Processing Centers has been evolved. 15 Service branches of the Bank in India are now functioning as City Back Offices (CBOs), handling entire clearing functions. 5 Regional Back Offices (RBOs) will be set up during the year to handle other back office activities.

Web Details Attached :

It has been a long and eventful journey of almost a century across 21 countries. Starting in 1908 from a small building in Baroda to its new hi-rise and hi-tech Baroda Corporate Centre in Mumbai, is a saga of vision, enterprise, financial prudence and corporate governance.

It is a story scripted in corporate wisdom and social pride. It is a story crafted in private capital, princely patronage and state ownership. It is a story of ordinary bankers and their extraordinary contribution in the ascent of Bank of Baroda to the formidable heights of corporate glory. It is a story that needs to be shared with all those millions of people - customers, stakeholders, employees & the public at large - who in ample measure, have contributed to the making of an institution.

Mission statement

To be a top ranking National Bank of International Standards committed to augmenting stake holders' value through concern, care and competence.

It’s new logo is a unique representation of a universal symbol. It comprises dual ‘B’ letterforms that hold the rays of the rising sun. The Bank call this the Baroda Sun.

The sun is an excellent representation of what our bank stands for. It is the single most powerful source of light and energy – its far reaching rays dispel darkness to illuminate everything they touch. At Bank of Baroda, The Bank seek to be the source that will help all our stakeholders realise their goals. To their customers, The Bank seek to be a one-stop, reliable partner who will help them address different financial needs. To their employees, The bank offer rewarding careers and to our investors and business partners, maximum return on their investment.

The single-colour, compelling vermillion palette has been carefully chosen, for its distinctiveness as it stands for hope and energy.

The bank also recognize that their bank is characterized by diversity. It’s network of branches spans geographical and cultural boundaries and rural-urban divides. It’s customers come from a wide spectrum of industries and backgrounds. The Baroda Sun is a fitting face for their brand because it is a universal symbol of dynamism and optimism – it is meaningful for their many audiences and easily decoded by all.

It’s new corporate brand identity is much more than a cosmetic change. It is a signal that The bank recognize and are prepared for new business paradigms in a globalised world. At the same time, The bank will always stay in touch with their heritage and enduring relationships on which their bank is founded. By adopting a symbol as simple and powerful as the Baroda Sun, The bank hope to communicate both.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.40.60
UK Pound	1	Rs.80.13
Euro	1	Rs.54.87

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	9
PAID-UP CAPITAL	1~10	7
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	9
--LEVERAGE	1~10	9
--RESERVES	1~10	9
--CREDIT LINES	1~10	9
--MARGINS	-5~5	---
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		72

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average/normal.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions