Asset Liabilities Manatgement Leo Labs

8/15/2019 Asset Liabilities Manatgement Leo Labs

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INTRODUCTION

Asset Liability Management (ALM) is a strategic approach of managing the

balance sheet dynamics in such a way that the net earnings are maximized. This

approach is concerned with management of net interest margin to ensure that its

leel and ris!iness are compatible with the ris! return ob"ecties of the .

#f one has to define Asset and Liability management without going into

detail about its need and utility$ it can be defined as simply % management of money” which carries alue and can change its shape ery &uic!ly and has an

ability to come bac! to its original shape with or without an additional growth.

The art of proper management of healthy money is

ASSET AND LIABILITY MANAGEMENT (ALM)

The Liberalization measures initiated in the country resulted in reolutionary

changes in the sector. There was a shift in the policy approach of s from the

traditionally administered mar!et regime to a free mar!et drien regime. This

has put pressure on the earning capacity of co'operatie s$ which forced them to

foray into new operational areas thereby exposing themseles to new ris!s.

As ma"or part of funds at the disposal of s come from outside sources$ the

management are concerned about RISK arising out of shrin!age in the alue of

asset$ and managing such ris!s became critically important to them. Although

co'operatie s are able to mobilize deposits$ ma"or portions of it are high cost

fixed deposits. Maturities of these fixed deposits were not properly matched

with the maturities of assets created out of them. The tool called ASSET AND

LIABILITY MANAGEMENT proides a better solution for this.


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ASSET LIABILITY MANAGEMENT (ALM) is a portfolio management of

assets and liability of an organization. This is a method of matching arious

assets with liabilities on the basis of expected rates of return and expected

maturity patter

#n the context of s$ ALM is defined as %a process of ad"usting s liability to meet

loan demands$ li&uidity needs and safety re&uirements.This will result in

optimum alue of the $ at the same time reducing the ris!s faced by them and

managing the different types of ris!s by !eeping it within acceptable leels.

NEED O! T"E STUDY#

The need of the study is to concentrates on the growth and performance of Leo

Labs and to calculate the growth and performance by using asset and liability

management to !now the management of nonperforming assets.

• To !now financial position

• To analyze existing situation

• To improe the performance

• To analyze competition

SCO$E O! T"E STUDY#

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#n this study the analysis based on ratios to !now asset and liabilities

management underLeo Labs and to analyze the growth and performance of Leo

Labs by using the calculations under asset and liability management based on

ratio.

• +atio analysis

• ,omparatie statement

• ,ommon size balance sheet.

OB%ECTI&ES O! T"E STUDY

To study the concept of Assets - Liability Management

To study process of ,ash #nflows - ut /lows

To study +is! Management

To study +eseres ,ycle of ALM

To study /unctions - b"ecties of ALM committee.

MET"ODOLOGY O! T"E STUDY

The study of ALM Management is based on two factors.

*. 0rimary data collection.

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1. 2econdary data collection

$RIMARY DATA COLLECTION#

The sources of primary data were

The chief manager 3 ALM cell

4epartment 2r. manager financing - Accounting

2ystem manager' ALM cell

5athering the information from other managers and other officials of the

SECONDARY DATA COLLECTION#

,ollected from boo!s regarding$ "ournal$ and management containing

releant information about ALM and ther main sources were

Annual report of the Le' Labs

0ublished report of the

RBI guidelines for ALM

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LIMITATION O! T"E STUDY#

*. This sub"ect is based on past data of the company

1. The analysis is based on structural li&uidity statement and gap

analysis.

6. The study is mainly based on secondary data.

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RE&IE O! LITERATURE

ASSET LIABILITY MANAGEMENT (ALM) SYSTEM

Int'd*+ti'n#

#n the normal course$ the s are exposed to credit and mar!et ris!s in iew of the

asset liability transformation. 8ith the liberalization in the

#ndian financial mar!ets oer the last few years and growing integration of

domestic mar!ets and with external mar!ets the ris!s associated with s

operations hae become complex$ large$ re&uiring strategic management. s are

now operating in a fairly deregulated enironment and are re&uired to determine

on their own$ interest rates on deposits and adance in both domestic and

foreign currencies on a dynamic basis. The interest rates on s inestments in

goernment and other securities are also now mar!et related. #ntense

competition for business inoling both the assets and liabilities$ together with

increasing olatility in the domestic interest rates$ has brought pressure on the

management of s to maintain a good balance among spreads$ profitability and

long'term iability. #mpudent li&uidity management can put s earnings anreputation at great ris!. These pressures call for structured and comprehensie

measures and not "ust adahoc action. The management of s has to base their

business decisions on a dynamic and integrated ris! management system and

process$ drien by corporate strategy. s are exposed to seeral ma"or ris!s in

course of their business'credit ris!$ interest rate and operational ris! therefore

important than s introduce effectie ris! management systems that address theissues related to interest rate$ currency and li&uidity ris!s.

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:eed to address these ris!s in a structured manner by upgrading their ris!

management and adopting more comprehensie Asset'Liability management

(ALM) practices than has been done hitherto. ALM among other functions$ is

also concerned with ris! management and proides a comprehensie and

dynamic framewor! for measuring$ monitoring and managing li&uidity interest

rate$ foreign exchange and e&uity and commodity price ris! of a that needs to

be closely integrated with the s business strategy. #t inoles assement of

arious types of ris!s altering the asset liability portfolio in a dynamic way in

order to manage ris!s.

The initial focus of the ALM function would be to enforce the ris! management

discipline$ iz. and managing business after assessing the ris!s inoled.

#n addition$ the managing the spread and ris!iness$ the ALM function is more

appropriately iewed as an integrated approach which re&uires simultaneous

decisions about asset;liability mix and maturity structure.

RIS, MANAGEMENT IN ALM

+is! management is a dynamic process$ which needs constant focus and

attention. The idea of ris! management is a well'!nown inestment principlethat the largest potential returns are associated with the ris!iest entures. There

can be no single prescription for all times$ decisions hae to be reersed at short

notice. +is!$ which is often used to mean uncertainty$ creates both opportunities

and problems for business and indiiduals in nearly eery wal! of life.

+is! sometimes is consciously analyzed and managed< other times ris! is

simply ignored$ perhaps out of lac! of !nowledge of its conse&uences. #f loss

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regarding ris! is certain to occur$ it may be planned for in adance and treated

as to definite$ !nown expense. >usinesses and indiiduals may try to aoid ris!

of loss as much as possible or reduce its negatie conse&uences.

2eeral types of ris!s that affect indiiduals and businesses were introduced$

together with ways to measure the amount of ris!. The process used to

systematically manage ris! exposure is !nown as RIS, MANAGEMENT

8hether the concern is with a business or an indiidual situation$ the same

general steps can be used to systematically analyze and deal with ris!.

STE$S IN RIS, MANAGEMENT#

+is! identification

+is! ealuation

+is! management techni&ue

+is! measurement

+is! reiew decisions

#ntegrated or enterprise ris! management is an emerging iew that recognizes

the importance of ris!$ regardless of its source$ in affecting a firms ability to

realize its strategic ob"ecties. The detailed ris! management process is as

follows<

Ris- identi.i+ati'n#

The first step in the ris! management process is to identify relevant exposures to

risk. This step is important not only for traditional ris! management$ which

focuses on uncertainty of ris!s$ but also for enterprise ris! management$ where

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much of the focus is on identifying the firm@s exposures from a ariety of

sources$ including operational$ financial$ and strategic actiities.

Ris- e/al*ati'n#

/or each source of ris! that is identified$ an ealuation should be performed. At

this stage$ uncertainty of ris!s can be categorized as to how often associated

losses are li!ely to occur. #n addition to this ealuation of loss fre&uency$ an

analysis of the size$ or seerity$ of the loss is helpful. ,onsideration should be

gien both to the most probable size of any losses that may occur and to the

maximum possible losses that might happen.

Ris- management te+0ni1*es#

The results of the analyses in second step are used as the basis for decisions

regarding ways to handle existing ris!s. #n some situations$ the best plan may be

to do nothing. #n other cases$ sophisticated ways to finance potential losses may

be arranged. The aailable techni&ues for managing ris!s are 5A0 Analysis$

A+ Analysis$ Beinrich 4omino theory etc.$ with consideration of when eachtechni&ue is appropriate.

Ris- meas*ement#

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nce ris! sources hae been identified it is often helpful to measure the extent

of the ris! that exists. As part of the oerall ris! ealuation$ in some situations it

may be possible to measure the degree of ris! in a meaningful way. #n other

cases$ especially those inoling indiiduals computation of the degree of ris!

may not yield helpful information.

Ris- e/ie2 de+isi'ns#

/ollowing a decision about the optimal methods for handling identified ris!s$

the business or indiidual must implement the techni&ues selected. Boweer$

ris! management should be an ongoing process in which prior decisions are

reiewed regularly. 2ometimes new ris! exposures arise or significant changes

in expected loss fre&uency or seerity occur. The dynamic nature of many ris!s

re&uires a continual scrutiny of past analysis and decisions.

DIMENSIONS O! RIS,

2pecifically two broad categories of ris! are the basis for classifying financial

serices ris!.

(3)$'d*+t ma-et Ris-

(4)Ca5ital ma-et Ris-

Dconomists hae long classified management problems as relating to either The

0roduct Mar!ets +is!s or The ,apital Mar!ets +is!s.

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TOTAL !INANCIAL SER&ICES !IRMS RIS,

Total +is!

(+esponsibility of ,D)

>usiness +is! /inancial +is!

0roduct Mar!et +is! ,apital Mar!et +is!

(+esponsibility of the (+esponsibility of the

,hief perating fficer) ,hief /inancial fficer)

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,redit #nterest rate

2trategic Li&uidity

+egulatory currency

perating 2ettlement

Buman resources >asis

Legal

(I)$RODUCT MAR,ET RIS,#

This ris! decision relate to the operating revenues and expenses of the form

that impact the operating position of the profit and loss statements which

include crisis$ mar!eting$ operating systems$ labor cost$ technology$ channels of

distributions at strategic focus. 0roduct +is!s relate to ariations in the

operating cash flows of the firm$ which effect ,apital Mar!et$ re&uired +ates f

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+is! in 0roduct Mar!et relate to the operational and strategic aspects of

managing operating reenues and expenses. The aboe types of 0roduct +is!s

are explained as follows.

CREDIT RIS,#

The most basic of all 0roduct Mar!et +is! in a or other financial intermediary

is the erosion of alue due to simple default or non'payment by the borrower.

,redit ris! has been around for centuries and is thought by many to be the

dominant financial serices today. s intermediate the ris! appetite of lenders and

essential ris! ness of borrowers. s manage this ris! by < (A) ma!ing intelligent

lending decisions so that expected ris! of borrowers is both accurately assessed

and priced< (B) 4iersifying across borrowers so that credit losses are not

concentrated in time< (C) purchasing third party guarantees so that default ris!

is entirely or partially shifted away from lenders.

(4). STRATEGIC RIS,#

This is the ris! that entire lines of business may succumb to competition or

obsolescence. #n the language of strategic planner$ commercial paper is a

substitute product for large corporate loans. 2trategic ris! occurs when a is not

ready or able to compete in a newly deeloping line of business. Darly entrants

en"oyed a uni&ue adantage oer newer entrants. The seemingly conseratieact of waiting for the mar!et to deelop posed a ris! in itself. >usiness ris!

accrues from "umping into lines of business but also from staying out too long.

(6) COMMODITY RIS,#

,ommodity prices affect s and other lenders in complex and often unpredictable

ways. The macro effect of energy price increases on inflation also contributed to

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a rise in interest rates$ which adersely affected the alue of many fixed rate

financial assets. The subse&uent crash in oil prices sent the process in reerse

with nearly e&ually deastating effects.

(7) O$ERATING RIS,#

Machine'based system offer essential competitie adantage in reducing costs

and improing &uality while expanding serice and speed. :o element of

management process has more potential for surprise than systems malfunctions.

,omplex$ machine'based systems produce what is !nown as the “black box

effect”. The inner wor!ing of system can become opa&ue to their users. >ecause

deelopers do not use the system and users often hae not constitutes a

significant 0roduct Mar!et +is!. :o financial serice firm can small

management challenge in the modern financial serices company.

(8) "UMAN RESOURCES RIS,#

/ew ris!s are more complex and difficult to measure than those of personnel

policy< they are Recruitment, Training, Motivation and Retention. +is! to the

alue of the :on'/inancial Assets as represented by the wor! force represents amuch more subtle of ris!. ,oncurrent with the loss of !ey personal is the ris! of

inade&uate or misplaced motiation among management personal. This human

redundancy is conceptually e&uialent to safety redundancy in operating

systems.

(9) LEGAL RIS,#

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This is the ris! that the legal system will expropriate alue from the

shareholders of financial serices firms. The legal landscape today is full of

ris!s that were simply unimaginable een a few years ago. More oer these

ris!s are ery hard to anticipate because they are often unrelated to prior eents

which are difficult and impossible to designate but the management of a

financial serices firm today must hae these ris!s at least in iew. They can

cost millions.

(II) CA$ITAL MAR,ET RIS,#

#n the ,apital Mar!et +is! decision relate to the financing and financial support

of 0roduct Mar!et actiities. The result of product mar!et decisions must be

compared to the re&uired rate of return that results from capital mar!et decision

to determine if management is creating alue. ,apital mar!et decisions affect

the ris! tolerance of product mar!et decisions related to ariations in alue

associated with different financial instruments and re&uired rate of return in the

economy.

*. L#IH#4#TG +#2F

1. #:TD+D2T +ATD +#2F

6. ,H++D:,G +#2F

7. 2DTTLDMD:T +#2F

9. >A2#2 +#2F

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3 LI:UIDITY RIS,#

/or experienced financial serices professionals$ the foremost capital mar!et

ris! is that of inadequate liquidity to meet financial obligations. The obious

form is an inability to pay desired withdrawals. 4epositors react desperately to

the mere prospect of this situation.

They can drie a financial intermediary to collapse by withdrawing funds at a

rate that exceeds its capacity to pay. /or most of this century$ indiidual

depositors who lost faith in s ability to repay them caused failures from

li&uidity. /unds are deposited primarily as a financial of rate. 2uch funds are

called “purchased money” or “headset funds” as they are fre&uently bought by

employees who wor! on the money des! &uoting rates to institutions that shop

for the highest return. To chec! li&uidity ris!$ firms must !eep the maturity profile of the liabilities compatible with that of the assets. This balance must be

close enough that a reasonable shift in interest rates across the yield cure does

not threaten the safety and soundness of the entire firm.

4 INTEREST RATE RIS,#

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#n extreme conditions$ #nterest +ate fluctuations can create a liquidity crisis.

The fluctuation in the prices of financial assets due to changes in interest rates

can be large enough to ma!e default ris! a ma"or threat to a financial serices

firm@s iability. There@s a function of both the magnitude of change in the rate

and the maturity of the asset. This inade&uacy of assessment and conse&uent

mispricing of assets$ combined with an accounting system that did not record

unrecognized gains and losses in asset alues$ created a financial crisis. +is!

based capital rules pertaining to s hae done little to mitigate the interest rate

ris! management problem. The decision to pass it of$ howeer is not without

large cost$ so the cost benefit tradeoff becomes complex.

6 CURRENCY RIS,#

The ris! of exchange rate olatility can be described as a form of basis ris!

among currencies instead of basis ris! among interest rates on different

securities. >alance sheets comprised of numerous separate currencies contain

large camouflaged ris!s through financial reporting systems that do not re&uire

assets to be mar!ed to mar!et. Dxchange rate ris! affects both the 0roduct

Mar!ets and The ,apital Mar!ets. 8ays to contain currency ris! haedeeloped in today@s deriatie mar!et through the use of swaps and forward

contracts. Thus$ this ris! is manageable only after the most sophisticated and

modern ris! management techni&ue is employed

4. SETTLEMENT RIS,#

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2ettlement +is! is a particular form of default risk $ which inoles the s

competitors. Amounts settle obligations haing to do with money transfer$

chec! clearing$ loan disbursement and repayment$ and all other inter' transfers

within the worldwide monetary system. A single payment is made at the end of

the day instead of multiple payments for indiidual transactions.

8 BASIS RIS, #

>asis ris! is a ariation on the interest rate ris! theme$ yet it creates ris!s that

are less easy to obsere and understand. To guard against interest rate ris!$

somewhat non comparable securities may be used as a hedge. Boweer$ the

success of this hedging depends on a steady and predictable relationship

between the two no identical securities. >asis can negate the hedge partially or

entirely$ which astly increases the ,apital Mar!et +is! exposure of the firm.

RIS, MANAGEMENT SYSTEM#

Assuming and managing ris! is the essence of business decision'ma!ing.

#nesting in a new technology$ hiring a new employee$ or launching a mar!eting

campaign is all decisions with uncertain outcomes. As a result all the ma"or

management decisions of how much ris! to ta!e and how to manage the ris!.

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The implementation of ris! management aries from business to business$ from

one management style to another and from one time to another. +is!

management in the financial serices industry is different from others.

,ircumstances$ #nstitutions and Managements are different. n the other hand$

an inestment decision is no recent history of legal and political stability$

insights into the potential hazards and opportunities.

Many ris!s are managed &uantitatiely. +is! exposure is measured by some

numerical index. +is! cost tradeoff many tools are described by numerical

aluation formulas.

+is! management can be integrated into a ris! management system. 2uch a

system can be utilized to manage the trading position of a small'specialized

diision or an entire financial institution. The modules of the system can be

implemented with different degrees of accuracy and sophistication.

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RIS, MANAGEMENT SYSTEM

4ynamics of ris! factors

,ash flows Arbitrage

5enerator 0ricing Model

0rice and +is!

0rofile of ,ontingent ,laims

4ynamic +is!

Target

Trading +ules ptimizer

+is! 0rofile

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Arbitrage pricing models range from simple e&uations to large scale

numerically sophisticated algorithms. ,ash flow generators also ary

from a single formula to a simulator that accounts for the dependence of

cash flows on the history of the ris! factors.

/inancial engineers are continuously incorporating adances in

econometric techni&ues$ asset pricing models$ simulation techni&ues and

optimization algorithms to produce better ris! management systems.

#mportant ingredient of the ris! management approach is the treatment of

ris! factors and securities as an integrated portfolio. Analyzing the

correlation among the real$ financial and strategic assets of an

organization leads to clear understanding of ris! exposure. 2pecial

attention is paid to ris! factors$ which translate to correlation among the

alues of securities. #dentifying the correlation among the basic ris!

factors leads to more effectie ris! management.

CONCLUSION

The burden of the +is! and its ,osts are both manageable and transferable.

/inancial serice firms$ in the addition to managing their own ris!$ also sell

financial ris! management to others. They sell their serices by bearing

customers financial ris!s through the products they proide. A financial firm can

offer a fixed'rate loan to a borrower with the ris! of interest rate moements

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transferred from the borrower to the . /inancial innoations hae been

concerned with risk reductionthen any other sub"ect. 8ith the possibility of

managing ris! near zero$ the challenge becomes not how much ris! can be

remoed.

/inancial serices inole the process of intermediation between those who

hae financial resources and those who need them$ either as a principal or as an

agent. Thus$ alue brea!s into seeral distinct functions$ and it includes the

intermediation of the following J

Maturity 0reference mismatch$ 4efault$ ,urrency 0reference mis'match$ 2ize of

transaction and Mar!et access and information.

RIS, MANAGEMENT IN Le' Labs IT S'l*ti'ns $/t Ltd

The s were re&uired by the to introduce effectie ris! management systems to

coer ,redit ris!$ mar!et ris! and perations ris! on priority.

Naasim0am +'mmittee II ; adised s to address mar!et ris! in a structured

manner by adopting Asset and Liability Management practices with effect

from April *st *ECE.

Asset and liability management (ALM) is %the Art and 2cience of choosing the

best mix of assets for the firm@s asset portfolio and the best mix of liabilities for

the firm@s liability portfolio. #t is particularly critical for /inancial #nstitutions.

/or a long time it was ta!en for granted that the liability portfolio of financial

firms was beyond the control of the firm and so management concentrated its

efforts on choosing the asset mix. #nstitutions treasury department used the

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funds proided by deposits to structure an asset portfolio that was appropriate

for the gien liability portfolio.

8ith the adent of ,ertificate f 4eposits (,4s)$ s had a tool by which to

manipulate the mix of liabilities that supported their Asset portfolios$ which has

been one of the actie management of assets and liabilities.

Asset and liability management program eole into a strategic tool for

management$ the main elements of the ALM system are J

ALM #:/+MAT#:.

ALM +5A:#2AT#:.

ALM /H:,T#:.

ALM IN!ORMATION#

ALM is a ris! management tool through which Mar!et ris! associated with

business are identified$ measured and monitored to maintain profits by

restructuring Assets and Liabilities. The ALM framewor! needs to be built on

sound methodology with necessary information system as bac! up. Thus the

information is !ey element to the ALM process.

There are arious methods prealent worldwide for measuring ris!s. These

range from the simple 5ap statement to extremely sophisticate and data

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intensie Risk adjusted profitaility measurement (+A0M) methods. The central

element for the entire ALM exercise is the aailability of ade&uate and accurate

information.

Boweer$ the existing systems in many #ndian s do not generate information in

manner re&uired for the ALM. ,ollecting accurate data is the biggest challenge

before the s$ particularly those haing wide networ! of branches$ but lac!ing

full'scale computerization.

Therefore the introduction of these information systems for ris! measurement

and monitoring has to be addressed urgently.

The large networ! of branches and the lac! of support system to collect

information re&uired for the ALM which analysis information on the basis of

residual maturity and behaioral pattern$ it would ta!e time for s in the present

state to get the re&uisite information.

ALM ORGANISATION#

2uccessful implementation of the ris! management process re&uires strong

commitment on the part of senior management in the to integrate basic

operations and strategic decision ma!ing with ris! management.The >oard of 4irectors should hae oerall responsibility for management of

ris! and should decide the ris! management policy of the $ setting limits for

li&uidity$ interest rate$ foreign exchange and e&uity ; price ris!.

The Asset Liability Management ,ommittee (#,#,#) consisting of the s senior

management$ including ,D;,M4 should be responsible for ensuring

adherence to the limits set by the >oard of 4irectors as well as for deciding the

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business strategy of the (on the assets and liabilities sides) in line with the s

budget and decided ris! management ob"ectie.

The ALM support group consisting of operation staff should be responsible for

analyzing$ monitoring and reporting the ris! profiles to the #,#,#. The staff

should also prepare forecasts (simulations) showing the effects of arious

possible changes in mar!et condition related to the balance sheet and

recommend the action needed to adhere to s internal limits$

The #,#,# is a decision'ma!ing unit responsible for balance sheet planning

from a ris!'return perspectie including the strategic management of interest

rate and li&uidity ris!s. Dach has to decide on the role of its #,#,#$ its

responsibility as also the decision to be ta!en by it. The business and ris!

management strategy of the should ensure that the operates within the limits ;

parameters set by the >oard. The business issues that an #,#,# would consider$

inter alia$ will include product pricing for deposits and adances$ desired

maturity profile and mix of the incremental Assets and Liabilities$ etc. in

addition to monitoring the ris! leels of the $ the #,#,# should reiew the results

of and progress in implementation of the decisions made in the preious

meetings. The #,#,# would also articulate the current interest rate iew of the

and base its decisions for future business strategy on this iew. #n respect of this

funding policy$ for instance$ its responsibility would be to decide on source andmix of liabilities or sale of assets. Towards this end$ it will hae to deelop a

iew on future direction of interest rate moements and decide on funding

mixes between fixed s. floating rate funds$ wholesale s. retail deposits$

Money mar!ets s. ,apital mar!et funding$ domestic s. foreign currency

funding etc. #ndiidual s will hae to decide the fre&uency for holding their

#,#,# meetings.

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TY$ICAL BUSINESS

• +eiewing of the impact of the regulatory changes on the industry.

• erseeing the budgetary process<

• +eiewing the interest rate outloo! for pricing of assets and liabilities

(Loans and 4eposits)

• 4eciding on the introduction of any new loan ; deposit product and their

impact on interest rate ; exchange rate and other mar!et ris!s<

• +eiewing the asset and liability portfolios and the ris! limits and

thereby$ assessing the capital ade&uacy<

• 4eciding on the desired maturity profile of incremental assets and

liabilities and thereby assessing the li&uidity ris!< and

• +eiewing the ariances in actual and pro"ected performances with

regard to :et #nterest Margin(:#M)$ spreads and other balance sheet

ratios.

COM$OSITION O! Le' Labs IT S'l*ti'ns $/t Ltd

The size ( number of members) of Leo Labs #T 2olutions 0t. Ltd would depend

on the size of each institution$ business mix and organizational complexity$ To

ensure commitment of the Top management and timely response to mar!et

dynamics$ the ,D;M4 or the 5M should head the committee. The chiefs of

#nestment$ ,redit$ +esources Management or 0lanning$ /unds Management ;

Treasury (domestic)$ etc.$ can be members of the committee. #n addition$ the

head of the computer (technology) 4iision should also be an initee for

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building up of M#2 and related computerization. 2ome s may een hae 2ub'

,ommittee and 2upport 5roups.

ALM ORGANIA+4

Leo Labs #T 2olutions 0t. Ltd

ALM ,DLL

,MM#TTDD / 4#+D,

ALM BOARD

The >oard of management should hae oerall responsibility for

management of ris! and should decide the ris! management policy of the

and set limits for li&uidity and interest rate ris!s.

Le' Labs IT S'l*ti'ns $/t Ltd

#t has constituted an Asset' Liability committee (Leo Labs #T 2olutions 0t.

Ltd). The committee may consist of the following members.

i) 5eneral Manager ; in Bead of ,ommittee

ii) 5eneral Manager (Loans - Adances) Member

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iii) 5eneral Manager (,M# - A4) Member

i) A5M ; Bead of the ALM ,ell Member

The Leo Labs #T 2olutions 0t. Ltd is a decision ma!ing unit responsible for

ensuring adherence to the limits set by board as well as for balance sheet

planning from ris! return perspectie including the strategic management of

interest rate and li&uidity ris!s$ in line with the s budget and decided ris!

management ob"ecties.

The >usiness issues that an Leo Labs #T 2olutions 0t. Ltd would consider

interalia, will include fixation of interest rates for both deposits and adances$

desired maturity profile of the incremental assets and liabilities etc.

The Leo Labs #T 2olutions 0t. Ltd would also articulate the current interest

rate due of the and base its decisions for future business strategy on this iew. #n

respect of funding policy$ for instance$ its responsibility would be decided on

source and mix of liability.

#ndiidual s will hae to decide the fre&uency for their Leo Labs #T 2olutions0t. Ltd meetings. Boweer$ it is adised that Leo Labs #T 2olutions 0t. Ltd

should meet at least once in a fortnight. The Leo Labs #T 2olutions 0t. Ltd

should reiew results of and process in implementation of the decisions made in

the preious meetings

ALM CELL

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The ALM des! ; cell consisting of operating staff should be responsible for

analyzing$ monitoring and reporting the profiles to the Leo Labs #T 2olutions

0t. Ltd. The staff should also prepare forecasts (simulations) showing the

effects of arious possible changes in mar!et conditions related to the balance

sheet and recommend the action needed to adhere to s internal limits.

COMMITTEE O! DIRECTORS

The s should also constitute professional$ management and superisory

committee$ consisting of three to four directors$ which will oersee the

implementation of the ALM system$ and reiew it@s functioning periodically.

ALM $ROCESS#

The scope of ALM function can be described as followsJ

*. Li&uidity +is! Management

1. #nterest +ate +is! Management

6. ,urrency +is! Management

7. 2ettlement +is! Management

9. >asis +is! Management

The RBI guidelines mainly address Li&uidity +is! Management and #nterest

+ate +is! Management.

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The following are the concepts discussed for analysis of@ s Asset'Liability

Management under aboe mentioned ris!s.

K Li&uidity +is!

K Maturity profiles

K #nterest rate ris!

K 5ap analysis

*. Li1*idity Ris- Management #

Measuring and managing li&uidity needs are ital actiities of the s. >y assuring

a s ability to meet its liability as they become due$ li&uidity management can

reduce the probability of an aderse situation deelopment. The importance of

li&uidity transcends indiidual institutions$ as li&uidity shortfall in one

institution can hae repercussions on the entire system.

Li&uidity ris! management refers to the ris! of maturing liability not finding

enough maturing assets to meet these liabilities. #t is the potential inability tomeet the liability as they became due. This ris! arises because borrows funds for

different maturities in the form of deposits$ mar!et operations etc. and loc!

them into assets of different maturities.

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Li&uidity 5ap also arises due to unpredictability of deposit withdrawals$

changes in loan demands. Bence measuring and managing li&uidity needs are

ital for effectie and iable operations

Li&uidity measurement is &uite a difficult tas! and usually the stoc! or

cash flow approaches are used for its measurement. The stoc! approach

used certain li&uidity ratios. The li&uidity ratios are the ideal indicators of

li&uidity of s operating in deeloped financial mar!ets$ the ratio do not

reeal the real li&uidity profile of s which are operating generally in a

fairly illi&uid mar!et. The assets$ which are commonly considered as

li&uid li!e 5oernment securities$ hae limited li&uidity when the mar!et

and players are in one direction. Thus analysis of li&uidity inoles

trac!ing of cash flow mismatches.

The statement of structural li&uidity may be prepared by placing all cash

inflows and outflows in the maturity ladder according to the expected timing of

cash flows.

The MATH+#TG 0+/#LD could be used for measuring the future cash flows

in different time bands.

The position of Assets and Liabilities are classified according to the maturity

patterns a maturing liability will be a cash outflow while a maturing asset will be a cash inflows. The measuring of the future cash flows of s is done in

different time buc!ets.

The time buc!ets$ gien the statutory +esere cycle of *7 days may be

distributed as underJ

*. * to *7 days

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1. *9 to 1C days

6. 1E days and up to 6 months

7. er 6 months and up to = months

9. er = months and upto * year

=. er * year and upto 6 years

?. er 6 years and upto 9 years

C. er 9 years.

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MATURITY $RO!ILE = LI:UIDITY

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66

"EAD O! ACCOUNTS

A.HT/L82

Classi.i+ati'n int' time b*+-ets

*.,apital$ +eseres and 2urplus er 9 years buc!et.

1.4emand 4eposits (,urrent -

2aings 4eposits)

4emand 4eposits may be

classified into olatile and core

portions$ 19 of deposits are

generally withdraw able on

demand. This portion may be

treated as olatile. 8hile olatile

portion may be placed in the first

time buc!et i.e.$ *'*7 days$ the

core portion may be placed in *'

1 years$ buc!et.

6. Term 4eposits +espectie maturity buc!ets.

7. >orrowings +espectie maturity buc!ets.

9. ther liabilities and proisions

(i) >ills 0ayable

(ii) #nter'office Ad"ustment

(iii) 0roisions for :A0s

a) sub'standard

b) doubtful and Loss

(i) proisions for

depreciation

in #nestments

(i) *'*7 days buc!et

(ii) #tems not representing cash

payable may be placed in

oer 9

years buc!et

(iii)

a) 1'9 years buc!et.

b) er 9 years buc!et

.

(i) er 9 years buc!et.


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B IN!LOS

*. ,ash *'*7 days buc!et.

1. >alance with other s

(i) ,urrent Account

(ii) Money at call and short

:otice$Term 4eposits and other

0lacements

(i) :on'withdraw able portion

on

account of stipulations of

minimum balances may be

shown

Less than *'*7 days buc!et.(ii) +espectie maturity

buc!ets.

6. #nestments

(i) Approed

securities

(ii) ,orporate

4ebentures and

bonds$ ,4s and

,0s$ redeemable

preference shares$

units of Mutual

/unds (close

ended). Dtc.

(iii) 2hare ; Hnits of

Mutual /unds

(open ended)

(iii) #nestment in

(i) +espectie maturity buc!ets

excluding the amount

re&uired to

be reinested to maintain

SLR

(ii) +espectie Maturity

buc!ets.

#nestments classified as

:0As

2hould be shown under 1'9

years

buc!et (sub'standard) or

oer 9

years buc!et (doubtful and

loss).

(iii) er 9 years buc!et.

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subsidiaries ;

oint entures. (i) er 9 years buc!et.

7. Adances (performing ;standard)

(i) >ills 0urchased and

4iscounted

(including bills under

4H0:)

(i) ,ash ,redit ; erdraft(including T4) and

4emand Loan

component of

8or!ing ,apital.

(iii) Term Loans

(i) +espectie Maturity buc!ets.

(ii) s should underta!e a styud

of behaioral and seasonal

pattern of a ailments based on

outstanding and the core and

olatile portion should beidentified. 8hile the olatile

portion could be shown in the

respectie maturity buc!et.

The core portion may be

shown under *'1 years

buc!et.

(iii) #nterim cash flows may be

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shown under respectie

maturity

buc!ets.

9. :0As

b. 2ub'standard

c. 4oubtful and Loss

(#) 1'9 years buc!et.

(ii) er 9 years buc!et.

=. /ixed Assets er 9 years buc!et.

?. ther'office Ad"ustment

(i) #nter'office Ad"ustment

(ii) thers

(i) As per trend analysis$

#ntangible items or

itemsnot representing cash

receiables may be

shown

in oer 9 years buc!et.

(i) +espectie maturity

buc!ets. #ntangible assets

and assets

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Tems *sed#

CDs# ,ertificate of 4eposits.

C$s# ,ommercial 0apers.

DTL $RO!ILE# 4emand and Time Liabilities.

Inte '..i+e ad>*stment#

O*t.l'2s# :et ,redit >alances

In.l'2s# :et 4ebt >alances

Ot0e Liabilities# ,ash payables$ #ncome receied in adance$ Loan Loss and

4epreciation in #nestments.

Ot0e assets# ,ash +eceiable$ #ntangible Assets and Leased Assets.

4 Inteest Rate Ris-#

#nterest +ate +is! refers to the ris! of changes in interest rates subse&uent to the

creation of the assets and liabilities at fixed rates. The phased deregulations of

interest rates and the operational flexibility gien to s in pricing most of the

assets and liabilities imply the need for ing system to hedge the interest rate

ris!. This is a ris! where changes in the mar!et interest rates might adersely

affect a financial conditions.

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The changes in interest rates affect s in large way. The immediate impact of

change in interest rates is on earnings by changing its :et #nterest #ncome (NII)

A long term impact of changing interest rates is on @s Mar!et alue of D&uity

(M&E) or net worth as the economic alue of @s assets$ liabilities and off'

balance sheet positions get affected due to ariation in mar!et interest rates.

The ris! from the earnings perspectie can be measured as changes in the :et

#nterest #ncome (:##) + :et #nterest Margin (:#M).

There are many analytical techni&ues for measurement and management of

interest rate ris!. #n M#2 of ALM$ slow pace of computerization in s and the

absence of total deregulation$ the traditional 5A0 A:ALG2#2 is considered as a

suitable method to measure the interest rate ris!.

Data Inte5etati'n

Ga5 Analysis#

The 5ap or mismatch ris! can be measured by calculating !aps over different

time uckets as at a given date. 5ap analysis measures mismatches between rate

sensitie liabilities and rate sensitie assets including off'balance sheet position.

An asset or liability is normally classified as rate sensitie ifJ

#f there is a cash flow within the time interal.

The interest rate resets or reprises contractually during the interal.

+># changes the interest rates i.e.$ on saing deposits$ export credit$

refinance$ ,++ balances and so on$ in case where interest rate areadministered.

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#t is contractually pre'payable or withdraw able before the stated

maturities

The 5ap is the difference between +ate 2ensitie Assets (+2A) and +ate

sensitie Liabilities (+2A) for each time buc!et.

The 5'siti/e GA$ indicates that RSAs are more than RSLs (RSA?RSL)

The negati/e GA$ indicates that RSAs are more than RSALs (RSA@RSL)

INDUSTRY $RO!ILE

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The information industry or information industries are industries that are

information intensie in one way or the other. #t is considered one of the most

important economic sectors for a ariety of reasons.

There are many different !inds of information industries$ and many differentways to classify them. Although there is no standard or distinctiely better way

of organizing those different iews$ the following section offers a reiew of

what the term Ninformation industryN might entail$ and why. Alternatie

conceptualizations are that of !nowledge industry and information'related

occupation. The term Ninformation industryN is mostly identified with computer

programming$ system design$ telecommunications$ and others.

/irst$ there are companies which produce and sell information in the form ofgoods or serices. Media products such as teleision programs and moies$

published boo!s and periodicals would constitute probably among the most

accepted part of what information goods can be. 2ome information is proided

not as a tangible commodity but as a serice. ,onsulting is among the least

controersial of this !ind. Boweer$ een for this category$ disagreements can

occur due to the agueness of the term Ninformation.N /or some$ information is

!nowledge about a sub"ect$ something one can use to improe the performance

of other actiitiesOit does not include arts and entertainments.

2econd$ there are information processing serices. 2ome serices$ such as legal

serices$ ban!ing$ insurance$ computer programming$ data processing$ testing$

and mar!et research$ re&uire intensie and intellectual processing of

information. Although those serices do not necessarily proide information$

they often offer expertise in ma!ing decisions on behalf of clients. These !inds

of serice industries can be regarded as an information'intensie part of arious

industries that is externalized and specialized.

Third$ there are industries that are ital to the dissemination of the information

goods mentioned aboe. /or example$ telephone$ broadcasting and boo! retail

industries do not produce much information$ but their core business is to

disseminate information others produced. These industries handle

predominantly information and can be distinguished from wholesale or retail

industries in general

Therefore$ in order to capture the information related actiities of the economy$

it might be a good idea to include this type of industry. These industries show

how much of an economy is about information$ as opposed to materials. #t is

useful to differentiate production of aluable information from processing thatinformation in a sophisticated way$ from the moement of information.

7

https://en.wikipedia.org/wiki/Industryhttps://en.wikipedia.org/wiki/Informationhttps://en.wikipedia.org/wiki/Economic_sectorhttps://en.wikipedia.org/wiki/Knowledgehttps://en.wikipedia.org/wiki/Computer_programminghttps://en.wikipedia.org/wiki/Computer_programminghttps://en.wikipedia.org/wiki/Mass_mediahttps://en.wikipedia.org/wiki/Televisionhttps://en.wikipedia.org/wiki/Movieshttps://en.wikipedia.org/wiki/Information_processinghttps://en.wikipedia.org/wiki/Legalhttps://en.wikipedia.org/wiki/Bankinghttps://en.wikipedia.org/wiki/Insurancehttps://en.wikipedia.org/wiki/Computer_programminghttps://en.wikipedia.org/wiki/Data_processinghttps://en.wikipedia.org/wiki/Telephonehttps://en.wikipedia.org/wiki/Broadcastinghttps://en.wikipedia.org/wiki/Informationhttps://en.wikipedia.org/wiki/Economic_sectorhttps://en.wikipedia.org/wiki/Knowledgehttps://en.wikipedia.org/wiki/Computer_programminghttps://en.wikipedia.org/wiki/Computer_programminghttps://en.wikipedia.org/wiki/Mass_mediahttps://en.wikipedia.org/wiki/Televisionhttps://en.wikipedia.org/wiki/Movieshttps://en.wikipedia.org/wiki/Information_processinghttps://en.wikipedia.org/wiki/Legalhttps://en.wikipedia.org/wiki/Bankinghttps://en.wikipedia.org/wiki/Insurancehttps://en.wikipedia.org/wiki/Computer_programminghttps://en.wikipedia.org/wiki/Data_processinghttps://en.wikipedia.org/wiki/Telephonehttps://en.wikipedia.org/wiki/Broadcastinghttps://en.wikipedia.org/wiki/Industry


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/ourth$ there are manufacturers of information'processing deices that re&uire

research and sophisticated decision'ma!ing. These products are ital to

information'processing actiities of aboe mentioned industries. The products

include computers of arious leels and many other microelectronic deices$ as

well as software programs. 0rinting and copying machines$ measurement andrecording deices of arious !inds$ electronic or otherwise$ are also in this

category.

/ifth$ there are ery research'intensie industries that do not sere as

infrastructure to information'production or sophisticated decision'ma!ing.

0harmaceutical$ food'processing$ some apparel design$ and some other Nhigh'

techN industries belong to this type. These products are not exclusiely for

information production or sophisticated decision'ma!ing$ although many arehelpful. 2ome serices$ such as medical examination are in this category as

well. ne can say these industries inole a great deal of sophisticated decision'

ma!ing$ although that part is combined with manufacturing or Nnon'

informationalN actiities.

/inally$ there are industries that are not research intensie$ but sere as

infrastructure for information production and sophisticated decision'ma!ing.

Manufacturing of office furniture would be a good example$ although it

sometimes inoles research in ergonomics and deelopment of new materials.

As stated aboe$ this list of candidates for information industries is not a

definitie way of organizing differences that researchers may pay attention to

when they define the term. Among the difficulties is$ for example$ the position

of adertising industry.

,M0A:G 0+/#LD

7*

https://en.wikipedia.org/wiki/Researchhttps://en.wikipedia.org/wiki/Infrastructurehttps://en.wikipedia.org/wiki/Researchhttps://en.wikipedia.org/wiki/Infrastructure


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Leo Labs #T 2olutions 0t. Ltd. has built a reputation of deliering software and

business management solutions that proide measurable results. #t has been

recognized as one of the fastest growing companies in Byderabad$ #ndia.

Leo Labs growth can be attributed to the companyPs focus on &uality$

consistency$ and long'term ision. 8hile many 2oftware companies chased the

mar!et to find reenue in the latest fads$ Leo Labs #T 2olutions remained

focused on deliering proen business solutions to its clients

Htilizing our pro"ect management methodology that has produced esteemedresults for our clients$ we are strategically establishing new offices in mar!ets

that offer opportunity. This methodology$ combined with the extraordinary

talent of the local managing directors and exceptional consultants with their

years of experience$ will deelop offices to sere our clients and partner@s.

#n order to thrie in an interconnected economy$ the serice offerings by Leo

Labs #T 2olutions meet the demands of an eer'changing business enironment.

Leo Labs deliers fresh solutions with seasoned professional deelopers and

consultants who hae one singular focusJ Dnsure that eerything we do deliers

alue to our clients and moes their businesses forward giing them the edge in

the demanding business world.

#2#:

8e proide our customers with the highest leels of serice$ &uality$ and

efficiency. The enduring and personal relationships we hold with our clients$

gies us the adantage of a loyal$ well'established client and partnership base.

8e offer the assurance that company needs will be met now and in the future.

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MISSION

To be globally recognized as a proider of a trusted$ reliable resource to &uality

#nformation Technology (#T) solutions.

To build worldwide partnerships for success.

To gie the clients a competitie edge.

To enhance the operational efficiency and financial adantage to clients.

SOLUTIONS

B*siness Stategy

EB*sinesseb Se/i+es

Ente5ise A55li+ati'n

Integati'n

Integated Ma-eting

It Stategy De/el'5ment

$'+ess De/el'5ment

BUSINESS STRATEGY#

BUSINESS CONSULTING

The greatest accomplishments begin with an architect plan. 8e beliee that Leo

Labs #T 2olutions is the adisor that the company needs most as you begin to

conceptualize the business road map.

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ur business consulting team is the cohesie mortar that unites our arious

disciplines. >y focusing on companyPs strategic ob"ecties$ we are able to

design$ deelop$ and implement the solutions that will produce measurable

change across the enterprise. As the foundation of Leo Labs #T 2olutions$ this

business'centric philosophy permeates our arious discipline leaders. 8hether a

deeloper or a designer$ the goal of producing custom business solutions is

paramount.

DE!INING DIRECTIONS

ur ability to offer guidance throughout the highest leels of leadership is

cultiated by our ability to architect and execute solutions that matter most. This

focus on sound strategic direction proides a high'leel road map that can

manage and expand channels$ enhance reenue$ and penetrate mar!ets that may

hae preiously been inaccessible. ur !nowledge and use of business

intelligence tools allows our clients to ma!e calculated decisions based on real'

time data$ thus proiding accurate and effectie results

!ORMING A STRUCTURE

ur s!ill in analyzing companyPs internal structure enables Leo Labs #T

2olutions to enhance business processes$ operational efficiencies and manage or reduce oerall costs. >y optimizing supply chain through supplier collaboration

and rationalization we can improe the relationships that support business.

ETENDING RELATIONS"I$

>y helping to orientate leadership direction and formulate operational practices$

Leo Labs #T 2olutions can also effectiely refine how company goes to mar!et.

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>y improing the ways in which the company deploy their sales force$ manage

traditional customer relationships and build an integrated mar!eting and

communications plan$ we can help the craft eery touch point between the

company and customers.

EB*sinesseb se/i+es#

D'>usiness is much more than buying and selling oer the 8eb. #n the simplest

sense$ it is the use of #nternet technologies to improe core business processes.

And$ while technology ma!es e'business possible$ e'business isnPt about

technology. #tPs about connecting core business systems and processes to

customers$ suppliers$ and employeesO17 hours a day$ ? days a wee!.

Eb*siness#

D'>usiness can help companies meet todayPs business challenges head'on.

8hether itPs increasing reenue or decreasing costs$ reaching new customers or

better sering existing ones$ a solid e'business infrastructure proides the

foundation to delier true alue to sta!eholders.

#mportant reasons to become an e'business include the followingJ

• #ncrease reenue

• 4ecrease costs

• #mproe employee efficiency

• Dxpand mar!et reach

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• 2trengthen business relationships

• #mproe customer satisfaction

At Leo Labs #T 2olutions$ we !now that the success of our company depends on

our ability to proide world'class$ e'business solutions with real business alue

to our clients. 8e understand the business impact of e'business. ur experts

hae helped many companies leerage the #nternet with the following solutionsJ

D'commerceOallows companies to buy and sell products and serices online.

>usiness intelligenceOallows companies to ac&uire data about their customers

to proide better serice. ,ustomer relationship managementOproides the

ability to support and retain profitable customers .

2upply chain managementOstreamlines end'to'end processes associated with

the flow of products.

Ente5ise A55li+ati'n Integati'n

Leo Labs #T 2olutions deelopment team is designed to partner with our clients

to address many business critical issues and ob"ecties. Leo Labs #T 2olutions

!nows how to use state'of'the'art technologies to proide targeted$ world'class

integration solutions that address uni&ue business needs.

T"E NEED

Are the companies getting the most out of the 8eb and core business'system

implementationsQ Are these applications connected throughout the

organizationQ 4oes the company &uestion whether or not the integration

between applications is able to support the company changing business process

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needsQ 4o your business associates hae access to accurate$ releant$ and timely

information for critical decision'ma!ingQ

8ith eer'increasing pressure to be as efficient as possible$ Dnterprise

Application #ntegration is becoming ital to organizations of eery size. DA# is

used to interconnect existing information systems$ prior technology

inestments$ and business partner@s systems and data. As enterprises grow and

recognize the need for their information to be shared between systems$

companies are inesting in DA# to streamline processes and !eep disparate

elements of the enterprise interconnected.

T"E SOLUTION

SA$''This solution proides end'to'end functionality for business analytics$

financials$ human capital management$ operations$ and corporate serices '' and

allows you to upgrade to the full range of 2A0 solutions.

Ente5ise Res'*+e $lanning ER$''2eamless D+0 #mplementations and

Hpgrades$ Dfficient 2upport and Iuic!er +eturn on #nestment (+#) on their

Dnterprise Applications is what eery organization dreams of.

Leo Labs D+0 team has oer 9 highly &ualified ,onsultants$ offering a uni&ue

blend of business ertical !nowledge and technical expertise that meets its

customersP Dnterprise Application re&uirements from a 2hort'Term 5oal

+ealization perspectie$ as well as a Long'Term Total ,ost perations

+eduction

Leo Labs solutions are implemented using a framewor! that enables your

organization to integrate and extend your business applications across and

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beyond the enterprise. ur solutions address specific business challenges such

asJ

•

/inding cost saings by integrating business applications and processeswith flexible and scalable long'term solutions

• Maximizing the return'on'inestment from the 8eb site and core

business system implementations by creating tight inter'application

integration

• Baing real'time access to more accurate and timely business data to

ma!e better decisions$ reduce cycle times and increase operational

efficiencies

• 2electing the right technical architectures and endor products to

maximize efficiencies and compliment your existing and future state

enterprise architecture

• ,reating integration between co'existing business units as well as for the

assimilation of mergers and ac&uisitions

• Lin!ing to and collaborating with a ariety of customers and partners

with different needs or standards directly or through mar!et exchanges

E$ERIENCE

Leo Labs #T 2olutions deelopment team continues to delier solutions across a

wide range of industries and functional areas. ur solutions are aided by our

strong partnerships with leading industry endors. As a result$ our consultants

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are well ersed in the latest trends$ tools and technologies best suited for the

particular business and technical challenges.

T"E AD&ANTAGE

Leo Labs #T 2olutions focus is on deliering solutions that will be effectie in

the uni&ue enironment. ur experience and endor neutral position allows us

to choose the best mix of technologies for the particular enironment.

May organization has inested significant time$ effort$ and financial resources

into the applications and information systems that run business. Leo Labs #T

2olutions$ solutions are designed to minimize these inestments by identifying

and simplifying the processes that will proide secure and timely access to your

company@s information assetsOgiing the organization a strong competitie

adantage.

Integated Ma-eting#

2uccessful #ntegrated Mar!eting solutions ta!e three !ey elements in order to

produce alueJ solid strategy$ &uality design$ and measurability.

SOLID STRATEGY

>y understanding competitie landscapes$ identifying audiences$ and estimating

the return on inestment$ Leo Labs #T 2olutions can help out ma!ing intelligent

mar!eting decisions that proide maximum returns. 8e analyze the company

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business ob"ecties and determine a path of communication that will reach the

consumer or client base on a more consistent basis.

:UALITY DESIGN

#ntegrated Mar!eting utilizes a ariety of media and channels. #t employs

designers that understand these mediums and can translate their designs into

effectie communications. Leo Labs designers hae the expertise to match

isual design with the appropriate language and elements$ essential in

improing response rates and reaching near to intended audience.

MEASURABILITY

Leo Labs #T 2olutions specializes in business intelligence tools that can analyze

data$ response rates$ and demographics. >y haing access to this information in

real time$ we can effectiely tailor communications to increase response rates$

measure return on inestment$ and ma!e #ntel suited for your businessob"ecties. Leo Labs #T 2olutions can enable the company to ta!e adantage of

the technology and talent that is aailable to drie consumer demand$ sales$ and

the message of the organization.

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IT Stategy De/el'5ment

er the past few years the role of technology in business has become a critical

success factor. Many organizations leerage information technology to help

them delier their products and serices. >ut few organizations truly realize the

business benefits that can be achieed from an effectie technology strategy.

The rapid pace of change in technology proides companies with new$ cost'

effectie mechanisms to communicate with their customers$ suppliers$

employees$ and !ey business partners. 0roperly harnessed$ technology

initiaties can enrich customer relationships$ shorten supply chains$ and

streamline a number of internal processes so that a true return on inestment is

realized. The first step is to create alignment and consensus within the

organization and build an action plan around those initiaties that will delier

the highest return.

STRATEGIC $LANNING SOLUTIONS

Leo Labs #T 2olutions 2trategic solutions leerage a proen methodology to

help our clients fundamentally align and leerage technology in order to achiee

enterprise business ob"ecties. 8e deise these strategies by examining the

current infrastructure$ #T organization$ business processes$ organizational

ob"ecties$ and !ey sta!eholders. Then we align technology solutions in a waythat ties these sta!eholders to the business systems and processes within the

organization.

2trategic 0lanning 2erice /eatures

• Aligns technology infrastructure and initiaties with high'priority

business processes and organizational ob"ecties

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• /ocuses on the needs of the !ey sta!eholders (customers$ suppliers$

employees) and not on the limitations of technology.

•0roides &ualitatie and &uantitatie measures of the success of the

strategy or business continuity plan.

• ,reates alignment$ consensus$ and accountability for the prioritized

initiaties among executie leadership and line of business management.

ur strategic planning solutions can be used to help the organization during its

annual planning$ or throughout the year as industry and mar!et trends demand.

2trategic planning may be necessary in the following situationsJ

• 8hen a competitie adantage is needed to demonstrate &uality of

serice

• 8hen the organization see!s to expand while maintaining existing

operational infrastructure (capital and human resources)

• 8hen audits hae identified gaps or wea!nesses in business or #T

capability

• 8hen structural organizational changes occur (ac&uisition$ merger$ or

diestiture)

• 8hen no business continuity$ disaster recoery$ or emergency

management plan exists

$'+ess De/el'5ment

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Leo Labs >usiness 0rocess #mproement solutions are designed to help the

company to streamline the processes that are critical to managing business.

rganizations need to optimize the business process$ but seldom do. That@s

where Leo Labs >usiness 0rocess #mproement solutions come in.

Hsing our proen methodology and toolsets$ we delier !ey business results in a

timely fashion. 8e help to achiee improed customer serice$ cost reductions$

and capacity expansion.

T"E NEED

Are the company !ey performance metrics out of alignment with the

competitorsQ Are the customers reducing their lead timesQ And do the company

employees continually executie a process that is loaded with %no alue3add

tas!s. These are the &uestions that many organizations are faced with on a daily

basis. The reality is that most organizations could be handling these processes

much more efficiently$ proiding significant business alue and competitie

adantage.

T"E SOLUTION

Leo Labs #T 2olutions >usiness 0rocess #mproement solutions are designed to

position the organization to ta!e adantage of the opportunities and &uic!ly

address the challenges. ur solutions are able to seamlessly cross the

department and operational boundaries within the organization. ur focus is to

ensure that participants within a process are all wor!ing off the same ision and

driing toward the same goals. Leo Labs #T 2olutions >usiness 0rocess

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#mproement solutions are customized to your specific needs. #n addition to

deliering the customer business metrics$ we leerage our experience in order to

rapidly delier best practices that hae proen to be important to many of the

organizations that we hae wor!ed with.

E$ERIENCE

Leo Labs #T 2olutions >usiness 0rocess #mproement team has deliered

solutions across a wide range of industries. ur consultants are ersed in the

latest trends$ tools$ and technologies being deployed as part of these solutions.

Baing participated in numerous >usiness 0rocess #mproement engagements.

ur consultants are well e&uipped to architect and deploy the solution most

suited for your particular business. ur solutions are aided by our strong focus

on economic and financial analysis.

T"E AD&ANTAGE

Leo Labs #T 2olutions has an entire practice dedicated to deliering >usiness0rocess #mproement solutions. ur focus is on deliering solutions that will be

effectie in the uni&ue enironment. 8e beliee that our endor focus on

economic and financial analysis is a !ey differentiator from our competition.

Many rganizations has inested a lot of time$ effort$ and financial resources

into the applications and information systems that run your business. Leo Labs

#T 2olutions >usiness 0rocess #mproement solutions are designed to minimize

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those inestments by identifying and simplifying the processes that support the

company$ giing the organization a strong competitie adantage.

Se/i+es#

$'d*+t De/el'5mentJ

Leo Labs #T 2olutions 0t. Ltd. fosters rapid$ framewor! and component'based

deelopment approach to build mission critical$ off'the'shelf products and

applications. 8e hae deeloped products and solutions on leading technologies

with a strong orientation toward standards'drien architecture.

ur process drien approach forms the foundation for engaging with customers$

to build high &uality$ cost'effectie products and applications. er and aboe$

we lay our thrust in understanding customer needs to deise optimum design

and deelopment strategies that would enable them to mar!et their product

&uic!ly.

Leo Labs #T 2olutions has the concept of /ramewor! and N,omponent >ased

4eelopmentN for product ; application deelopment and reusability and

proides cost'effectie serices to our customers for outsourced product

deelopment.

$RODUCT MAINTAINANCE AND SU$$ORT

Leo Labs #T 2olutions offers maintenance and support serices to the customers

as part of its serice offering. Leo Labs has a clearly laid down methodology for

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such maintenance engagements. er the years we hae gained substantial

experience in proiding 17;? maintenance support remotely$ to the customers.

Leo Labs has the expertise and ability to meet the needs and expectations to

support the applications.

ONSITE MAINTAINENCE

#n this approach$ the Leo Labs team at onsite will carry out all the maintenance

and support for the application. Boweer the offshore team based at Leo Labs

deelopment center will be extending the support for the onsite team on any

technical issues that they may hae. They act as a bac!up and in the eent of

any emergency< can immediately act as a replacement.

O!!S"ORE REMOTE MAINTAINENCE

The remote maintenance approach adopted by Leo Labs #T 2olutions 0t. Ltd.

to carry out the maintenance is explained below.

Re+ei/ing t0e iss*e# The onsite technical support team receies the issue from

client either through any of the following media li!e e'mail$ telephone$ mobile

phone or instant messenger serices. A tic!et number generated would help the

offsite team identify each issue.

St*dy and Analysis# nce the problem Tic!et issue is receied$ the nsite

technical team ma!es a careful study of the issue and analyzes its complexity.

Estimati'n# After a thorough analysis the wor! estimation is made and it is

placed before the client through an offsite support Manager. >ased on the

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estimated time and priority$ the issue is then scheduled to be resoled either by

the onsite team or by the offshore team.

S+0ed*ling# #dentify the best suitable team member(s) for soling the issue and

assign the tas!s to that particular resource(s).

S'l*ti'n# The assigned team member(s) proides the solution as specified in the

gien tas! document in a scheduled time adhering to the &uality standards$ he

also proides a standarddocument describing the wor! done.

Testing# Test the changed code as per the Maintenance Manual. Hpdate the

documentation as re&uired

L'g Maintenan+e# Logs will be maintained for future use by the offsite as well

as offshore team for all the support issues that hae come up.

A55li+ati'n De/el'5ment

8ith increasing demands$ enterprises worldwide are finding it difficult to

implement$ and support new applications$ while at the same time$ maintaining

and upgrading their existing systems. To oercome the situation$ companies

must see! to expand deelopment capacity$ accelerate time'to'mar!et$ and build

flexible distributed deliery models to negotiate ris!.

8e remain focused on deeloping the best solution to respond to each clientPs

indiidual business needs. Through our adanced consultatie approach$ Leo

Labs assists in clearly defining organizational goals and determining where the

current systems meet these goals$ where they fail$ and how they can be

improed through our custom applications solutions.

Se/i+es in t0ese aeas ae .'+*sed 'n#

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• Application 4eelopment ' This includes web based$ client;serer

application deelopment and enhancements to legacy applications.

•Migration and ,ustomization ' This includes ersion Hpgrade 2erices$

4atabase migration$ +e'engineering$ /unctionality upgrades and 0orting.

• #mplementation 2upport ' +outine Maintenance and /unctional

Dnhancements.

• 4eelopment and Testing ' ,omponent 4eelopment and Hnit Testing$

2ystem and #ntegration testing

A55li+ati'n Maintenan+e

Leo Labs #T 2olutions proides comprehensie software application

maintenance serices for medium to large enterprises. 2erices range from

underta!ing maintenance of existing applications to adding new functionality.

4eep experience in understanding and maintaining large applications coupled

with an expertise in new technologies help to not only prolong the life of

existing applications but also infuse fresh blood into the system. A team of

dedicated software engineers are aailable round the cloc! both onsite and

offsite to handle all maintenance related issues from defect fixing to adding new

products and functionality.

A55li+ati'n maintenan+e deals 2it0

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• 0romptly fixing software problems that cause the system to be non'

operatie or to perform incorrectly

•#mplementing changes$ improements$ and enhancements to the system.

Intea+ti'n

Leo Labs #T 2olutions has rich experience in successfully executing large #T

outsourcing pro"ects with well'established #nfrastructure. Leo Labs #nteractions$

the >0 arm of Leo Labs #T 2olutions 0t. Ltd. Aims about reducing the

operational costs for its ,lients by improing the outsourced processes and

increasing their productiity. The strong parentage of Leo Labs #T 2olutions

proides the right mix of #nfrastructure$ 0eople and 0rocesses to the clients. The

partnership offers technical expertise coupled with global call center expertise.

To !eep pace with todayPs economic enironment$ organizations need to focus

on their core competence.

The easiest way of doing this is to partner with a serice proider li!e Leo Labs

#nteractions$ who understands the company business and soles non'core$ yet

critical business processes. Leo Labs #nteractions interest lies in a long'term

partnership addressing all aspects of the outsourcing re&uirements from clients.

Leo Labs #nteractions gies the ery best in bringing cost efficiency with

&uality processes$ round'the'cloc! operations$ state'of'the'art infrastructure and

a committed people force.

#t offers #ndustry'specific serices to customers. /or instance$ in the #nsurance

and Bealthcare sector$ it addresses ,laims 0rocessing$ 0olicy #ssuance$

0remium Accounting$ etc. #t also offers /ront ffice serices li!e ,ontact

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,enters for ,ustomer 2erice. #t proides 0roduct 2upport - Technical Belp

4es! serices as well as >ac!'ffice 0rocesses in the areas of Accounting$ B+

and other Transaction #ntensie actiities.

B*siness $'+ess O*ts'*+ing

>usiness 0rocess utsourcing (>0) has changed the way the world does

business$ and this trend is only li!ely to accelerate. >0 is &uic!ly emerging as

a !ey enabler of all high performing organizations. More and more businesses

and goernmental leaders'cross industry$ organizational size and geography are

turning to >0 to help them eleate their organizations performance.

Through the right mix of business process improement$ labor arbitrage and

technology enhancements$ >0 is aimed at reducing cost$ increasing serice

leels and thus improing the enterprise alue of the business processes.

>lending &ualified wor!force and faster adoption of well'defined business

processes leads to higher productiity gains without compromising on &uality.

The aailability of cost effectie s!illed resources ' that is well educated and

able to conerse in Dnglish$ well'deeloped communication infrastructure andsoftware sector as well as an appropriate time difference with other countries$

help in ma!ing #ndia a faorite destination for the >0 industry.

RFD O*ts'*+ing

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The story of +esearch and 4eelopment utsourcing in #T in #ndia dates bac!

to *EC9'C= when Texas #nstruments (T#) established its deelopment center in

>angalore. Today$ the +-4 serices outsourced to #ndian companies include

product deelopment$ embedded technology$ software engineering$ encryption

and networ! security and chip design serices. After #T serices (#T2) and #T'

enabled serices (#TD2)$ a new opportunity for #ndian companies is the arena of

related product and technology serices for independent software endors

(#2s).

The factors driing the increasing momentum of +-4 off'shoring ; outsourcing

industry areJ

• Aailability of highly

• s!illed manpower

• ,ost'effectieness

• 0roximity to fast'growing Asian mar!ets

• >enefit of follow'the'sun schedules

• #nformation security solutions

rganizations worldwide hae begun focusing on outsourcing actiities to ease

the pressures of financial performance$ &uality$ productiity and time'to'mar!et.

To increase the competitieness of their businesses$ organizations hae been

laying greater emphasis on +-4 utsourcing to leerage internal resources and

capabilities with external sources of research and technology.

Se/i+es 0el5 +*st'mes t'#

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• Aail cost'effectie ffshore 4eelopment 2erice

• 0rotect their #ntellectual 0roperty +ights (#0+) by following established

processes for secure communication and protection

• >uild resource pools consisting of focused +-4 teams for new initiaties

in specific technologies

• +educe deelopment time and effort

•Minimize ris!s and improe product &uality

Te+0n'l'gy E+ellen+e G'*5 (TEG)

Leo labs hae established structured Technology Dxcellence 5roups (TD5) to

foster innoation. The following Technology Dxcellency 5roups hae been

formedJ

• .:DT

• 1DD

• 8eb 2erices

• Legacy

• 2ecurity

• Dmbedded 2ystems

• Mobile

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• Application 2erers

• 4atabase

• Fnowledge

&al*e $'5'siti'n

• Leo labs 2trategic 0artnership with the client would help the client

leerage our Technology labs and 4eelopment facilities$ &uic!ly buildresource pools consisting of focused + - 4 teams for new initiaties in

specific technologies

• ur dedicated Technology labs for the clientPs +-4 diision acts as

irtual Dxtension in terms of ision$ 0eople$ and #nfrastructure

• 0rotect clientPs #ntellectual 0roperty +ights (#0+) by following

established processes for secure communication and protection

• ur strong focus is towards the &uality of solution we delier and support

we offer to our client

• ur extensie s!ills in deeloping re'usable components$ framewor!s and

expertise in executing complex solutions gies adantage of high'&uality$

cost'effectie deelopment to our customers

• 8e ma!e sure that our wor! is towards minimizing the business ris!s and

speeding up the entry of new products in the mar!et.

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CallCente Se/i+es

ur focus has been to continually find new and better ways to help our clients

ma!e profitable connections with their customers. 8hether you need messaging

or answering serice$ inbound call center serices$ outbound call center

serices$ email support and online chat$ we can help out to ma!e the most of

eery contact

Inb'*nd Telese/i+es

ur call handling and inbound telemar!eting serices for business'to'business

and business'to'consumer campaigns will help drie customer ac&uisition$

increase customer retention$ improe sales and rapidly expand your mar!ets.

ur inbound supports includeJ

Belp 4es!J 17 Bours ;4ay$ 6=9 4ays ;Gear

Technical 2upport +e&uests /or Maintenance 2upport

+e&uests /or Maintenance 2upport

#nbound Telemar!eting ; Hp'2elling - ,ross'2elling

+e&uests for 2amples

rder 2tatusJ ,ustomers can chec! on the status of their order at any time

4ealer LocateJ ,allers are gien information on the store or dealer nearest to

them.Tic!eting 2ales

2ubscriptions

/undraising

Adertising ,o'p ,laim 0rocessing

+ebate 0rocessing

#nsurance ,laims 0rocessing

0roduct +ecall Management

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,ustomized #nteractie oice 2erices

erflow$ ff'Bour And 8ee!end ,all Bandling

/ax on 4emandJ An access channel for those customers who need documented

answers or written confirmation

O*tb'*nd Telese/i+es

ur tele'professionals help out to turn the company prospects into customers$

and then our customers into adocates. 8e focus on building a relationship that

lasts by using a personalized approach that proides the alue addition

necessary to maintain and grow your client base. ur outbound capabilities

includeJ

Telemar!eting and 2alesJ 8e use predictie dialing to connect to customers.

ur tele'sales techni&ues also includeJ

+eactiationJ Approaching your PexpiredP customers with the right offer

TargetingJ #solating !ey decision'ma!ers and discoering their budgets before

you spend resources on more costly mail or sales calls

:ew MoersJ Tapping people who hae "ust moed residence$ for example$ and

as!ing them to pre'register for your serice or organization

+enewalsJ for publishing and finance$ telemar!eting is by far the most efficientway to secure repeat buyers

Aftermar!et 2alesJ ,ontacting new customers and securing additional sales$

een when other products are seemingly unrelated.

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Documents

Asset Liabilities Manatgement Leo Labs