Objective Of Study

The main objectives of this project are the following:

To study about ICICI BANK and its related aspects like its products & services,
history, organizational structure,
subsidiary companies etc.
To analyse the financial statement i.e P&L account and Balance sheet of ICICI
BANK.
To learn about P&L Account, Balance-sheet and
different type of Assets& Liabilities.
To understanding the meaning and need of Balance Sheet and profit and loss
account.
The purpose is to portray the financial position of ICICI BANK with the help of
Balance sheet and profit and loss account.
To evaluate the financial soundness ,stability and liquidity of ICICI BANK

Company Profile

ICICI BANK

ICICI Bank is India’s second-largest bank with total assets of 3,997.95 billion
(US$ 100 billion) at March 31, 2008 and profit after tax of Rs. 41.58 billion for the
year ended March 31, 2008. ICICI Bank is the most valuable bank in India in terms
of market capitalization and is ranked second amongst all the companies listed
on the Indian stock exchanges. In terms of free float market capitalization*.

The Bank has a network of about 1308branches and 3,950 ATMs in India and presence
in 18 countries. ICICI Bank offers a wide range of banking products and financial
services to corporate and retail customer through a variety of delivery channels and
through its specialized subsidiaries and affiliates in the areas of investment banking,
life and non-life insurance, venture capital and asset management. The Bank currently
has subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore,
Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Center and
representative offices in the United States, United Arab Emirates, China, South
Africa, Bangladesh, Thailand, Malaysia and Indonesia. UK subsidiary has established
a branch in Belgium.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange

(BSE) and the National Stock Exchange (NSE) of India Limited and its American
Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

3.1.1HISTORY

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly owned subsidiary. ICICI's shareholding in ICICI Bank was
reduced to 46% through a public offering of shares in India in fiscal 1998, an equity
offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition
of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary
market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was
formed in 1955 at the initiative of the World Bank, the Government of India and
representatives of Indian industry. The principal objective was to create a development
financial institution for providing medium-term and long-term project financing to Indian
businesses. In the 1990s, ICICI transformed its business from a development financial
institution offering only project finance to a diversified financial services group offering a
wide variety of products and services, both directly and through a number of subsidiaries
and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the
first bank or financial institution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the

emerging competitive scenario in the Indian banking industry, and the move towards
universal banking, the managements of ICICI and ICICI Bank formed the view that the
merger of ICICI with ICICI Bank would be the optimal strategic alternative for both
entities, and would create the optimal legal structure for the ICICI group's universal
banking strategy. The merger would enhance value for ICICI shareholders through the
merged entity's access to low- cost deposits, greater opportunities for earning fee-based
income and the ability to participate in the payments system and provide transaction-
banking services. The merger would enhance value for ICICI Bank shareholders through
a large capital base and scale of operations, seamless access to ICICI's strong corporate
relationships built up over five decades, entry into new business segments, higher market
share in various business segments, particularly fee-based services, and access to the vast
talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of
ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail
finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital
Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI
and ICICI Bank in January 2002, by the High Citst of Gujarat at Ahmedabad in March
2002, and by the High Citst of Judicature at Mumbai and the Reserve Bank of India in
April 2002. Consequent to the merger, the ICICI group's financing and banking
operations, both wholesale and retail, have been integrated in a single entity. ICICI Bank
has formulated a Code of Business Conduct and Ethics for its directors and employees.

3.1.2 BOARD OF DIRECTORS

MR. N.Vaghul (CHAIRMAN)

MR. Sridar Iyengar
MR. Lakshmi N. Mittal
MR. Narendra Murkumbi
MR. Anupam Puri
Mr. Arun Ramanathan
MR. M. K. Sharma
MR. P.M. Sinha
Prof. Marti G. Subrahmanyam
MR. T. S. Vijayan
MR. V. Prem Wasta
MR. K. V. Kamath (MANAGING DIRECTOR & CEO)
MR. Chanda Kochhar (JOINT MANAGING DIRECTOR)
MR. V. Vaidyanathan, (EXECUTIVE DIRECTOR)
Ms. Madhabi Puri-Buch, Executive Director
MR. Sonjoy Chatterjee (EXECUTIVE DIRECTOR)

3.1.4 ICICI Bank’s global network, today, spans 18

countries
3.1.5 VISION AND MISSION
Vision

 To be the leading provider of financial services in India and a

major global bank.

Mission

We will leverage our people, technology, speed and financial capital to:
 Be the banker of first choice for our customers by delivering

high quality, world-class products and services.

 Expand the frontiers of our business globally.

 Play a proactive role in the full realisation of India’s potential.

 Maintain a healthy financial profile and diversify our earnings

across businesses and geographies.

 Maintain high standards of governance and ethics.

 Contribute positively to the various countries and markets in
which we operate.

 Create value for our stakeholders.

3.1.7 ORGANISATIONAL STRUCTURE OF ICICI BANK

ICICI Bank’s organisation structure is designed to be flexible and customer- focused,

while seeking to ensure effective control and supervision and consistency in standards
across the organisation and align all areas of operations to overall organisational
objectives. The organisation structure is divided into six principal groups – Retail
Banking, Wholesale Banking, International Banking, Rural (Micro-Banking) and
Agriculture Banking, Government Banking and Corporate Center.

RETAIL BANKING

The Retail Banking Group is responsible for products and services for retail customers
and small enterprises including various credit products, liability products, distribution of
third party investment and insurance products and transaction banking services.

WHOLESALE BANKING
The Wholesale Banking Group is responsible for products and services for large and
medium-sized corporate clients, including credit and treasury products, investment
banking, project finance, structured finance and transaction banking services.

INTERNATIONAL BANKING

The International Banking Group is responsible for its international operations,

including operations in various overseas markets as well as its products and services
for non-resident Indians and its international trade finance and correspondent banking
relationships.

RURAL AND AGRICULTURAL BANKING

The Rural, Micro-Banking & Agri-Business Group is responsible for envisioning and
implementing rural banking strategy, including agricultural banking and micro-finance.

GOVERNMENT BANKING

The Government Banking Group is responsible for government banking

initiatives.

CORPORATE CENTER

The Corporate Center comprises the internal control environment functions (including
operations, risk management, compliance, audit and legal); finance (including financial
reporting, planning and strategy, asset liability management, investor relations and
corporate communications); human resitsces management; and facilities management &
administration.

BUSINESS REVIEW

During fiscal 2008, the Bank continued to grow and diversify its asset base and revenue
streams by leveraging the growth platforms created over the past few years. We
maintained our leadership position in retail credit, achieved robust growth in our fee
income from both corporate and retail businesses, strengthened our deposit franchise and
significantly scaled up our corporate and international banking operations.

RETAIL BANKING

We are the largest provider of retail credit in India. Our total retail portfolio was Rs.
1,316.63 billion at March 31,2008, constituting 58% of our total loans at that date

During fiscal 2008, we continued our focus on strengthening our retail deposit franchise
to create a stable funding base. Our current and savings account (CASA) deposits as a
percentage of total deposits increased from 22% at March 31, 2007 to 26% at March 31,
2008, with savings account deposits increasing by 36% during fiscal 2008.
During the year, we have expanded our branch network substantially. At March 31, 2008,
we had 1,262 branches & extension counters compared to 755 branches & extension
counters at March 31, 2007, including the addition of about 200 branches through the
merger of Sangli Bank. Our branch network has further increased to 1,367 as of May 31,
2008. We continued to expand our electronic channels, namely internet banking, mobile
banking, call centres, point of sale terminals and ATMs, and migrate customer
transaction volumes to these channels. We increased our ATM network to 3,881 ATMs at
March 31, 2008 from 3,271 ATMs at March 31, 2007.

SMALL AND MEDIUM ENTERPRISES

During fiscal 2008, our small enterprises customer base increased by 26% to about 1.1
million accounts. We have introduced our service offerings in over 400 new branches,
increasing our coverage to over 1,000 branches. During the year, we have focused on
product specialisation including investment banking for SMEs. We have continued to
focus on shaping the small and medium enterprises sphere in India through initiatives
such as the “Emerging India Awards”, the SME CEO Knowledge Series - a platform to
mentor and assist SME entrepreneurs, and the “SME Dialogue” - a weekly feature in a
leading financial newspaper sharing SME best practices and success stories. During the
year, we have launched several new products and services like the SME toolkit – an
online business and advisory resource for SMEs.

CORPORATE BANKING

It’s corporate banking strategy is based on providing comprehensive and customized

financial solutions to its corporate customers. It offer a complete range of corporate
banking products including rupee and foreign currency debt, working capital credit,
structured financing, syndication and transaction banking products and services.

Fiscal 2008 saw continued demand for credit from the corporate sector, with growth
and additional investment demand across all sectors. We were able to leverage our
international presence and deep corporate relationships to work on overseas
acquisitions made by Indian companies and infrastructure projects in India. During
fiscal 2008 we were involved in 75% of outbound mergers and acquisitions deals
from India. We are now a preferred partner for Indian companies for syndication of
external commercial borrowings and other fund raising in international markets and
have been ranked number one in offshore loan syndications of Indian corporates in
calendar year 2007.

.RURAL BANKING

It’s rural strategy is based on enhancing value at every level of the supply chain in all important farm

and non-farm sectors. Towards this end, it offer a range of financial products and services that cater to

the rural masses in all the important sectors like infrastructure, horticulture, food processing, dairy,

poultry, seeds, fertiliser and agrochemical industries. Customised financial solutions are offered to

individual customers, agri small & medium enterprises, agri corporates and members of their supply

chains. On the rural retail side, the Bank offers crop loans, farm equipment financing, commodity-

based loans, working capital loans for agri-enterprises, microfinance loans, jewel loans as well as

savings, investment and insurance products. In addition bank is introducing products like rural

housing finance to cater to the needs of rural customers.

INTERNATIONAL BANKING

ICICI Bank has established a strong franchise among non-resident Indians (NRI). It
has established strong customer relationships by offering a comprehensive product
suite, technology-enabled access for overseas customers, a wide distribution network
in India and alliances with local banks in various markets. It has over 5,00,000 NRI
customers.
It has undertaken significant brand-building initiatives in international markets and
have emerged as a well-recognised financial services brand for NRIs. It’s market
share in inward remittances into India has increased to over 25%. It has consolidated
it’s global remittance initiative, targeting non-Indian communities, by leveraging it’s
core capabilities of technology-based service delivery. A large number of remittance
products were introduced to complement the existing suite of products. The business
focus has been on rolling out successful products across multiple geographies and
getting into high volume correspondent arrangements.

3.1.5 PRODUCTS AND SERVICES

BANKING ACCOUNTS

ICICI Bank offers a wide range of banking accounts such as Current, Saving, Life
Plus Senior, Recurring Deposit, Young Stars, Salary Account etc. tailor- made for
every customer segments, from children to senior citizens. Convenience and ease to
access are the benefits of ICICI Bank accounts
.
YOUNG STARS ACCOUNT

A special portal for children to learn banking basics, manage personal

finances and have a lot of fun.

BANK@CAMPUS

This student banking services gives students access to their account details at the click
of a mouse. Plus, the student gets a cheque book, debit card and annual statements.

SAVINGS ACCOUNTS

Convenience is the name of the game with ICICI bank’s savings account. whether it
is an ATM/debit card, easy withdrawal, easy loan options or internet banking, ICICI
bank’s saving account always keep you in touch of money.

FIXED DEPOSITS

ICICI Bank offers a range of deposit solutions to meet varying needs at every stage of
life. It offers a range of tenures and other features to suit all requirements.

INSURANCE
The ICICI group offers a range of insurance products to cover varying needs
ranging from life, pensions and health, to home, motor and travel insurance. The
products are made accessible to customers through a wide network of advisors,
banking partners, Corporate agents and brokers with the added convenience of being
able to buy online.

LIFE INSURANCE
The ICICI group provides the many life insurance product through ICICI
Prudential Life Insurance Company.

GENERAL INSURANCE
The ICICI group provides the many general insurance products like motor, travel and
home insurance through ICICI Lombard General Insurance Company.

LOANS

ICICI bank offers a range of deposits solutions to meet varying needs at every stage
of life. It offers a range of tenures and other features to suit all requirements.

HOME LOAN

The No. 1 Home Loans Provider in the country, ICICI Bank Home Loans offers some
unbeatable benefits to its customers - Doorstep Service, Simplified Documentation
and Guidance throughout the Process. It's really easy !

PERSONAL LOAN

ICICI Bank Personal Loans are easy to get and absolutely hassle free. With minimum
documentation you can now secure a loan for an amount upto Rs. 15 lakhs.

VEHICLE LOANS
The No. 1 financier for car loans in the country. Network of more than 2500 channel
partners in over 1000 locations. Tie-ups with all leading automobile manufacturers to
ensure the best deals. Flexible schemes & quick processing are the main advantages are
here. Avail attractive schemes at competitive interest rates from the No 1 Financier
forTwo Wheeler Loans in the country . Finance facility upto 90% of the On
Road Cost of the vehicle, repayable in convenient repayment options and
comfortable tenors from 6 months to 36 months

CARDS

ICICI Bank offers a variety of cards to suit different transactional needs. Its range
includes Credit Cards, Debit Cards and Prepaid cards. These cards offer you convenience
for financial transactions like cash withdrawal, shopping and travel. These cards are
widely accepted both in India and abroad.
CREDIT CARD

ICICI Bank Credit Cards give you the facility of cash, convenience and a range of
benefits, anywhere in the world. These benefits range from life time free cards, Insurance
benefits, global emergency assistance service, discounts, utility payments, travel
discounts and much more.

DEBIT CARD

The ICICI Bank Debit Card is a revolutionary form of cash that allows customers to
access their bank account around the clock, around the world. The ICICI Bank Debit
Card can be used for shopping at more than 3.5 Lakh merchants in India and 24 million
merchants worldwide.

TRAVEL CARD

ICICI Bank Travel Card. The Hassle Free way to Travel the world. Traveling with US
Dollar, Euro, Pound Sterling or Swiss Francs; Looking for security and convenience; take
ICICI Bank Travel Card. Issued in duplicate. Offers the Pin based security. Has the
convenience of usage of Credit or Debit card

MOBILE BANKING

Bank on the move with ICICI Bank Mobile Banking. With ICICI Bank, Banking is no
longer what it used to be. ICICI Bank offers Mobile Banking facility to all its Bank,
Credit Card, Demat and Loan customers.

ICICI Bank Mobile Banking can be divided into two broad categories of
facilities:

Alert facility: ICICI Bank Mobile Banking Alerts facility keeps you
informed about the significant transactions in yits Accounts. It keeps you
updated wherever you go.

Request facility: ICICI Bank Mobile Banking Requests facility

enables you to query for yits account balance.
INVESTMENT PRODUCTS:
Along with Deposit products and Loan offerings, ICICI Bank assists you to manage yits
finances by providing various investment options ranging from ICICI Bank Tax Saving
Bonds to Equity Investments through Initial Public Offers and Investment in Pure Gold.
ICICI Bank facilitates following investment products:

• ICICI Bank Tax Saving Bonds

• Government of India Bonds
• Investment in Mutual Funds
• Initial Public Offers by Corporates
• Investment in "Pure Gold"
• Foreign Exchange Services
• Senior Citizens Savings Scheme,2004

TRADE-SERVICES:
ICICI Bank offers online remittances as well as online processing of letters of credit and
bank guarantees.

ASSET-MANAGEMENT:
Prudential ICICI Asset Management Company offers a wide range of retail mutual fund
products tailored to suit varied risk and maturity profiles.

CASH MANAGEMENT:
ICICI Bank offers a complete range of highly customized solutions for managing both
the collections and payments requirements of clients by leveraging technology. Daily
customized transactions reports and real time web-enabled downloads, provide on-tap
information facilitating effective working capital management.

CORPORATE BANKING:
ICICI Bank offers comprehensive and customized financial solutions for its corporate
clients, including rupee and foreign currency debts, working capital credit, structured
financing syndication and transaction banking products and services.

INTERNET BANKING:
Internet banking is available to all ICICI bank savings and deposit account holders, credit
card, demat and loan customers. Internet banking service offers customers a world of
convenience with services such as balance enquiry, transaction history, account
statement, bill payments, fund transfers and accounts related service requests.
ATMs:
With more than 2500 ATMs across the country, ICICI Bank has one
of the largest ATM networks in India

PHONE BANKING:
Phone banking offers 24*7 service across liability, asset and investment products to
both retail and corporate customers.

NRI-BANKING:
A gamut of services to take care of all NRI banking needs including deposits, money
transfers and private banking.

MONEY2INDIA:
A complete range of online and offline money transfer solutions to send money to India.

PROPERTY:
For millions of home buyers across the country, ICICI Bank offers not just great deals on
home loans but also a wealth of expert advice. ICICI Bank offers home search service
which can help a customer identify the property of his choice based on his budget and
other requirements
.
DEMAT ACCOUNTS:
ICICI Bank’s demat services after unique features like e-constructions, consolidation,
digitally signed statements, mobile requests and corporate benefit tracking.
RURAL-BANKING: Bank offers technology-based solutions, financial
innovations and multiple delivery channels to meet the financial needs of rural
areas.

MICROFINANCE:
ICICI Bank assists over 2.5 million low income clients
to build livelihoods by partnering With over 100 microfinance institutions.
BRANCHES: ICICI Bank has a network of over 630 branches ( of which 51 are
extension counters) across the country. The network puts a wide range of banking
products and financial services with in easy reach of retail and corporate customers.

3.1.6 RISK ASPECTS OF ICICI BANK

RISK MANAGEMENT

Risk is an integral part of the banking business and bank aim at delivering superior
shareholder value by achieving an appropriate trade-off between risk and returns.
Bank is exposed to various risks, including credit risk, market risk and operational
risk. Bank’s risk management strategy is based on a clear understanding of various
risks, disciplined risk assessment and measurement procedures and continuous
monitoring. The policies and procedures established for this purpose are continuously
benchmarked with international best practices. Bank has two dedicated groups, the
RISK MANAGEMENT GROUP (RMG) and COMPLIANCE & AUDIT GROUP
(CAG) which is responsible for assessment, management and mitigation of risk in
ICICI Bank. These groups from part of the corporate center are completely
independent of all business operations and are accountable to the Risk and Audit
committees of the Board of directors. RMG is further organized into the Credit Risk
Management group, Market Risk Management group, Retail Risk Management group
and Operational Risk Management group. CAG is further organised into the Credit
Policies, RBI Inspection & Anti-Money Laundering Group and the Internal Audit
Group.

CREDIT RISK

Credit risk is the risk that a borrower is unable to meet its financial obligations to the
lender. Bank measure, monitor and manage credit risk for each borrower and also at
the portfolio level. Bank has standardized credit-approval processes, which include a
well-established procedure for comprehensive credit appraisal and rating. ICICI Bank
has well developed internal credit rating methodologies for rating obligors. The rating
factors in quantitative, qualitative issues and credit enhancement features specific to
the transaction. The rating serves as a key input in the approval as well as post-
approval credit processes. Industry knowledge is constantly updated through field
visits and interactions with clients, regulatory bodies and industry experts. In retail
credit operations, the Board or a Board Committee approves all products, policies and
authorizations Credit approval authority lies only with the credit officers who are
distinct from the sales team. Credit scoring models are used in the case of certain
products like credit cards. External agencies such as field investigation agencies and
credit processing agencies are used to facilitate a comprehensive due diligence
process including visits to offices and homes in the case of loans to individual
borrowers.

MARKET RISK

Market risk is the risk of loss resulting from changes in interest rates, foreign
currency exchange rates, equity prices and commodity prices. The objective of market
risk management is to minimize the impact of losses on earnings and equity capital
due to market risk. Market risk policies include the Investment Policy and the Asset-
Liability Management (ALM) Policy. The policies are approved by the Board of
Directors. The Asset Liability Management Committee (ALCO) of the Board of
Directors stipulate liquidity and interest rate risk limits, monitors adherence to limits,
articulates the organisation’s interest rate view and determines the strategy in light of
the current and expected environment. These policies and processes are articulated in
the ALPM policy. The investment policy addresses issues related to investment in
various trading products. RMG exercises independent control over the process of
market risk management and recommends changes in process and methodologies for
measuring market risk Interest rate risk is measured through the use of re-pricing gap
analysis and duration analysis. Liquidity risk is measured through gap analysis. Bank
ensure adequate liquidity at all time through systematic funds planning and
maintenance of liquid investment as well as focusing on more stable funding sitsces
such as retail deposits. ICICI Bank limit exposure to exchange rate risk by stipulating
position limits. The treasury Middle Office Group monitors the asset-liability position
under the supervision of the ALCO. The Treasury Middle Office Group is also
responsible for processing treasury transactions, tracking the daily funds position and
complying with all treasury related management and regulatory reporting
requirements.

OPREATIONAL RISK

Operational risk is the risk of loss that can result from a variety of factors, including
failure to obtain proper internal authorizations, improperly documented transactions,
failure of operational and information security procedures, computer systems, software or
equipment, fraud, inadequate training and employee errors. Bank’s approach to
operational risk management is designed to mitigate operational risk by maintaining a
comprehensive system of internal controls, establishing systems and procedures to
monitor transactions, maintaining key back-up procedures and undertaking regular
contingency planning. Effective operational risk management system would ensure that
bank has sufficient information to make appropriate decisions about additional controls,
adjustments to controls, or other risk responses. Operational risk management policy
aims at minimizing losses and customer dissatisfaction due to failure in processes,
focusing on flaws in products and their design that can expose the bank to losses due to
fraud, analyzing the impact of failures in systems, developing mitigants to minimize the
impact and developing plans to meet external shocks that can adversely impact continuity
in the bank’s operations.

3.1.7 SUBSIDIARY COMPANIES

DOMESTIC SUBSIDIARIES

ICICI Home Finance Company Limited

ICICI Investment Management Company Limited
ICICI Lombard General Insurance Company Limited
ICICI Prudential Life Insurance Company Limited
ICICI Securities Limited
ICICI Trusteeship Services Limited
ICICI Venture Funds Management Company Limited
ICICI Securities Primary Dealership Limited
ICICI Prudential Asset Management Company Limited
ICICI Prudential Trust Limited
INTERNATIONAL SUSIDIARIES
ICICI Bank Canada
ICICI Bank Eurasia Limited Liability Company
ICICI International Limited
ICICI Securities Holding Inc
ICICI Securities Inc
ICICI Bank Uk Limited

3.1.8 KEY GROUP COMPANIES

ICICI PRUDENTIAL INSURANCE COMPANY

ICICI Life continued to maintain its market leadership among private sector life
insurance companies with a market share of 12.71% on the basis of weighted received
premium. Life insurance companies worldwide make losses in the initial years, in view of
business set-up and customer acquisition costs in the initial years as well as reserving for
actuarial liability. While the growing operations of ICICI Life had a negative impact of
Rs. 10.31 billion on the Bank’s consolidated profit after tax in FY2008 on account of the
above reasons, the company’s unaudited New Business Achieved Profit (NBAP) for
FY2008 was Rs. 12.54 billion as compared to Rs. 8.81 billion in fiscal 2007.
ICICI LOMBARD GENERAL INSURANCE COMPANY

ICICI Lombard General Insurance Company (ICICI General) enhanced its leadership
position with a market share of about 29.8% among private sector general insurance
companies and an overall market share of about 11.9% during fiscal 2008. ICICI
General’s gross written premium grew by 11.4% from Rs 30.03 billion in fiscal 2007 to
Rs. 33.45 billion in fiscal 2008. ICICI General is required to expense upfront, on
origination of a policy, all sitscing expenses related to the policy. While ICICI General’s
profit after tax for Rs. 1.03 billion in fiscal 2008,a growth of 50.5% over fiscal 2007.The
combined ratio is the sum of net claims and expenses as a percentage of premiums and
indicates the surplus generated on an annualised basis from the business written during a
period (excluding investment income).

ICICI PRUDENTIAL AMC & TRUST

ICICI Prudential Asset Management Company (ICICI AMC) was the second largest asset
management company in India with average assets under management of Rs. 543.55
billion for March 2008. ICICI AMC achieved a profit after tax of Rs. 0.82 billion in fiscal
2008, a growth of 69.7% over fiscal 2007.

ICICI SECURITIES LIMITED

The securities and primary dealership business of the ICICI group have been reorganised.
ICICI Securities Limited has been renamed as ICICI Securities Primary Dealership
Limited. ICICI Brokerage Services Limited has been renamed as ICICI Securities
Limited and has become a direct subsidiary of ICICI Bank. ICICI Securities achieved a
profit after tax of Rs. 1.50 billion and ICICI Securities Primary Dealership achieved a
profit after tax of Rs. 1.40 billion, in fiscal 2008.

ICICI VENTURE FUNDS MANAGEMENT COMPANY LIMITED

 ICICI Venture Funds Management Company Limited (ICICI Venture) strengthened its
leadership position in privateequity in India, with funds under management of about Rs. 95.50
billion at year-end fiscal 2008. ICICI Venture achieved a profit after tax of Rs. 0.90 billion in
fiscal 2008 compared to Rs. 0.70 billion in fiscal 2007.

Key Financial Ratios of ICICI Bank

------------------- in Rs. Cr. -------------------

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10
Investment Valuation Ratios
Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share 8.50 10.00 11.00 11.00 12.00
Operating Profit Per Share (Rs) 36.75 42.19 51.29 48.58 49.80
Net Operating Profit Per Share (Rs) 196.87 316.45 354.71 343.59 293.74
Free Reserves Per Share (Rs) 193.24 199.52 346.21 351.04 356.94
Bonus in Equity Capital -- -- -- -- --
Profitability Ratios
Interest Spread 2.67 3.43 3.51 3.66 5.66
Adjusted Cash Margin(%) 17.55 12.30 11.81 11.45 13.64
Net Profit Margin 14.12 10.81 10.51 9.74 12.17
Return on Long Term Fund(%) 56.24 82.46 62.34 56.72 44.72
Return on Net Worth(%) 14.33 13.17 8.94 7.58 7.79
Adjusted Return on Net Worth(%) 11.40 12.31 8.80 7.55 7.53
Return on Assets Excluding
1.01 270.37 417.64 444.94 463.01
Revaluations
Return on Assets Including
1.01 270.37 417.64 444.94 463.01
Revaluations
Management Efficiency Ratios
Interest Income / Total Funds 8.36 9.55 10.60 9.82 8.82
Net Interest Income / Total Funds 3.78 4.06 4.29 3.99 4.08
Non Interest Income / Total Funds 0.22 0.10 0.02 0.08 0.08
Interest Expended / Total Funds 4.58 5.49 6.31 5.83 4.74
Operating Expense / Total Funds 2.22 2.79 2.76 2.60 2.59
Profit Before Provisions / Total Funds 1.49 1.19 1.40 1.30 1.41
Net Profit / Total Funds 1.21 1.04 1.12 0.96 1.08
Loans Turnover 0.15 0.17 0.20 0.18 0.17
Total Income / Capital Employed(%) 8.58 9.65 10.62 9.90 8.90
Interest Expended / Capital
4.58 5.49 6.31 5.83 4.74
Employed(%)
Total Assets Turnover Ratios 0.08 0.10 0.11 0.10 0.09
Asset Turnover Ratio 2.94 4.52 5.61 5.14 4.60
Profit And Loss Account Ratios
Interest Expended / Interest Earned 69.62 71.14 76.28 73.09 68.44
Other Income / Total Income 2.59 1.07 0.17 0.86 0.92
Operating Expense / Total Income 25.86 28.87 26.00 26.22 29.05
Selling Distribution Cost Composition 4.80 6.12 4.43 1.74 0.72
Balance Sheet Ratios
Capital Adequacy Ratio 13.35 11.69 13.97 15.53 19.41
Advances / Loans Funds(%) 84.89 77.72 72.67 69.86 58.57
Debt Coverage Ratios
Credit Deposit Ratio 87.59 83.83 84.99 91.44 90.04
Investment Deposit Ratio 46.07 41.15 42.68 46.35 53.28
Cash Deposit Ratio 5.77 6.99 10.12 10.14 10.72
Total Debt to Owners Fund 7.45 9.50 5.27 4.42 3.91
Financial Charges Coverage Ratio 1.39 1.25 1.25 0.25 0.33
Financial Charges Coverage Ratio Post
1.33 1.22 1.20 1.20 1.26
Tax
Leverage Ratios
Current Ratio 0.08 0.09 0.11 0.13 0.14
Quick Ratio 6.64 6.04 6.42 5.94 14.70
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 34.08 33.89 33.12 36.60 37.31
Dividend Payout Ratio Cash Profit 27.36 28.84 29.08 31.00 32.33
Earning Retention Ratio 65.82 64.80 66.35 63.23 61.40
Cash Earning Retention Ratio 72.58 70.22 70.51 68.87 66.70
Adjusted Cash Flow Times 52.30 65.12 52.34 49.41 44.79

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Earnings Per Share 28.55 34.59 37.37 33.76 36.10

Book Value

3.1.11 PUBLIC RECOGNITION

On May 5, 2008, Mr. K. V. Kamath, MD&CEO was awarded the prestigious
Padma Bhushan by the President of India
 ICICI BANK (ICBK)
Live BSE Quotes Apr 1, 2011 (Close)
Price (Rs) Open (Rs) High (Rs) Low (Rs)
1,102.70 1,110.00 1,119.00 1,095.00
% Change Volume Value (Rs) 52-Week H/L
-0.90 295,104 325,476,288 1,277.00 / 810.00

Live NSE Quotes Apr 1, 2011 (Close)

Price (Rs) Open (Rs) High (Rs) Low (Rs)
1,102.90 1,114.80 1,119.00 1,095.00

% Change Volume Value (Rs) 52-Week

-1.19 3,164,043 3,490,383,104 H/L
1,279.00 /
712.00

Valuation
EPS (Rs)* P/E Ratio (x) Market Cap (Rs P/BV (x)
40.86 26.99 m) 2.48
1,269,670.83

DATA ANALYSIS
4.1 STUDY OF PROFIT& LOSS A/C

4.1.1 MEANING: It is a financial statement, which shows net loss of a

Company for a specified period. The accounting year means calendar year of
12 months or less or more than 12 months.

4.1.2 CONTENTS: This presents the revenues and expenses of a company

and shows the excess of revenues over expenses for profit and vice versa for
a loss.

4.1.3 FORMAT: The Companies act does not provide any specific format
for this account. However it is required to be prepared on the basis of the
Instructions given in part ii of schedule (vi) of the companies act.

4.1.4 MAIN ITEMS OF PROFIT AND LOSS ACCOUNT

Turnover or sales: The aggregate amount of sales and connected

items with the sales such as commission paid to sole-selling agents and other
selling agents and brokerage and discounts on sales other than usual trade
discount.
Depreciation: The amount of depreciation of fixed assets and the
arrears of depreciation as per section 205(2) shall be disclosed by way of
foot-note

 Interest on loans and debentures: Interest on loans and debentures has

to be stated separately. It will include the amount of interest paid as well
as outstanding.

 Miscellaneous expenses: In this head items such as rates and taxes,

insurance premium etc., must be stated separately.

 Preliminary expenses: Such expenses include the costs of formation of a

company and since their amount is usually large, it is not desirable to
write off them in one year.

 Provision for taxation: The profit and loss account of a company must
be debited with the estimated liabilities for tax on the current profits at
current rates of taxation.
 Unclaimed dividends: It is shown on the liabilities side of the balance
sheet under the heading ‘current liabilities ‘.
 Interim dividends: It is an item of appropriation. It is transferred to the
debit side of the Profit and loss appropriation account.

 Final dividend as an item of the trial balance: This is shown in the

debit side of the appropriation section of the profit and loss account.

 Proposed dividend or final dividend proposed: Since it is an

adjustment item, it has to be shown at two places- In the debit side of the
profit and loss appropriation account and on the liabilities side of the balance
sheet under the head ‘current liabilities and provisions’.

 Political donations: It must be shown as a separate item in the profit and

loss account.

 Dividend on interest income: This item is transferred to the credit side

of the profit and loss account.

 Payment to auditors: It must be stated separately. This will include

consultancy fee, auditing fees management services etc.

 Managerial remuneration: This includes the payments made to

managerial remuneration director’s fee, pension, other allowances and
commission

4.2 STUDY OF BALANCE SHEET

4.2.1 MEANING: The balance sheet is a financial snapshot of a company's condition
at a single point in time. A balance sheet contains a listing of the company's asset,
liability and Capital accounts. When someone, whether a creditor or investor, asks
you how your company is doing, you'll want to have the answer ready and
documented. The way to show off the success of your company is a balance sheet. A
balance sheet is a documented report of your company's assets and obligations, as
well as the residual ownership claims against your equity at any given point in time. It
is a cumulative record that reflects the result of all recorded accounting transactions
since your enterprise was formed. You need a balance sheet to specifically know what
your company's net worth is on any given date. With a properly prepared balance
sheet, you can look at a balance sheet at the end of each accounting period and know
if your business has more or less value, if your debts are higher or lower, and if your
working capital is higher or lower. By analyzing your balance sheet, investors,
creditors and others can assess your ability to meet short-term obligations and
solvency, as well as your ability to pay all current and long-term debts as they come
due. The balance sheet also shows the composition of assets and liabilities, the
relative proportions of debt and equity financing and the amount of earnings that you
have had to retain. Collectively, external parties to help assess your company’s
financial status, which is required by both lending institutions and investors before
they will allot any money toward your business, will use this information.

4.2.2 LEARN THE DIFFERENT ASSETS

Current assets: Current assets include cash and other assets that in the normal
course of events are converted into cash within the operating cycle. For example, a
manufacturing enterprise will use cash to acquire inventories of materials. These
inventories of materials are converted into finished products and then sold to
customers. Cash is collected from the customers. This circle from cash back to cash is
called an operating cycle. In a merchandising business one part of the cycle is
eliminated. Materials are not purchased for conversion into finished products. Instead,
the finished products are purchased and are sold directly to the customers. Several
operating cycles may be completed in a year, or it may take more than a year to
complete one operating cycle. The time required to complete an operating cycle
depends upon the nature of the business. It is conceivable that almost all of the assets
that are used to conduct your business, such as buildings, machinery, and equipment,
can be converted into cash within the time required to complete an operating cycle.
However, your current assets are only those that will be converted into cash within
the normal course of your business. The other assets are only held because they
provide useful services and are excluded from the current asset classification. If you
happen to hold these assets in the regular course of business, you can include them in
the inventory under the classification of current assets. Current assets are usually
listed in the order of their liquidity and frequently consist of cash, temporary
investments, accounts receivable, inventories and prepaid expenses.

 Cash: Cash is simply the money on hand and/or on deposit that is available for
general business purposes. It is always listed first on a balance sheet. Cash held for
some designated purpose, such as the cash held in a fund for eventual retirement of a
bond issue, is excluded from current assets.

Marketable Securities: These investments are temporary and are made

from excess funds that you do not immediately need to conduct
operations. Until you need these funds, they are invested to earn a return.

 Accounts Receivable: Simply stated, accounts receivables are the amounts

owed to you and are evidenced on your balance sheet by promissory notes. Accounts
receivable are the amounts billed to your customers and owed to you on the balance
sheet's date. You should label all other accounts receivable appropriately and show
them apart from the accounts receivable arising in the course of trade. If these other
amounts are currently collectible, they may be classified as current assets.
 Inventories: Your inventories are your goods that are available for sale, products
that you have in a partial stage of completion, and the materials that you will use to
create your products. The costs of purchasing merchandise and materials and the costs
of manufacturing your various product lines are accumulated in the accounting
records and are identified with either the cost of the goods sold during the fiscal
period or as the cost of the inventories remaining.

 Prepaid expenses: These expenses are payments made for services that will be
received in the near future. Strictly speaking, your prepaid expenses will not be
converted to current assets in order to avoid penalizing companies that choose to pay
current operating costs in advance rather than to hold cash. Often your insurance
premiums or rentals are paid in advance.

Investments: Investments are cash funds or securities that you hold for a designated
purpose for an indefinite period of time. Investments include stocks or the bonds you
may hold for another company, real estate or mortgages that you are holding for
income-producing purposes. Your investments also include money that you may be
holding for a pension fund.

Plant Assets: Often classified as fixed assets, or as plant and equipment, your
plant assets include land, buildings, machinery, and equipment that are to be used in
business operations over a relatively long period of time. It is not expected that you
will sell these assets and convert them into cash. Plant assets simply produce income
indirectly through their use in operations.

Intangible Assets: Your other fixed assets that lack physical substance are referred
to as intangible assets and consist of valuable rights, privileges or advantages.
Although your intangibles lack physical substance, they still hold value for your
company. Sometimes the rights, privileges and advantages of your business are worth
more than all other assets combined.

Other Assets: During the course of preparing your balance sheet you will notice
other assets that cannot be classified as current assets, investments, plant assets, or
intangible assets. These assets are listed on your balance sheet as other assets.
Frequently, your other assets consist of advances made to company officers, the cash
surrender value of life insurance on officers, the cost of buildings in the process of
construction, and the miscellaneous funds held for special purposes.

4.2.3 LEARN THE DIFFERENT LIABILITIES

Current Liabilities: On the equity side of the balance sheet, as on the asset side,
you need to make a distinction between current and long-term items. Your current
liabilities are obligations that you will discharge within the normal operating cycle of
your business. In most circumstances your current liabilities will be paid within the
next year by using the assets you classified as current. The amount you owe under
current liabilities often arises as a result of acquiring current assets such as inventory
or services that will be used in current operations. You show the amounts owed to
trade creditors that arise from the purchase of materials or merchandise as accounts
payable. If you are obligated under promissory notes that support bank loans or other
amounts owed, your liability is shown as notes payable. Other current liabilities may
include the estimated amount payable for income taxes and the various amounts owed
for wages and salaries of employees, utility bills, payroll taxes, local property taxes
and other services.

Long-Term Liabilities: Your debts that are not due until more than a year from
the balance sheet date are generally classified as long-term liabilities. Notes, bonds
and mortgages are often listed under this heading. If a portion of your long-term debt
is due within the next year, it should be removed from the long- term debt
classification and shown under current liabilities.

Deferred Revenues: Your customers may make advance payments for

merchandise or services. The obligation to the customer will, as a general rule, be
settled by delivery of the products or services and not by cash payment. Advance
collections received from customers are classified as deferred revenues, pending
delivery of the products or services.

Owner's Equity: Your owner's equity must be subdivided on your balance sheet:
One portion represents the amount invested directly by you, plus any portion of
retained earnings converted into paid-in capital. The other portion represents your net
earnings that are retained. This rigid distinction is necessary because of the nature of
any corporation. Ordinarily, stockholders, or owners, are not personally liable for the
debts contracted by a company. A stockholder may lose his investment, but creditors
usually cannot look to his personal assets for satisfaction of their claims. Under
normal circumstances, the stockholders may withdraw as cash dividends an amount
measured by the corporate earnings. The distinction in this rule gives the creditors
some assurance that a certain portion of the assets equivalent to the owner's
investment cannot be arbitrarily withdrawn. Of course, this portion could be depleted
from your balance sheet because of operating losses. The owner's equity in an
unincorporated business is shown more simply. The interest of each owner is given in
total, usually with no distinction being made between the portion invested and the
accumulated net earnings. The creditors are not concerned about the amount invested.
If necessary, creditors can attach the personal assets of the owners.
4.2.4 BALANCE-SHEET STRUCTURE

Basis of balance-sheet: Assets = Liability + Equity

The following Balance sheet structure is just an example. It does not show all possible
kind of assets, equity and liabilities, but it shows the most usual ones. It could be a
consolidated balance sheet. Monetary values are not shown and summary (total) rows
are missing as well.

Assets
Current Assets
Cash and cash equivalents
Inventories
Account receivable
Investment held for trading
Other current assets

Non-Current Assets
Property, plant and equipment
Goodwill
Other intangible fixed assets
Investment in associates
Deferred tax assets
Miscellaneous Expenditure

Equity And Liabilities

Capital & Reserve

Share capital reserve
Revaluation reserve
Translation reserve
Retained earnings
Minority interest
Non-Current Liabilities
Bank loan
Issued debt securities
Deferred tax liability
Current Liabilities
Accounts payable
Current income tax liability
Short-term part of bank loans
Short-term provisions

4.2.5 EQUITY VALUATION: The real value to a purchaser of the business or a

shareholder may be different from the net assets shown by the balance sheet. This is
because factors that affect the value of a business may not be recorded yet. For
example, a purchaser will be interested in the future earnings of the business, whether
assets such as property have been revalued recently, and whether there are potential
liabilities in the future such as lawsuits. The value of the assets in the balance has also
been based on the assumption that the business is a going concern, otherwise the
break-up value of the assets may be far less than the value in the balance sheet.

4.2.6 PREPAIRING A BALANCE-SHEET

 Title and Heading: In practice, the most widely used title is Balance
Sheet; however Statement of Financial Position is also acceptable. Naturally, when
the presentation includes more than one time period the title "Balance Sheets" should
be used.
 Heading: In addition to the statement title, the heading of your balance sheet
should include the legal name of your company and the date or dates that your
statement is presented. For example, a comparative presentation might be headed:

XYZ CORPORATION
BALANCE SHEETS
December 31, 2008

Format: There are two basic ways that balance sheets can be arranged. In Account
Form, your assets are listed on the left-hand side and totaled to equal the sum of
liabilities and stockholders' equity on the right-hand side. Another format is Report
Form, a running format in which your assets are listed at the top of the page and
followed by liabilities and stockholders' equity. Sometimes total liabilities are
deducted from total assets to equal stockholders' equity.

Captions: Captions are headings within your statement that designate major groups
of accounts to be totaled or subtotaled. Your balance sheet should include three
primary captions: Assets, Liabilities and Stockholders' Equity. In the report form of
presentation, the placement of your primary captions would be as follows: 2006
ASSETS, LIABILITIES AND STOCKHOLDER’S EQUITY.

Order of Presentation of Captions: First, start with items held primarily for
conversion into cash and rank them in the order of their expected conversion. Then,
follow with items held primarily for use in operations but that could be converted into
cash, and rank them in the order of liquidity. Finally, finish with items whose costs
you will defer to future periods or that you cannot convert into cash.

4.3 STUDY OF CASH FLOW STATEMENT

4.3.1 MEANING: Cash flow statement or statement of cash flows is a financial
statement that shows a company's incoming and outgoing money (sources and uses of
cash) during a time period (often monthly or quarterly). The statement shows how
changes in balance sheet and income accounts affected cash and cash equivalents, and
breaks the analysis down according to operating, investing, and financing activities.
As an analytical tool the statement of cash flows is useful in determining the short-
term viability of a company, particularly its ability to pay bills.

4.3.2 PURPOSE: The cash flow statement reflects a firms liquidity or solvency.
The main purpose to make cash flow statement are as follows:

1. Provide information on a firm's liquidity and solvency and its ability to Change
cash flows in future circumstances
2. Provide additional information for evaluating changes in assets, liabilities and
equity
3. Improve the comparability of different firms' operating performance by Eliminating
the effects of different accounting methods
4. Indicate the amount, timing and probability of future cash flows

4.3.3 ACTIVITIES INVOLVED IN CASH FLOW: The cash flowstatement

is partitioned into cash flow resulting from operating activities, cash flowresulting
from investing activities, and cash flow resulting from financing activities.Operating
activities: Operating activities include the production, sales and delivery of the
company's product as well as collecting payment from its customers. This could
include purchasing raw materials, building inventory, advertising. Investing activities:
Investing activities focus on the purchase of the long-term assets a company needs in
order to make and sell its products, and the selling of any long-term assets. Financing
activities: Financingactivities include the inflow of cash from investors such as
banksand shareholders, as well as the outflow of cash to shareholders asdividends as
the company generates income. Other activities which impact the long-term liabilities
and equity of the company are also listed in the financing activities section of the cash
flow statement. Analysis of cash flow statement is necessary for every organisation to
depict its cash inflow and outflow.

4.4 FINANCIAL STATEMENT ANALYSIS

4.4.1 MEANING: Financial statement analysis is the process of examining

relationships among financial statement elements and making comparisons with
relevant information. It is a valuable tool used by investors and creditors, financial
analysts, and others in their decision-making processes related to stocks, bonds, and
other financial instruments. With a great understanding of the balance sheet & p&l
account and how it is constructed, we can look at some techniques to analyze the
information contained within the balance sheet & p&l account.
4.4.2 PURPOSE:The main purpose of analyzing the financial statement are
the following:-

To assess past performance and current financial position.

To make predictions about the future performance of a company.

4.4.3 TOOLS FOR ANALYSING

1.PERCENTAGE CALCULATION

There are two popular methods by which we can analyze the financial statement by
calculating percentage as taking a common base.

 Horizontal Analysis When an analyst compares financial information for two

or more years for a single company, the process is referred to as horizontal analysis,
since the analyst is reading across the page to compare any single line item, such as
sales revenues. In addition to comparing dollar amounts, the analyst computes
percentage changes from year to year for all financial statement balances, such as
cash and inventory. Alternatively, in comparing financial statements for a number of
years, the analyst may prefer to use a variation of horizontal analysis called trend
analysis. Trend analysis involves calculating each year's financial statement balances
as percentages of the first year, also known as the base year. When expressed as
percentages, the base year figures are always 100 percent, and percentage changes
from the base year can be determined. If we want to calculate % change in sales then
we apply the following formula:
Percentage=change in sales /Base Year Sales*100

 Vertical Analysis

When using vertical analysis, the analyst calculates each item on a single financial
statement as a percentage of a total. The term vertical analysis applies because each
year's figures are listed vertically on a financial statement. The total used by the
analyst on the income statement is net sales revenue, while on the balance sheet it is
total assets. This approach to financial statement analysis, also known as component
percentages, produces common-size financial statements. Common-size balance
sheetsand income statements can be more easily compared, whether across the years for
a single company or across different companies.

If we want to calculate % change of current assets then we apply the

following formula:
Percentage: current assets/total assets*100

2.RATIO ANALYSIS
Financial ratio analysis uses formulas to gain insight into the company and its
operations. For the balance sheet, using financial ratios (like the debt-to-equity ratio)
can show you a better idea of the company’s financial condition along with its
operational efficiency. It is important to note that some ratios will need information
from more than one financial statement, such as from the balance sheet and the
income statement. Ratio analysis facilitates inter-firm and intra-firm comparison.

Ratios are often classified using the following terms:

 LIQUIDITY RATIO
Liquidity ratios are measures of the short-term ability of the company to
pay its debts when they come due and to meet unexpected needs for cash.
• Current Ratio: The current ratio is a rough indication of a firm ability to
service its current obligations. Generally, the higher the current ratio, the

greater the cushion between current obligations and a firm ability to pay them. The
stronger ratio reflects a numerical superiority of current assets over current liabilities
Current ratio is calculated as follows:

Current ratio= Current Assets/Current Liabilities

Quick Ratio: It is also known as the “acid test” ratio, this is a refinement of the
current ratio and is a more conservative measure of liquidity. The quick ratio
expresses the degree to which a company’s current liabilities are recovered by the
most liquid current assets. quick ratio is calculated as follows:

Quick ratio= (cash + marketable securities +

Receivables)/current
liabilities
 SOLVENCY RATIO

Solvency ratios indicate the ability of the company to meet its long-term obligations
on a continuing basis and thus to survive over a long period of time.
•

Debt/Worth Ratio: This ratio expresses the relationship between capital contributed by
creditors and that contributed by owners. It expresses the degree of protection
provided by the owners for the creditors. The higher the ratio, the greater the risk
being assumed by creditors. The lower the ratio, the greater the long-term financial
safety. A firm with a low debt/worth ratio usually has a greater flexibility to borrow in
the future. A more highly leveraged company has a more limited debt capacity.
Debt/worth ratio=Total Liabilities / Tangible Net Worth

 PROFITABILITY RATIO

Profitability ratios are gauges of the company's operating success for a

given period of time.