Rahul Emparical Study

A PROJECT REPORT ON
An Evaluation of the MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK
A Report Submitted In Partial Fulfillment of the Requirements For The Award of the Degree of MASTER OF BUSINESS ADMINISTRATION (Collaborative program of M.S.Ramaiah Management Institute with PRIST University)
By Rahul Kumar REG NO :- Cm2091860060 Under the Guidance of Prof Savitha Rani
PRIST UNIVERSITY Vallam, Thanjavur, 2011
MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK
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STUDENTS DECLARATION
I hereby declare that the Project Report conducted MERGER AND CONSOLIDATION OF ICICI LTD.AND ICICI BANK under the guidance of Prof Savitha Rani submitted in Partial fulfilment of the requirements for the Degree of MASTER OF BUSINESS ADMINISTRATION Collaborative program with PRIST University to M.S.RAMAIAH MANAGEMENT NSTITUTE. It is my original work and the same has not been submitted for the award of my other Degree.
Place: Bangalore Date: CM2091860060
Rahul Kumar Reg. No:
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CERTIFICATE
This is to certify that the Project Report on MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK submitted in partial fulfilment of the requirements for the award of the degree of MASTER OF BUSINESS DMINISTRATION Of PRIST UNIVERSITY In collaboration with M.S.RAMAIAH MANAGEMENT INSTITUTE Under my supervision and guidance and that no part of this report has been submitted for the award of any other degree/diploma/fellowship or similar titles or prizes.
FACULTY GUIDE Signature: Name: Savitha Rani Qualifications:
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ACKNOWLEDGEMENT
I extend my special gratitude to our beloved director Shri. ANANDARAM, Our DEAN, & our Co-coordinator Muralidharan Harikrishnan for inspiring me to take up this project. I would like to use this opportunity to thank my institution guide Prof. Savitha Rani, faculty of M.S Ramaiah Management Institute for her constant guidance and support. . Last but not the least; I would like to thank all others who directly or indirectly helped me in this regard
STUDENT NAME Rahul kumar Registration No. CM2091860060
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Table of Contents
Sl. No 1. 2. 3. Particulars Chapter 1 Introduction Chapter 2 Objective of The Study Chapter 3 Introduction of Corporate Restructure Corporate Restructuring Types Of Corporate Restructuring Common Motivations For Merger And Acquisitions Merger and Consolidation Procedure Merger and Consolidation Shareholders right Advantage of Merger Purpose of Merger And Consolidation Chapter 4 Procedure of Merger And Consolidation Procedure of Bank Merger RBI Guidelines on Merger And Consolidation Of Banks Chapter 5 Introduction Of Bank Competitors Product And Services Chapter 6 Merger Of ICICI And ICICI Bank Boards of ICICI and ICICI Bank Approve Merger IMPACT OF MERGER OF ICICI BANK WITH ICICI LIMITED Merger process of ICICI Bank Ltd- highlights Chapter 7 Research design Tables Graphs Limitation Of Study Findings Conclusions Bibliography Page No 7-8 8 9-10 10 11-24 11 12 13-17 18 19 20 21-22 22-24 25-27 26 26- 27 27 28- 32 29 29 30-31 34-50 34-35 36-38 38-49 50 51-54 55-67 68-77 79 80 81 82
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C H A P T E R
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Introduction:The financial year 2007-08 witnessed a slew of acquisitions across diverse sectors of the economy in India. Unlike in the past, such activity was not limited to acquisitions within India or of Indian companies. Of all sectors, steel was the most dominant in terms of stake sales as deals valuing $ 3.862 billion took place in Q1 of 2007-08 by the Indian companies in the global arena. Energy ranked second, with automotive and auto components close on its heels.1 In the domestic segment, iron ore, aviation and steel were the most prolific in terms of mergers and acquisitions. With Indian corporate houses showing sustained growth over the last decade, many have shown an interest in growing globally by choosing to acquire or merge with other companies outside India. One such example would be the acquisition of Britains Corus by Tata an Indian conglomerate by way of a leveraged buy-out. The Tatas also acquired Jaguar and Land Rover in a significant cross border transaction. Whereas both transactions involved the acquisition of assets in a foreign jurisdiction, both transactions were also governed by Indian domestic law. Whether a merger or an acquisition is that of an Indian entity or it is an Indian entity acquiring a foreign entity, such a transaction would be governed by Indian domestic law. In the sections which follow, we touch up on different laws with a view to educate the reader of the broader areas of law which would be of significance. Mergers and acquisitions are methods by which distinct businesses may combine. Joint ventures are another way for two businesses to work together to achieve growth as partners in progress, though a joint venture is more of a contractual arrangement between two or more businesses.
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C H A P T E R
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OBJECTIVE OF THE STUDY
1. To study about merger and consolidation of bank.

2. To know about services provided by the ICICI bank limited after
merging.
3. Analysis of impact of merger on ICICI bank.
4. Study about working of the bank after merge.
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C H A P T E R
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Introduction of Corporate Restructure

Corporate restructuring
It can be defined as any change in the business capacity or portfolios that is carried out by an inorganic route or a change in the capital structure of a company that is not a part of its ordinary course of business or any change in ownership of control over the management of the company or a combination of there off. Action taken to expand or contract a firms basic operations or fundamentally change is asset or financial structure are referred to as Corporate restructuring activities. Corporate Restructuring is a catchall term that refers to a broad array of activities, ranging from reorganizing business units to take overs and joint ventures to divestitures and spin offs and equity carve outs. While focus in this project is on corporate restructuring involving M & A. Reasons of Corporate restructuring Any company undergo change on a continual basis. Change is the order of the day corporate sector cannot be an exception to his pro-active organization translate problems into opportunities and there by growth. There are many reasons why change is forced upon a company. Change in external environment due to: Increase in competition Advent of new & more efficient technology Emergence of new competitive product. Emergence of new market Emergence of new classes of consumers Demographic changes Business cycle
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Some companies undertake changes to increase their cutting edge over the competition and enhance there leadership position, so as to make it impossible for other competitors to catch up with them.
Types of Corporate restructuring

1. Merger 2. Consolidation 3. Acquisition 4. Divestiture 5. Demergers 6. Carve Out 7. Joint Ventures 8. Reduction of Capital 9. Buy Back Of Securities 10. 11. Delisting Of Shares or Company. Merger and Amalgamations
The term merger is not defined under the Companies Act, 1956 (the Companies Act), the Income Tax Act, 1961 (the ITA) or any other Indian law. Simply put, a merger is a combination of two or more distinct entities into one; the desired effect being not just the accumulation of assets and liabilities of the distinct entities, but to achieve several other benefits such as, economies of scale, acquisition of cutting edge technologies, obtaining access into sectors / markets with established players etc. Generally, in a merger, the merging entities would cease to be in existence and would merge into a single surviving entity. Very often, the two expressions "merger" and "amalgamation" are used synonymously. But there is, in fact, a difference. Merger generally refers to a circumstance in which the assets and liabilities of a company
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(merging company) are vested in another company (the merged company). The merging entity loses its identity and its shareholders become shareholders of the merged company. On the other hand, an amalgamation is an arrangement, whereby the assets and liabilities of two or more companies (amalgamating companies) become vested in another company (the amalgamated company). The amalgamating companies all lose their identity and emerge as the amalgamated company; though in certain transaction structures the amalgamated company may or may not be one of the original companies. The shareholders of the amalgamating companies become shareholders of the amalgamated company. While the Companies Act does not define a merger or amalgamation, Sections 390 to 394 of the Companies Act deal with the analogous concept of schemes of arrangement or compromise between a company, it shareholders and/or its creditors. A merger of a company A with another company B would involve two schemes of arrangements, one between A and its shareholders and the other between B and its shareholders. The ITA defines the analogous term amalgamation as the merger of one or more companies with another company, or the merger of two or more companies to form one company. The ITA goes on to specify certain other conditions that must be satisfied for the merger to be an amalgamation. Mergers may be of several types, depending on the requirements of the merging entities:
Horizontal Mergers.
Also referred to as a horizontal integration, this kind of merger takes place between entities engaged in competing businesses which are at the same stage of the industrial process. A horizontal merger takes a company a step closer towards monopoly by eliminating a competitor and establishing a stronger presence in the market. The other benefits of this form of merger are the advantages of economies of scale and economies of scope.
Vertical Mergers.
Vertical mergers refer to the combination of two entities at different stages of the industrial or production process. For example, the merger of a company engaged in the construction business with a company engaged in production of brick or steel would lead to vertical integration. Companies stand to gain on account of lower transaction costs and
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synchronization of demand and supply. Moreover, vertical integration helps a company move towards greater independence and self-sufficiency. The downside of a vertical merger involves large investments in technology in order to compete effectively.
Co generic Mergers.
These are mergers between entities engaged in the same general industry and somewhat interrelated, but having no common customersupplier relationship. A company uses this type of merger in order to use the resulting ability to use the same sales and distribution channels to reach the customers of both businesses.
Conglomerate Mergers.
A conglomerate merger is a merger between two entities in unrelated industries. The principal reason for a conglomerate merger is utilization of financial resources, enlargement of debt capacity, and increase in the value of outstanding shares by increased leverage and earnings per share, and by lowering the average cost of capital.4 A merger with a diverse business also helps the company to foray into varied businesses without having to incur large start-up costs normally associated with a new business.
Cash Merger.
In a typical merger, the merged entity combines the assets of the two companies and grants the shareholders of each original company shares in the new company based on the relative valuations of the two original companies. However, in the case of a cash merger, also known as a cash-out merger, the shareholders of one entity receive cash in place of shares in the merged entity. This is a common practice in cases where the shareholders of one of the merging entities do not want to be a part of the merged entity.
Triangular Merger
A triangular merger is often resorted to for regulatory and tax reasons. As the name suggests, it is a tripartite arrangement in which the target merges with a subsidiary of the acquirer. Based on which entity is the survivor after such merger, a triangular merger may be forward (when the target merges into the subsidiary and the subsidiary survives), or
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reverse (when the subsidiary merges into the target and the target survives).
Consolidation
A contractual and statutory process by which (1) Two or more corporations join to become a completely new corporation (the successor corporation), (2) The original corporations cease to exist and to do business, and (3) The successor corporation acquires all of the assets and liabilities of the original (now defunct) corporations.
ACQUISITIONS.
An acquisition or takeover is the purchase by one company of controlling interest in the share capital, or all or substantially all of the assets and/or liabilities, of another company. A takeover may be friendly or hostile, depending on the offer or companys approach, and may be effected through agreements between the offer or and the majority shareholders, purchase of shares from the open market, or by making an offer for acquisition of the offerees shares to the entire body of shareholders.
Friendly takeover
Also commonly referred to as negotiated takeover, a friendly takeover involves an acquisition of the target company through negotiations between the existing promoters and prospective investors. This kind of takeover is resorted to further some common objectives of both the parties.
Hostile Takeover.
A hostile takeover can happen by way of any of the following actions: if the board rejects the offer, but the bidder continues to pursue it or the bidder makes the offer without informing the board beforehand.
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Leveraged Buyouts.
These are a form of takeovers where the acquisition is funded by borrowed money. Often the assets of the target company are used as collateral for the loan. This is a common structure when acquirers wish to make large acquisitions without having to commit too much capital, and hope to make the acquired business service the debt so raised.
Bailout Takeovers.
Another form of takeover is a bail out takeover in which a profit making company acquires a sick company. This kind of takeover is usually pursuant to a scheme of reconstruction/rehabilitation with the approval of lender banks/financial institutions. One of the primary motives for a profit making company to acquire a sick/loss making company would be to set off of the losses of the sick company against the profits of the acquirer, thereby reducing the tax payable by the acquirer. This would be true in the case of a merger between such companies as well. Acquisitions may be by way of acquisition of shares of the target, or acquisition of assets and liabilities of the target. In the latter case it is usual for the business of the target to be acquired by the acquirer on a going concern basis, i.e. without attributing specific values to each asset / liability, but by arriving at a valuation for the business as a whole. An acquirer may also acquire a target by other contractual means without the acquisition of shares, such as agreements providing the acquirer with voting rights or board rights. It is also possible for an acquirer to acquire a greater degree of control in the target than what would be associated with the acquirers stake in the target, e.g., the acquirer may hold 26% of the shares of the target but may enjoy disproportionate voting rights, management rights or veto rights in the target.
Divestiture
It means an out and out sale of all or substantially all the assets of the company or any of the business divisions. Usually for cash or a combination of cash and debt and not against the equity shares. It means sell of assets on a price meal manner. It is generally use to mobilise resources for core business by selling assets of non- core business.
DEMERGERS.
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A demerger is the opposite of a merger, involving the splitting up of one entity into two or more entities. An entity which has more than one business, may decide to hive off or spin off one of its businesses into a new entity. The shareholders of the original entity would generally receive shares of the new entity. If one of the businesses of a company is financially sick and the other business is financially sound, the sick business may be demerged from the company. This facilitates the restructuring or sale of the sick business, without affecting the assets of the healthy business. Conversely, a demerger may also be undertaken for situating a lucrative business in a separate entity. A demerger, may be completed through a court process under the Merger Provisions, but could also be structured in a manner to avoid attracting the Merger Provisions. Types of company restructuring
Carve Out
Carve out is a hybrid of divestiture and spin off. In a carve out a company transfers all the assets and liabilities loans business of one of its division or its undertaking to its 100% subsidiaries. Thus at the time of transfer shares are issued to transferred company itself not to share -holders. Later on the company sells the shares in part of outsiders. Carve out are used to mobilize funds for core business by realising the value of non- core business. In this process promoters can merge the business that dont require capital without equity dilution.
JOINT VENTURES.
A joint venture is the coming together of two or more businesses for a specific purpose, which may or may not be for a limited duration. The purpose of the joint venture may be for the entry of the joint venture parties into a new business, or the entry into a new market, which requires the specific skills, expertise, or the investment of each of the joint venture parties. The execution of a joint venture agreement setting out the rights and obligations of each of the parties is usually a norm for most joint ventures. The joint venture parties may also incorporate a new company which will engage in the proposed business. In such a case, the byelaws of the joint venture company would incorporate the agreement between the joint venture parties. Merger Common Motivations for Merger and Acquisitions
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1. Synergy 2. Diversification 3. Strategic realignment 4. Hubris 5. Buying undervalued assets( q ratio) 6. Management ( agency problem) 7. Managerialism 8. Tax consideration 9. Market power 10. Misevaluation
1. Synergy :Synergy is the simplistic notion that the combination of two business creates greater shareholders value then if they are operated separately. There are two types of synergy. I) Operating synergy II) Financial synergy i) Operation Synergy : It consist of both economies of scale and economies of scope. Economies of scale refers to the spreading of fixed costs over increasing production levels. Scale is defined by such fixed costs as depreciation of equipment and amortization of capitalized software, normal maintenance spending obligations such as interest expense, lease payments, and unions customers, and vendor contracts and taxes. Economy of scope refers to using a specific set of skills or an asset certainly employed in producing a specific product or services to produce related products or services. They are most often found when it is cheaper to combine two or more product line in one firm then to produce then in separate firms. ii) Financial Synergy : It refers to the impact of mergers and acquisitions on the cost of capital of the acquiring firm or the newly formed firm, resulting from the merger or acquisition,. Theoretically the cost of capital could be
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reduced if the merged firms have uncorrelated cash flow, realized financial economies of scale from lower securities and transaction cost, or result in a better matching of investment opportunities with internally generated costs or result in a better matching of investment opportunities with internally generated firms
2. Diversification :
It refers to the strategy of buying firms out of the companys current primary line of business. There are two commonly used justifications used in diversification. The first relates to the creation of financial strategy, resulting in a reduce cost of capital. The second argument for diversification is for firm to shift from their core product line or market into product line or market that have higher growth prospects. The investor do not benefit from unrelated diversification. The share price of conglomerate often trade at a discount from share at a focused firms or from or from their value if they were broken up and sold in pieces by as much 10 -15%. This discount is called the conglomerate or diversification discount. MERGER & CONSOLIDATION: PROCEDURE Any merger or consolidation is governed by the laws of one (or more) of the states, each of which sets forth its own procedural requirements. However, in general:
(1)
The boards of directors of each (original) corporation involved in the proposed transaction must approve the merger or consolidation plan; The shareholders of each (original) corporation involved in the proposed transaction must, thereafter, approve the merger or little bit
(2)
consolidation plan by vote at a called or scheduled shareholders meeting; (3) (4) The approved plan must be filed with the appropriate state officials; and Once all state-law formalities have been satisfied, the state will issue, as appropriate, a certificate of merger to the
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surviving corporation or a certificate of consolidation to the successor corporation. Short-Form Merger: A merger between a parent and a subsidiary (at least 90% owned by the parent) which can be accomplished without shareholder approval.
MERGER & CONSOLIDATION: SHAREHOLDERS RIGHTS
While the day-to-day operations of a corporation, and even the policies governing its on going operations, are generally left to the corporations officers and directors, any extraordinary matter such as a merger or consolidation must be approved by the corporations shareholders.
If the necessary majority of the corporations shareholders approve a merger or consolidation, it will go forward, and the shareholders will be compensated as previously discussed. However, no shareholder who votes against the transaction is required to accept shares in the surviving or successor corporation. Instead, he or she may exercise appraisal rights.
Appraisal Right: The right, created by state law, of a dissenting shareholder who objects to an extraordinary transaction (such as a merger or consolidation):
(1) To have his shares of the pre-merger or pre-consolidation
corporation appraised, and (2) To be paid the fair market value of his shares by the premerger or pre-consolidation corporation. (3) It is amalgamation of two companies engaged in unrelated industries like DCM and Modi Industries. The basic purpose of such amalgamations remains utilization of financial
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resources and enlarges debt capacity through re-organizing their financial structure so as to service the shareholders by increased leveraging and EPS, lowering average cost of capital and thereby raising present worth of the outstanding shares. Merger enhances the overall stability of the acquirer company and creates balance in the companys total portfolio of diverse products and production processes.
Advantages of Mergers Mergers and takeovers are permanent form of ASSET PURCHASE When a corporation acquires all or substantially all of the assets of another corporation, by direct purchase, the purchasing (or acquiring) corporation simply extends its ownership and control over the additional assets. The acquiring corporation does not need shareholder approval unless the purchase is to be paid for with stock and the acquiring corporation must issue additional shares to make the purchase, in which case its shareholders must approve the additional shares. Generally, the acquiring corporation only purchases the assets, not the liabilities, of the other corporation. However, there are exceptions when: (1) The acquiring corporation impliedly or expressly assumes the sellers liabilities; (2) The sale is a de facto merger or consolidation;
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(3) The acquiring corporation continues andretains the same personnel; or (4)
the
sellers
business
The sale is fraudulently executed in an effort to avoid liability.
STOCK PURCHASE Stock Purchase: The purchase of a sufficient number of voting shares of a corporations stock, enabling the acquiring corporation to exercise control over the target corporation. A stock purchase is generally facilitated by a tender offer to the target corporations shareholders. The tender offer is publicly advertised, available to all shareholders, and offers to pay a higher-than-market price for shares of the target corporation. Exchange Tender Offer: An offer to give shares in the acquiring corporation in exchange for shares in the target corporation. Cash Tender Offer: An offer to pay cash in exchange for shares of the target corporation. A tender offer may be conditioned on receiving a specified number of outstanding shares in the target corporation by a specified date. The terms and duration of, and the circumstances underlying, a tender offer are strictly regulated by federal securities laws. In addition, most states impose additional regulations on tender offers. TAKEOVER DEFENSES Takeover Defences include various measures included in a corporations articles and/or by-laws that automatically take effect in the event of a proxy fight or unfriendly takeover attempt in order to make the corporation a substantially less attractive target for the purchaser (e.g., golden parachutes, poison pills), as well as conscious efforts of management in response to a particular situation (e.g., crown jewels, white knights). TERMINATION Dissolution: The formal disbanding of a corporation, which may occur by (1) (2) Unanimous action by all shareholders, Shareholder approval of a dissolution proposal submitted by the directors,
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(3) (4) (5)
An act by the incorporation,
authorized
officer
of
the
state
of
Expiration of the time period set forth in the certificate of incorporation, or Court order.
Liquidation: The process by which corporate assets are converted into cash and distributed among creditors and shareholders according to specific rules of preference.
Purpose of Mergers & Consolidation

The purpose for an offer or company for acquiring another company shall be reflected in the corporate objectives. It has to decide the specific objectives to be achieved through acquisition. The basic purpose of merger or business combination is to achieve faster growth of the corporate business. Faster growth may be had through product improvement and competitive position. Other possible purposes for acquisition are short listed below: 1) Procurement of supplies: I. II. III. To safeguard the source of supplies of raw materials or intermediary Product; To obtain economies of purchase in the form of discount, savings in transportation costs, overhead costs in buying department, etc.; To share the benefits of suppliers economies by standardizing the materials
(2) Revamping production facilities: I. II. III. IV. To achieve economies of scale by amalgamating production facilities through more intensive utilization of plant and resources; To standardize product specifications, improvement of quality of product, Expanding Market and aiming at consumers satisfaction through strengthening after sale Services; To obtain improved production technology and know-how from the offered Company
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V.
To reduce cost, improve quality and produce competitive products to retain and improve market share.
(3) Market expansion and strategy: I. II. III. IV. V. VI. To eliminate competition and protect existing market; To obtain a new market outlets in possession of the offered; To obtain new product for diversification or substitution of existing products and to enhance the product range; Strengthening retain outlets and sale the goods to rationalize distribution; To reduce advertising cost and improve public image of the offered company; Strategic control of patents and copyrights
(4) Financial strength: I. II. III. IV. V. To improve liquidity and have direct access to cash resource; To dispose of surplus and outdated assets for cash out of combined enterprise; To enhance gearing capacity, borrow on better strength and the greater assets backing; To avail tax benefits; To improve EPS (Earning per Share)
(5) General gains I. II. To improve its own image and attract superior managerial talents to manage its affairs; To offer better satisfaction to consumers or users of the product.
(6) Own developmental plans The purpose of acquisition is backed by the offered companys own developmental plans. A company thinks in terms of acquiring the other company only when it has arrived at its own development plan to expand its operation having examined its own internal strength where it might not have any problem
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of taxation, accounting, valuation, etc. But might feel resource constraints with limitations of funds and lack of skill managerial personnels. It has to aim at suitable combination where it could have opportunities to supplement its funds by issuance of securities; secure additional financial facilities eliminate competition and strengthen its market position. 7) Strategic purpose The Acquirer Company view the merger to achieve strategic objectives through alternative type of combinations which may be horizontal, vertical, product expansion, market extensional or other specified unrelated objectives depending upon the corporate strategies. Thus, various types of combinations distinct with each other in nature are adopted to pursue this objective like vertical or horizontal combination.
8) Corporate friendliness: Although it is rare but it is true that business houses exhibit degrees of cooperative spirit despite competitiveness in providing rescues to each other from hostile takeovers and cultivate situations of collaborations sharing goodwill of each other to achieve performance heights through business combinations. The combining corporate aim at circular combinations by pursuing this objective. (9) Desired level of integration: Mergers and acquisition are pursued to obtain the desired level of integration between the two combining business houses. Such integration could be operational or financial. This gives birth to conglomerate combinations. The purpose and the requirements of the offered company go a long way in selecting a suitable partner for merger or acquisition in business combinations. Other to achieve performance heights through business combinations. The combining corporate aim at circular combinations by pursuing this objective.
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C H A P T E R
Procedure Of Merger And Consolidation

PROCEDURE OF MERGER s & CONSOLIDATION
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To make a public announcement an acquirer shall follow the following procedure: 1. Appointment of merchant banker: The acquirer shall appoint a merchant banker registered as category I with SEBI to advise him on the acquisition and to make a public announcement of offer on his behalf. 2. Use of media for announcement: Public announcement shall be made at least in one national English daily one Hindi daily and one regional language daily newspaper of that place where the shares of that company are listed and traded. 3. Timings of announcement: Public announcement should be made within four days of finalization of negotiations or entering into any agreement or memorandum of understanding to acquire the shares or the voting rights. 4. Contents of announcement: Public announcement of offer is mandatory as required under the SEBI Regulations. Procedure of Bank Merger The procedure for merger either voluntary or otherwise is outlined in the respective state statutes/ the Banking regulation Act. The Registrars, being the authorities vested with the responsibility of administering the Acts, will be ensuring that the due process prescribed in the Statutes has been complied with before they seek the approval of the RBI. They would also be ensuring compliance with the statutory procedures for notifying the amalgamation after obtaining the sanction of the RBI. Before deciding on the merger, the authorized officials of the acquiring bank and the merging bank sit together and discuss the procedural modalities and financial terms. After the conclusion of the discussions, a scheme is prepared incorporating therein the all the details of both the banks and the area terms and conditions. Once the scheme is finalized, it is tabled in the meeting of Board of directors of respective banks. The board discusses the scheme thread bare and accords its approval if the proposal is found to be financially viable and beneficial in long run.
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After the Board approval of the merger proposal, an extra ordinary general meeting of the shareholders of the respective banks is convened to discuss the proposal and seek their approval. After the board approval of the merger proposal, a registered value is appointed to valuate both the banks. The value valuates the banks on the basis of its share capital, market capital, assets and liabilities, its reach and anticipated growth and sends its report to the respective banks. Once the valuation is accepted by the respective banks , they send the proposal along with all relevant documents such as Board approval, shareholders approval, valuation report etc to Reserve Bank of India and other regulatory bodies such Security & exchange board of India(SEBI) for their approval. After obtaining approvals from all the concerned institutions, authorized officials of both the banks sit together and discuss and finalize share allocation proportion by the acquiring bank to the shareholders of the merging bank SWAP ratio After completion of the above procedures, a merger and acquisition agreement is signed by the bank
RBI Guidelines on Mergers & Consolidation of Banks

With a view to facilitating consolidation and emergence of strong entities and providing an avenue for non disruptive exit of weak/unviable entities in the banking sector, it has been decided to frame guidelines to encourage merger/amalgamation in the sector . Although the Banking Regulation Act, 1949 (AACS) does not empower Reserve Bank to formulate a scheme with regard to merger and amalgamation of banks, the State Governments have incorporated in their respective Acts a provision for obtaining prior sanction in writing, of RBI for an order, inter alia, for sanctioning a scheme of amalgamation or reconstruction. The request for merger can emanate from banks registered under the same State Act or from banks registered under the Multi State Cooperative Societies Act (Central Act) for takeover of a bank/s registered under State Act. over of a co-operative bank registered under the State Act by a co-operative bank registered under the CENTRAL Although there are no specific provisions in the State Acts or the Central Act for the merger of a co-operative society under the State Acts with that under the Central Act, it is felt that, if all concerned including
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administrators of the concerned Acts are agreeable to order merger/ amalgamation, RBI may consider proposals on merits leaving the question of compliance with relevant statutes to the administrators of the Acts. In other words, Reserve Bank will confine its examination only to financial aspects and to the interests of depositors as well as the stability of the financial system while considering such proposals
C H A P T E R
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Introduction Of Bank
ICICI BANK ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81 billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year ended March 31, 2010. The Bank has a network of 2,009 branches and about 5,219 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries 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 United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE) Officers: Chairman: K. Vaman Kamath Managing Director and CEO: Chanda D. Kochhar Executive Director and CFO: N. S. Kannan Competitors: HDFC Bank State Bank of India Axis Bank
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Yes Bank Karur Vasya Bank ING Vysya Bank ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an Indian financial institution, in 1994. Four years later, when the company offered ICICI Bank's shares to the public, ICICI's shareholding was reduced to 46%. In the year 2000, ICICI Bank offered made an equity offering in the form of ADRs on the New York Stock Exchange (NYSE), thereby becoming the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. In the next year, it acquired the Bank of Madura Limited in an all-stock amalgamation. Later in the year and the next fiscal year, the bank made secondary market sales to institutional investors. With a change in the corporate structure and the budding competition in the Indian Banking industry, the management of both ICICI and ICICI Bank were of the opinion that a merger between the two entities would prove to be an essential step. It was in 2001 that the Boards of Directors of ICICI and ICICI Bank sanctioned the amalgamation of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. In the following year, the merger was approved by its shareholders, the High Court of Gujarat at Ahmadabad as well as the High Court of Judicature at Mumbai and the Reserve Bank of India Present Scenario ICICI Bank has its equity shares listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited. Overseas, its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). As of December 31, 2008, ICICI is India's second-largest bank, boasting an asset value of Rs. 3,744.10 billion and profit after tax Rs. 30.14 billion, for the nine months, that ended on December 31, 2008. Branches & ATMs ICICI Bank has a wide network both in Indian and abroad. In India alone, the bank has 1,420 branches and about 4,644 ATMs. Talking about foreign countries, ICICI Bank has made its presence felt in 18 countries United States, Singapore, Bahrain, and Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. The Bank proudly holds its subsidiaries in the United Kingdom, Russia and Canada out of which, the UK subsidiary has established branches in Belgium and Germany.
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Products & Services Personal Banking

Deposits Loans Cards Investments Insurance Demat Services Wealth Management
NRI Banking

Money Transfer Bank Accounts Investments Property Solutions Insurance Loans
Business Banking

Corporate Net Banking Cash Management Trade Services FX Online SME Services Online Taxes Custodial Services
Head Office ICICI Bank 9th Floor, South Towers ICICI Towers Bandra Kurla Complex Bandra (E) Mumbai PRESENT STOCK MARKET POSITION OF ICICI BANK LIMITED
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1,120 1,100 1,080 1,060 1,040 1,020 1,000 02-05-2011 03-05-2011 04-05-2011 05-05-2011 06-05-2011 Opening C ing los
ICICI Bank Limited (the Bank) is an India-based banking company engaged in providing a range of banking products and services to corporate and retail customers through a variety of delivery channels. During the fiscal year ended March 31, 2009 (fiscal 2009), the Bank had total assets of Rs. 4,826.9 billion ($94.9 billion).
OVERALL Beta: Market Cap (Mil.): Shares Outstanding (Mil.): Annual Dividend: Yield (%): 1.48 Rs939,926.12 1,114.84 12.00 1.43
FINANCIALS ICBK.BO P/E EPS 28.01 -Industry 56.66 -Sector 38.23 -Page 33
ROI: ROE:
---
0.00 2.29
0.64 2.66
C H A P
6
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T E R
Merger Of ICICI & ICICI Bank

MERGER OF ICICI WITH ICICI BANK ICICI Bank and ICICI, along with other ICICI group companies, were operating as a virtual universal bank, offering a wide range of financial products and services. The merger of ICICI and two of its subsidiaries with ICICI Bank has combined two organizations with complementary strengths and products and similar processes and operating architecture. The merger has combined the large capital base of ICICI with the strong deposit raising capability of ICICI Bank, giving ICICI Bank improved ability to increase its market share in banking fees and commissions, while lowering the overall cost of funding through access to lower-cost retail deposits. ICICI Bank would now be able to fully leverage the strong corporate relationships that ICICI has built, seamlessly providing the whole range of financial products and services to corporate clients. The merger has also resulted in the integration of the retail finance operations of ICICI, and its two merging subsidiaries, and ICICI Bank into one entity, creating an optimal structure for the retail business and allowing the full range of asset and liability products to be offered to all retail customers. The share exchange ratio approved for the merger was one fully paid-up equity share of ICICI Bank for two fully paid-up equity shares of ICICI. This was determined on the basis of a comprehensive valuation process incorporating international best practices, carried out by two separate financial advisors and an independent accounting firm. The
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equity shares of ICICI Bank held by ICICI have not been cancelled in the merger. In accordance with the provisions of the Scheme of Amalgamation, these shares have been transferred to a Trust to be divested by appropriate placement. The proceeds of such divestment would accrue to the merged entity. With the merger taking effect, the paid-up share capital of the Bank has increased to Rs. 6.13 billion, comprising 613 million shares of Rs.10 each. The merger process was complex and posed significant challenges. The merger of a financial institution with a commercial bank to create the countrys first universal bank had significant implications for the entire financial system. It therefore involved extensive dialogue with the Government and Reserve Bank of India. The merger also posed the challenge of compliance with regulatory norms applicable to banks in respect of ICICIs assets and liabilities, particularly the reserve requirements. This required resources of about Rs. 210.00 billion to be raised in less than six months for investment in Government securities and cash reserves, in addition to normal resource mobilization for on-going business requirements. We leveraged our strong retail franchise, including the distribution network acquired in the merger of the erstwhile Bank of Madura Limited with ICICI Bank in fiscal 2001, to grow our retail deposit base. We also achieved significant success in securitizing loans and developing a market for securitized debt in India. We also adopted proactive strategies to minimize the duration of our Government securities portfolio, in order to mitigate the interest-rate risk arising from the acquisition of a portfolio of about Rs. 180.00 billion in five months. As both ICICI and ICICI Bank were listed in Indian and US markets, effective communication to a wide range of investors was a critical part of the merger process. It was equally important to communicate the rationale for the merger to international and domestic institutional lenders and to rating agencies. The merger process was required to satisfy legal and regulatory procedures in India as well as to comply with United States Securities and Exchange Commission requirements under US securities laws.The merger of Indias largest financial institution with its largest private sector bank also involved significant accounting complexities. In accordance with best practices in accounting, the merger has been accounted for under the purchase method of accounting under Indian GAAP. Consequently, ICICIs assets have been fair-valued for their incorporation in the books of accounts. The fair value of ICICIs loan portfolio was determined by an independent value, while ICICIs equity and related investment portfolio was fair-valued by determining its marktomarket value. The total additional provisions & write-offs required to reflect the fair values of ICICIs assets determined at Rs. 37.80 billion have
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de-risked the loan and investment portfolio and created a significant cushion in the balance sheet, while maintaining healthy levels of capital adequacy. The merger was approved by the shareholders of both companies in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India (RBI) in April 2002. The challenge of mobilization of resources for compliance with statutory reserve requirements applicable to banks, on ICICIs outstanding liabilities on merger, was met successfully within the target date of March 30, 2002. While the merger became effective on May 3, 2002, in accordance with the provisions of the Scheme of Amalgamation and the terms of approval of RBI, the Appointed Date for the merger was March 30, 2002.
Boards of ICICI and ICICI Bank Approve Merger.

The Board of Directors of ICICI Limited (NYSE:IC) and the Board of Directors of ICICI Bank Limited (NYSE:IBN) in separate meetings at Mumbai, approved the merger of ICICI with ICICI Bank. The merger of two wholly-owned subsidiaries of ICICI, ICICI Personal Financial Services Limited and ICICI of two wholly-owned subsidiaries of ICICI, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank was also approved by the respective Boards. The proposal has been submitted to the Reserve Bank of India (RBI) for its consideration and approval, and shall be subject to various other approvals, including the approval of the shareholders of the respective companies, the High Courts of Mumbai and Gujarat, and the Government of India as may be required. Consequently, the Appointed Date of merger is proposed to be March 31, 2002, or the date from which RBI's approval
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becomes effective, whichever is later. The Scheme of Amalgamation ("the Scheme") approved by the respective Boards envisages a share exchange ratio of one domestic equity share of ICICI Bank for two domestic equity shares of ICICI. As each American Depositary Share (ADS) of ICICI represents five domestic equity shares while each ADS of ICICI Bank represents two domestic equity shares, the ADS holders of ICICI would be issued five ADS of ICICI Bank in exchange for four ADS of ICICI. The share exchange ratio approved by the Boards of the two entities was based on a valuation process incorporating international best practices in respect of a merger of two affiliate companies. JM Morgan Stanley was appointed by ICICI to advise it on a fair exchange ratio, while ICICI Bank appointed DSP Merrill Lynch for the same purpose. Thereafter, ICICI and ICICI Bank jointly appointed the leading accounting firm, Deloitte, Haskins & Sells to recommend the final share exchange ratio to the Boards of the two entities. The share exchange ratio has been determined in accordance with best practices in valuation, using the relative market prices, discounted cash flows and book values. Davis Polk & Wardwell are the international legal counsel and Amarchand & Mangaldas & Suresh A. Shroff & Co. are the domestic legal counsel for the merger. The Scheme will be filed before the High Courts of Mumbai and Gujarat and subsequently placed for approval at the meetings of shareholders of the respective companies. ICICI and ICICI Bank have submitted to RBI the proposal for the merger and compliance with regulatory norms applicable to banks, and would adhere to RBI's decision in the matter. The merged entity would be the second largest bank in India with total assets of about Rs. 95,000 crore (preform at September 30, 2001), 396 existing branches/ extension counters of ICICI Bank, 140 existing retail finance offices and centres of ICICI, and 8,275 employees. The merged entity would leverage on its large capital base, comprehensive suite of products and services, extensive corporate and retail customer relationships, technology-enabled distribution architecture, strong brand franchise and vast talent pool. The retail segment will be a key driver of growth for the merged entity, with respect to both assets and liabilities. The merged entity's competitive edge in the financial system is reflected in the combined cost-to-income ratio of 27 per cent (preform for the halfyear ended September 30, 2001), which compares favourably with that of other Indian banks of comparable size and scale of operations. The merger is expected to be beneficial to shareholders of both entities. The merger would enhance value for shareholders of ICICI through the merged entity's access to low-cost deposits, greater
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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 shareholders of ICICI Bank through the large capital base and scale of operations, 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. The process of integration between ICICI Bank and ICICI is expected to be smooth due to the strong synergies between the two entities. Consequent to the merger of ICICI with ICICI Bank, the Board of Directors of ICICI Bank is proposed to be reconstituted in compliance with the Banking Regulation Act, 1949 and in accordance with best practices in corporate governance. It is proposed that the Board of Directors of the merged entity would be headed by Mr. N. Vaghul as the non-executive Chairman. The executive management at the Board level would comprise Mr. K. V. Kamath as Managing Director and Chief Executive Officer, Mr. H. N. Sinor and Mrs. Lalita D. Gupte as Joint Managing Directors and Mrs. Kalpana Morparia, Mr. S. Mukherji, Mrs. Chanda D. Kochhar and Dr. Nachiket M. MOR as Executive Directors. The executive management at the Board level would not constitute more than one-half of the total strength of the Board. ICICI currently holds 46% of the paid-up equity share capital of ICICI Bank. This holding would not be cancelled under the scheme of amalgamation. It is proposed to be held in trust for the benefit of the merged entity, and divested through appropriate placement in fiscal 2003. The proceeds from the divestment will accrue to the merged entity. At the time of the merger, ICICI Bank would align the Indian GAAP accounting policies of ICICI to those of ICICI Bank, including a higher general provision against standard assets. Further, in accordance with international best practices in accounting, ICICI Bank has decided to adopt the "purchase method" of accounting, which is mandatory under US GAAP, to account for the merger under Indian GAAP as well. ICICI's assets and liabilities will therefore be fair valued for the purpose of incorporation in the accounts of ICICI Bank on the Appointed Date. Full compliance with the prudential norms applicable to banks on all of ICICI's existing liabilities is likely to have some adverse impact on the overall profitability of both entities in fiscal 2002. In 1998, ICICI had set up the Special Asset Management Group for focus on recovery and resolution of credit exposures, where the operations of the borrower companies had been adversely impacted due to systemic
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or other factors. This initiative has yielded significant benefits, due to the creation of a focused team of professionals and development of the specialized skill sets essential for asset resolution. ICICI is exploring several options for the creation of an asset reconstruction company, which would own and manage non-performing loans. ICICI proposes to work actively with the Government of India, RBI and other institutions and banks to create an enabling framework for an industry-wide mechanism that would maximize the economic value of distressed assets in the financial system.
IMPACT OF MERGER OF ICICI BANK WITH ICICI LIMITED

Retail Banking Wholesale Banking Project Finance & Special Assets Management International Business Corporate Centre The Project Finance Group comprises our project finance operations for infrastructure, oil &gas, manufacturing and shipping sectors. The Special Assets Management Group is responsible for large non-performing loans and accounts under watch. The International Business Group is responsible for ICICI Banks international operations as well as coordinating the international strategies and alliances of its subsidiaries and affiliates The Corporate Centre comprises all shared services and corporate functions, including finance and secretarial, investor relations, risk management, legal, human resources and corporate branding and communications.
Retail Banking
The retail business is the key driver of ICICI Banks growth strategy, with the objective of diversifying the asset portfolio and building a low-cost stable resource base. With a complete product suite across both asset and liability products as well as a wide range of banking services, ICICI Bank is today a retail financial supermarket with the ability to cross-sell the entire range of credit and investment products and other banking services to our customers. The key dimensions of our retail strategy are products,
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channels and processes, under a strong customer focus. Changing demographics and the trend towards upward migration in income levels coupled with existing low retail credit penetration levels have created a major growth opportunity in retail finance. ICICI Banks retail assets business is capitalizing on this opportunity with a competitive positioning and strategy comprising innovative products, wide distribution, strong credit controls and high customer service standards and rapidly growing volumes in each segment to achieve economies of scale. ICICI Banks retail portfolio (including the portfolio of ICICI Home Finance Company Limited, its wholly-owned subsidiary) at March 31, 2002 was over Rs. 76.00 billion, as compared to the combined retail portfolio of ICICI and ICICI Bank of about Rs. 29.00 billion at March 31, 2001. Our retail asset products include mortgages, automobile and two-wheeler loans, commercial vehicles and construction equipment financing, consumer durable loans, personal loans and credit cards. In the mortgages business, we expanded our reach to more than 140 locations across the country. We were the first to introduce adjustable rate home loans, with interest rates linked to a floating prime lending rate. This product received excellent response from customers cross the country and was a key driver of growth in the mortgages segment. It also enabled us to price loans competitively and achieve better asset-liability management. Other products and product variants introduced this year included loans against existing property as well as several value-added features retail property services and home insurance policies bundled with the loan. During fiscal 2002 we emerged as a leading player in the mortgages business. During fiscal 2002 we consolidated our position as clear market leaders in automobile loans. We expanded our distribution network to 145 cities and towns across the country. The key drivers of growth were the strength of our corporate relationships with leading automobile manufacturers, strong distribution capability and customer service focus. We rapidly increased our presence in other segments as well. We expanded our two-wheeler business to over 140 locations. ICICI Bank partners manufacturers in distributing their products and therefore enjoys preferred status with them. We were able to offer competitive products to our customers by leveraging economies of scale resulting from the rapid growth in operations. In the credit cards business we expanded our distribution to 36 locations. The total number of cards in force increased by 450,000 to about 650,000 at the end of fiscal 2002. During the year we launched two co-branded cards, with Hindustan Petroleum Corporation Limited (HPCL) and BPL Mobile respectively. We also entered the merchant acquiring business during the year. ICICI Bank is the largest incremental
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issuer of cards (including both debit and credit cards) in India. ICICI Banks Ncash debit card is a deposit access product that allows cash withdrawals through ATMs and also enables purchases at merchant establishments with point-of-sale terminals. The card is valid internationally and earns loyalty points on usage. Wealso introduced a domestic debit card variant primarily for our payroll customers. As at March, 31, 2002, ICICI Bank had issued about 600,000 debit cards. During fiscal 2002, ICICI Bank also implemented two smart card projects, at a corporate worksite and an educational institution. In order to reduce our funding cost and create a stable funding base, we continued our focus on retail deposits in fiscal 2002. The number of customer accounts increased from 3.2 million to over 5 million. ICICI Banks life stage segmentation strategy offering differentiated liability products to various categories of customers (kid-e-bank for children, bank@campus for students, Power Pay for salaried employees, ICICI Select for high net worth individuals and Business Multiplier for businessmen) contributed significantly to the rapid growth in the retail ability base. They have developed a successful third party distribution model with a growing market share in distribution of mutual funds, Reserve Bank of India relief bonds and insurance products . This allows us to meet all customer needs through products that are complementary to those that we offer directly, while leveraging our distribution capability to earn fee income from third parties. They also provide online trading facilities through www.ICICIdirect.com. ICICI direct provides complete end-to-end integration for seamless electronic trading on the stock exchanges and has been rated TxA1 by CRISIL, indicating highest ability to service broking transactions. ICICI direct has also launched Indias first Digitally Signed Contract Notes (DSCN), which allows a customer to view and print their contract notes online. ICICI Bank has pioneered a multi-channel distribution strategy in India, giving our customers24x7 access to banking services. The enhanced convenience that this offers the customer has supported our customer acquisition efforts and migration of customer transactions from branches to lowercost technology-enabled channels. During the year, ICICI Bank continued to expand its non-branch channels aggressively and successfully migrated customer transaction volumes to these channels. Only 35% of customer induced transactions now take place at branches. ICICI Bank set up over 500 new ATMs during fiscal 2002, taking the ATM network to over 1,000 ATMs. Master, Cirrus and Maestro cards can now be used on all our ATMs. Other new initiatives on ATMs include multilingual screens, bill payments and prepaid mobile card recharge facility.
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ICICI Bank now has over one million retail Internet banking accounts. Retail Internet banking customers can view their bank accounts, transfer funds between their own accounts and to any other ICICI Bank account. ICICI Bank also offers the facility of transferring funds to accounts in any branch of any bank, in eight cities through Cheques, Indias first Internet based inter-bank fund transfer facility. Customers can also open a fixed or recurring deposit, make a stop-cheque request and inquire into the status of a cheque online. Customers can write to the account manager through the secure channel and subscribe to account statement by e-mail. ICICI Bank offers its customers the facility of paying utility bills online in over 120cities in India. All major online shopping services are linked to ICICI Banks online payments facility. ICICI Bank has also focused on the call centre as a key channel. ICICI Banks call centre can now be accessed by customers in 100 cities, and is Indias largest domestic call centre. The call centre is a single point of contact for customers across all products. It provides various self-service options and also personalized communication with customer service officers for a full range of transactions and account and product related queries. The call centre is now evolving into a complete relationship management channel not only for complaint resolution but also for cross-selling on inbound calls. The call centre uses state-of-the-art voice-over Internet-protocol technology and cutting-edge desktop applications to provide a single view of the customers relationship. ICICI Banks mobile banking services provide the latest information on account balances previous transactions, credit card outstanding and payment status and allow customers to request a chequebook or account statement.
Corporate Banking
ICICI Banks corporate banking strategy is based on providing customized financial solutions to clients, tailored to meet their specific requirements. The corporate banking strategy focuses on careful management of credit risk and adequate return on risk capital through risk-based pricing and proactive portfolio management, rapid growth in fee-based services and extensive use of technology to deliver high levels of customer satisfaction in a cost effective manner. Our focus in fiscal 2002 was on expanding the range and depth of our corporate relationships, acquiring new clients and cross-selling all our corporate banking products and services to the existing client base. We continued to focus on working capital finance for highly-rated clients ,structured transactions and channel financing. In longer-term loans, in the absence of traditional capital expenditure financing opportunities and limited corporate-credit growth, ICICI Bank has taken advantage of emerging opportunities in the public sector disinvestment process, through
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structuring and advisory services. We focused strongly on transaction banking services such as cash management and non-fund-based facilities such as letters of credit and bank guarantees to increase our market share in banking fees and commissions. We have already achieved significant success in cash management services, with total volumes of Rs. 1.72trillion for fiscal 2002. We also targeted high value current accounts to reduce our cost of funding. We implemented a customer-level profitabilitybased pricing model. As the pioneers of securitization in India, we were successful in creating a market for securitized corporate debt, which would help to expand and deepen the debt markets .During the year we enhanced our technology-based delivery platforms and expanded the scope of our web-based services. ICICI Bank provides Internet banking services to its wholesale banking clients through ICICImarkets.com, a finance portal that is the single point web-based interface for all our corporate clients. The Corporate Internet Banking (CIB) platform of ICICI markets allows clients to conduct banking business online in a secure environment. Clients can view accounts online, transfer funds between their own accounts or to other accounts, and avail of other such services. ICICI Bank offers forex trading through the Internet on FX Online and Government of India securities trading through Debt Online. The corporate banking business is organized into special relationship groups for the Government and public sector, large corporate, emerging corporate and agri-business. ICICI Bank has strong linkages with several large public sector companies, and is leveraging
CORPORATE STRATEGY
These relationships to expand the range of services that it offers to them. ICICI Bank has also established relationships with several state governments, having financed state-level enterprises. Besides, ICICI Bank has been empanelled in eight states for collection of sales tax. ICICI Bank is also involved with several other state government initiatives. In the corporate client segment, ICICI Bank is focusing on increasing its share of banking business with its corporate clients. In the emerging corporate segment, ICICI Banks focus is on establishing structured financing arrangements and implementing a liability-led business strategy, providing sophisticated banking services to its clients. ICICI Bank has also developed several innovative structures for agri-business, including dairy farming. ICICI Bank is working with state governments and agri-based corporate to evolve viable and sustainable systems for financing agriculture. ICICI Banks dedicated Structured Products & Portfolio Management Group, with access to expertise in financial structuring and related legal, accounting and tax issues, actively supports the business groups in designing financial
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products and solutions. This Group is also responsible for managing the asset portfolio by structuring portfolio buyouts and sell-downs. The enhanced capital base consequent to the merger will significantly increase ICICI Banks ability to leverage its strong corporate relationships and provide non-fund-based facilities and trade finance services to its corporate clients. ICICI Bank is leveraging technology to set up centralized processing facilities to process large transaction volumes, thereby benefiting from economies of scale. A dedicated Corporate Operations & Technology Group has been set up for developing and managing back-office processing and delivery capabilities.
Treasury
The principal responsibilities of the Treasury include management of liquidity and exposure to market risks, mobilization of resources from domestic and international financial institutions and banks, and proprietary trading. Additionally, the Treasury is leveraging its strong relationships with financial sector players to provide a wide range of banking services in addition to its liability products. The Treasury is also responsible for ICICI Banks capital markets and custodial services operations. During fiscal 2002, the focus was on the challenge of meeting regulatory reserve requirements on ICICIs liabilities prior to the merger for meeting the reserve requirements and managing the interest-rate risk arising from the acquisition of Government securities aggregating about Rs. 180.00 billion in an environment of low interest rates. Yields on Government securities reached historic lows during 2001-2002 as a consequence of the easy liquidity environment and RBIs soft-interest-rate policy. To minimize the risk of adverse mark-to-market impact on any rise in interest rates, ICICI Bank adopted a strategy of acquiring securities of lower duration. A significant portion of the requirement of Government securities was acquired through active participation in primary auctions of floating-rate bonds and short-maturity Treasury bills. \Prior to the merger, in addition to its resource mobilization from the wholesale segment, ICICI had raised a foreign currency loan of USD 75 million at LIBOR + 70 basis points, setting a new benchmark for a five-year borrowing by an Indian entity in the international markets after the Asian currency crisis. ICICI had also borrowed USD 50 million from Kreditanstalt fur Wiederaufbau (KfW), a German financial institution, for twelve-and-a-half years. This was the first borrowing by ICICI from KfW without a Government of India guarantee. ICICI also entered into an agreement with Asian Development Bank (ADB) for availing a 25-year USD 80 million loan for
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housing finance, and with DEG, Germany for an 8-year USD 25 million loan. The focus of trading operations was active, broad-based marketmaking in key markets including corporate bonds, Government securities and interest-rate swap markets. Substantial reduction in interest rates provided an opportunity to capture gains in the fixed-income market by active churning of the trading portfolio.
Project Finance and Special Assets

ICICI BANK project finance activities include financing new projects as well as capacity additions in the manufacturing sector and structured finance to the infrastructure and oil, gas and petrochemicals sectors. Over the years, we have developed considerable expertise in financing complex project finance transactions and effectively allocating the associated risks. Our presence has been viewed by most sponsors as critical to the success of their projects, on account of our proficiency in developing enforceable contract models, syndicating requisite funds and working out complex issues related to Government regulations. Our project finance business is focused on structuring and syndication of financing for large projects by leveraging our expertise in project financing, and churning our project finance portfolio to prevent portfolio concentration and to manage portfolio risk. We view our role not only as providers of project finance but as arrangers and facilitators, creating appropriate financing structures that may serve as financing and investment vehicles for a wider range of market participants.
Infrastructure Sector
The infrastructure sector has not witnessed the anticipated growth, mainly due to policy-level is sues and delay in closure of various projects. While there were few opportunities in the power sector, the telecom and road sectors witnessed considerable activity. Guarantees to Department of Telecommunications on behalf of various telecom companies for basic, cellular and national and international long-distance licenses presented a significant non-fund based business opportunity. We have also capitalized on opportunities in the road sector, in both annuity and toll-based projects, including lead arranger mandates for four road projects of National Highway Authority of India (NHAI). The pace of growth in the road sector is expected to increase both due to NHAIs National Highway Development Programme and the larger state-level projects. Going forward, we expect ports and urban infrastructure sectors, in addition to telecom and roads, to provide significant business opportunities. Corporatization has already been initiated for five out of twelve major ports. Ports would also require significant expansion and modernization of facilities. We were appointed
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lead arrangers for a chemical port terminal project. The power sector is also expected to pick up with opportunities in the privatization of distribution, financial closure of select private projects with competitive tariffs, capacity additions in the public sector and its own reform and restructuring. We provided advisory services to the Ministry of Power, developing a comprehensive blueprint for private sector participation in hydropower. The Managing Director & CEO was a member of the Distribution Policy committee which submitted a report improving efficiency in power distribution in the country.
Manufacturing Sector
Fiscal 2002 saw few new projects in the manufacturing sector on account of lower economic growth and existing over-capacities in several commodities. Our focus in this sector is on projects sponsored by entities that have proven ability to commit the required financial resources and implement projects successfully within planned time-frames. We are also implementing tighter security measures, such as security interests in project contracts and escrow accounts to capture cash flows. We also believe that there is significant scope for consolidation in several segments in the manufacturing sector, which presents opportunities for structuring and syndicating acquisition financing.
Special Assets Management

Liberalization and integration with the global economy have posed major competitive challenges for Indian industry. Cyclical downturns in commodity demand and prices have adversely affected the performance of several sectors. This has impacted asset quality in the financial system. ICICI Banks efforts at asset resolution are driven by the Special Assets Management Group (SAMG), set up to manage large non-performing loans and large accounts under watch that require close monitoring. In case of exposures to essentially viable companies. SAMGs approach includes operational and financial restructuring, completion of projects under implementation, sale of unproductive assets and catalyzing consolidation. In respect of exposures to unviable and essentially uneconomical projects, we adopt an aggressive approach aimed at out-of-court settlements, enforcing collateral and driving consolidation. The accent is on time-value of recovery and a pragmatic approach towards settlements. During fiscal 2002, SAMG was strengthened by the induction of some of our highestrated performers into the group.
International Business
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ICICI BANK have already established a presence in the international markets, primarily in the areas of information technology, investment banking and banking products and services for the This posed the dual challenge of raising resources for meeting the reserve requirements and managing the interest-rate risk arising from the acquisition of Government securities aggregating about Rs. 180.00 billion in an environment of low interest rates. Yields on Government securities reached historic lows during 2001-2002 as a consequence of the easy liquidity environment and RBIs soft-interest-rate policy. To minimize the risk of adverse mark-tomarket impact on any rise in interest rates, ICICI Bank adopted a strategy of acquiring securities of lower duration. A significant portion of the requirement of Government securities was acquired through active participation in primary auctions of floating-rate bonds and short-maturity Treasury bills. Prior to the merger, in addition to its resource mobilization from the wholesale segment, ICICI had raised a foreign currency loan of USD 75 million at LIBOR + 70 basis points, setting a new benchmark for a five-year borrowing by an Indian entity in the international markets after the Asian currency crisis. ICICI had also borrowed USD 50 million from Kreditanstalt fur Wiederaufbau (KfW), a German financial institution, for twelve-and-a-half years. This was the first borrowing by ICICI from KfW without a Government of India guarantee. ICICI also entered into an agreement with Asian Development Bank (ADB) for availing a 25-year USD 80 million loan for housing finance, and with DEG, Germany for an 8-year USD 25 million loan. The focus of trading operations was active, broadbased market-making in key markets including corporate bonds, Government securities and interest-rate swap markets. Substantial reduction in interest rates provided an opportunity to capture gains in the fixed income market by active churning of the trading portfolio.
CREDIT RATING
During the year, ICICI became the first Indian company to be rated higher than the sovereign rating for India by Moodys Investor Service, when its senior and subordinated long term foreign currency debt was rated Ba1 i.e. one notch above the sovereign rating for India. The same rating has been assigned to ICICI Bank post-merger. ICICI Banks credit ratings as per various credit rating agencies (including ratings assigned to debt instruments issued by ICICI now transferred to ICICI Bank on merger) are given below:
Page 48
Agency Rating
Foreign currency debt Foreign currency deposits Standard & Poors (S&P) Credit Analysis & Research Limited (CARE) Investment Information and Credit Rating Agency (ICRA) Ba1 Ba3 BB CARE AAA LAAA
HUMAN RESOURCES ICICI Bank views its human capital as a key source of competitive advantage. Consequently the development and management of human capital is an essential element of our strategy and a key management activity .Human resources management in fiscal 2002 focused on smooth integration of the employee sand human resource management systems in the context of the merger, as well as on continuous improvement of recruitment, training and performance management processes. The process of integration involved defining the organizational structure of the merged entity people placement in various positions across the business and corporate groups, and integration of the grade and remuneration structure for the employees of the four entities. The organizational structure was announced in February 2002 and became effective on May 3, 2002. The people placement process was based on appropriate competency profiling tools and matching employee profiles to job specifications. The grade integration process has also been success fully completed, using job evaluation techniques. While ICICI Bank is Indias second-largest bank, it had just over 7,700 employees at March 31, 2002, demonstrating our unique technology-driven, productivity-focused business model. The recruitment process has been streamlined and a uniform recruitment policy and process implemented across the merged organization. Robust ability-testing and competency -profiling tools are being used to strengthen the campus recruitment process and match the profiles of employees to the needs of the organization. ICICI Bank continues to be a preferred employer at leading business schools and higher education institutions across the country, offering a wide range of career opportunities across the entire spectrum of financial services. In
Page 49
addition to campus recruitment, ICICI Bank also undertakes lateral recruitment to bring new skills, competencies and experience into the organization and meet the requirements of rapidly growing businesses. A Six Sigma initiative has been undertaken for the lateral recruitment process to improve capabilities in this area. ICICI Bank encourages crossfunctional movement, enriching employees knowledge and experience and giving them a holistic view of the organization while ensuring that the bank leverages its human capital optimally. The rapidly changing business environment and the constant challenges it poses to organizations and businesses make it imperative to continuously enhance knowledge and skill sets across the organization. ICICI Bank believes that building a learning organization is critical for being competitive in products and services and meeting customer expectations. ICICI Bank has built strong capabilities in training and development to build competencies. Training on products and operations is imparted through web-based training modules. Special programmes on functional training and leadership development to build knowledge as well as management ability are conducted at a dedicated training facility. ICICI Bank also draws from the best available training programmes and faculty, both international and domestic; to meet its training and development needs and build globally benchmarked skills and capabilities. ICICI Bank seeks to build in all its employees a total commitment towards exceptional standards of performance and productivity, adaptability to changing organizational needs and the demands of the business environment and a willingness to learn and acquire new capabilities. ICICI Bank believes in defining clear performance parameters for employees and empowering them to achieve their goals. This has helped to create a culture of high performance across the organization. ICICI Bank also has a structured process of identifying and developing leadership potential the focus on human resources management as a key organizational activity has resulted in the creation of an exceptional pool of talent, a performance-oriented organizational culture and has imparted agility and flexibility to the organization, enabling it to capitalize on opportunities and deliver value to its stakeholders. ORGANIZATIONAL EXCELLENCE ICICI Bank recognizes the importance of organizational excellence in its business. Developing and deploying world-class skills in a variety of areas such as technology, financial engineering, transaction processing and portfolio management, credit evaluation, customer segmentation and product design, and building and maintaining deep and enduring relationships of trust with our retail and wholesale customers are essential
Page 50
elements of our strategy. Different businesses across the ICICI group have over the past few months used successfully the Six Sigma methodology to focus on customer satisfaction and enhanced efficiency in operations. Application of Six Sigma techniques in regional processing centres, branch layout and design, and the home finance and demat services businesses have reduced turnaround time and significantly improved operational efficiency. In recognition of the critical importance of excellence in internal processes and delivery to customers, we have set up an Organizational Excellence Group headed by a Senior General Manager reporting to the Managing Director & CEO. This group will be responsible for institutionalization of quality initiatives, including Six Sigma, and for building the skills necessary for implementing and accelerating quality initiatives, reporting to the management the progress and value generated from these initiatives and replicating the successes across ICICI Bank as well as group companies.
Strong complementary organizations

Having similar operating architecture, people and processes. This merged entity is consequently well-positioned to harness synergistic advantages and thereby provide benefits to both ICICI and ICICI Bank
Benefits of merger Forward leap in the hierarchy of Indian banks A discontinuous jump in size and scale Achieve size and scale of operations Leverage ICICIs capital and client base to increase fee income
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Higher profitability by leveraging on technology and low cost structure Offer a complete product suite with immense cross-selling opportunities ICICIs presence in retail finance, insurance, investment banking and venture capital Access to the ICICI groups talent pool improved ability to further diversify asset portfolio and business revenues Lower funding costs Ability to accept/ offer checking accounts Availability of float money due to active participation in the payments system Diversified fund raising due to access to retail funds Increased fee income opportunities Ability to offer all banking products
Competitive advantages of the merged entity
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After the merger, the combined entity would be the second-largest bank in India, with an asset base of over Rs. 1 trillion
Merger process of ICICI BANK AND ICICI LIMITED highlights

1. Valuation Independently appointed investment bankers ICICI - JM Morgan Stanley ICICI Bank - DSP Merrill Lynch Jointly appointed independent accountant to recommend the final exchange ratio Deloitte, Haskins & Sells appointed Recommended one share of ICICI Bank for two shares of ICICI, which was approved by the respective Boards
2.
Transfer of ICICIs shareholding in ICICI Bank to an SPV prior to the merger
Divestment in FY2003 by way of appropriate placement
3. Consolidation of retail operations Merger of ICICI PFS and ICICI Capital Services with ICICI Bank
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Merger process - regulatory issues

Merger effective on March 31, 2002 or the date of RBI approval, whichever is later Shareholders approval High court approval Accounting for the merger in line with international best practices Purchase method, mandatory under US GAAP, to be adopted under Indian GAAP as well
C H A P T E R
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RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. Research methodology constitutes of research methods, selection criterion of research methods, used in context of research study and explanation of using of a particular method or technique so that research results are capable of being evaluated either by researcher himself or by others. Why a research study has been undertaken, how the research problem has been formulated, why data have been collected and what particular technique of analysing data has been used and a best of similar other question are usually answered when we talk of Research methodology concerning a research problem or study. The main aim of research is to find out the truth which is hidden and which has not been discovered as yet The research methodology that I undertook for the purpose of this study is enumerated below-
SCOPE OF THE STUDY

Each and every project study along with its certain objectives also has scope for future. And this scope in future gives to new researches a new need to research a new project with a new scope. Scope of the study not only consist one or two future business plan but sometime it also gives idea about a new business which becomes much more profitable for the researches then the older one.
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Scope of the study could give the projected scenario merger and consolidation of ICICI bank and ICICI limited. Whatever scope I observed in my project are not exactly having all the features of the scope which I described above but also not lacking all the features. We highlight the major themes to emerge from the study. We looked the key findings from the areas of production, survey of executive opinion in global organizations, within which we examined major operation, including staffing, performance management, rewards, development, and career management and knowledge and learning. Factors which I observed while doing project study are followingWorking management Quality of services provided by the bank. Satisfaction of the bank customer. Strategy of bank after merging.
RESEARCH DESIGN: DESCRIPTIVE

Descriptive studies are well structured, they tend to be rigid and its approach can not be changed every now and then. Descriptive study can be divided in two categories: (A) Cross sectional (B) Longitudinal Descriptive study is undertaken in many circumstances: 1. When the researcher is interested in knowing the characteristics of certain groups such as age, profession. 2. When the researcher is interested in knowing the proportion of people in given population who have behaved in a particular manner, making projection of certain things. I have taken descriptive because my research includes the knowing the merger and consolidation of ICICI bank and ICICI limited.
Comparative Study
Page 56
It is based on the comparative study of the performance of ICICI Bank before and after the merger. The comparison of bank is also with their current competitive banks in the market. The basis of measuring of the performance is evaluating the performance of bank through their different financial statements, like profit and loss account, Balance sheet, Cash flow statements etc. The comparison of the assets and liabilities of different banks with ICICI bank shows the performance of ICICI bank in the current market. Also on the basis of the service provided by the banks and the services by the ICICI banks. TOOLS AND TECHNIQUES As no study could be successfully completed without proper tools and techniques, same with my project. For the better presentation and right explanation I used tools of statistics and computer very frequently. And I am very thankful to all those tools for helping me a lot. Basic tools which I used for project from statistics are- Bar Charts - Pie charts - Tables Bar charts and pie charts are really useful tools for every research to show the result in a well clear, ease and simple way. Because I used bar charts and pie charts in project for showing data in a systematic way, so it need not necessary for any observer to read all the theoretical detail, simple on seeing the charts any body could know that what is being said.
Technological Tools Ms-Word Ms-excel Internet Above application software of Microsoft helped me a lot in making project more interactive and productive. Microsoft-Excel had a great role in my project, it created for me a situation of you sit and get. I provided
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it simply all the detail of data and in return it given me all the relevant information.. Microsoft-Access did the performance of my personal assistant who organizes my all the details of document without disturbing them even a single time in all the project duration. And in last Microsoft-Word did help me for the documentation of the project in a presentable form. Applied Principles and Concepts While I started to do the project the main thing which was the matter of concern was that around what principles I have to revolve my project. Because with out having any hypothesis and objective we can not determine that what output or result we are expecting form the project. And second thing is that having only tools and techniques for the purpose of project is not relevant until unless we have the principals for which we have to use those tools and techniques. Primary and Secondary data: For the purpose of project data is very much required which works as a food for process which will ultimately give output in the form of information. So before mentioning the source of data for the project I would like to mention that what type of data I have collected for the purpose of project and what it is exactly. PRIMARY RESEARCH: SECONDARY RESEARCH: 1 2 3 4 5 6 7 Internet, Books Journals, Newspaper, Annual report, Database available in the library, Catalogues and presentations. Study of Financial Statements of ICICI Bank
Comparative Performance
Page 58
Performance Of ICICI Bank before Merger (Rs in cr.)

For the Year Total Income PBIT Provision For Tax PAT 1996 29.01 5.08 0.72 4.36 1997 44.71 8.56 1.04 7.52 0.17 1998 57.36 10.23 0.82 9.41 (0.05) 1999 73.21 10.96 0.95 10.01 0.56 2000 84.60 13.28 1.22 12.06 0.40
Adjustment 0.38 for change in Accounting policies Extraordinar y Items Profit after 4.74 Tax for the year Approvals Disburseme nts At year End 145.95 71.20
1.45 7.69 10.81 10.57 12.46
140.84 111.81
247.17 158.07
323.71 192.25
444.79 258.36
Assets
Total Assets 233.24 362.92 261.16 459.20 338.02 585.47 422.99 653.90 482.99
Net Loans 167.85 And Debentures Eqity & 19.18 Other Investment Leassed Asssts 11.89
23.27
24.37
25.98
30.75
23.95
26.76
31.07
36.09
Liabilities
Shareholder s equity Borrowings 23.61 193.90 43.76 294.20 46.70 374.49 51.35 476.59 80.23 508.81 Page 59
Selected Ratios Return on 19.6 met Worth Return Assets EPS on 2.2 13.0 20.5 2.3 15.9 4.5 85.9 13.2 10.5 21.0 2.4 18.2 5.5 91.3 12.9 9.4 20.3 2.1 18.2 5.5 100.3 12.5 8.3 16.8 2.1 17.0 5.5 98.0 17.2 11.5
Dividend per 3.7 Share BV Share Per 76.4 10.0
Capital Adequecy
Of which 8.0 tier-1 Capital
Comparison Of Balance Sheets Of ICICI Bank after the Merger

Particulars Capital & Liabilities
2003
2004
2005
2006
Page 60
Capital Reserves & Surplus Deposits Borrowings
9,626,600 60,594,980 479,507,012 367,215,827
9,664,012 71,395,199 680,787,334 349,580,671 196048846
10,867,758 118,131,954 998,187,775 335,444,960 213,961,606
12,398,345 213,161,571 1,650,831,71 3 385,219,136 252,278,777
Other 177387259 Liabilities & Provisions Total Capital & Liabilities Assets Cash & balance With RBI
Balances with banks & Money at Call & Short Notice
1,094,331,67 8
1,307,476,06 2
1,676,594,05 3
2,513,889,54 2
49,089,557
54,462,954
63,449,004
89,343,737
16,407,439
35,421,148
65,850,719
81,058,508
Investment s Advances Fixed Assets Other Assets Total Assets Contingent Liabilities Billa For Collection
377,753,510 539,089,650 41,257,334 70,734,188 1,094,331,67 8 937,472,700 13,367,843
455,747,851 643,958,205 41,470,671 76,415,233 1,307,476,06 2 2,120,203,30 7 15,109,352
504,873,525 914,051,517 40,380,361 87,988,927 1,676,594,05 3 2,681,537,38 2 23,920,922
715,473,944 1,461,631,08 9 39,807,115 126,575,149 2,513,889,54 2 3,950,336,65 5 43,384,648
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Particulars Capital & Liabilities Capital Reserves & Surplus Deposits Borrowings
2007
2008
2009
2010
12,493,437 230,656,945 2,486,136,33 0 616,595,356
12,398,345 213,519,487 1,724,509,83 0 449,999,477 371868476
11,132,898 484,197,292 2,183,478,24 9 931,554,542 182,646,642
11,148,892 505,034,767 2,020,165,97 2 942,635,686 155,011,834
Other 597465120 Liabilities & Provisions Total Capital & Liabilities Assets Cash & balance With RBI Balances with banks & Money at Call & Short Notice Investment s Advances Fixed Assets Other Assets Total Assets
3,943,347,188
2,772,295,615
3,793,009,62 3
3,633,997,15 1
293775337
175,363,342
275,142,920
124,302,296
86635952
113,594,020
1114543415 2256160827
1,030,583,08 0 2,183,108,49 2 38,016,209 241,636,204 3,793,009,62 3
1,208,928,00 5 1,812,055,97 1 32,126,899 192,149,336 3,633,997,15 1
41088975
205746
3997950762
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Contingent Liabilities Bills For Collection
1211,0823313
8,346,830,02 7 60,004,383
7,270,840,58 7 64,749,539
42782842
Comparision Of Consolidated P&L Accounts Of ICICI Bank Particulars Income Interest Earned Other Income Total Income Expenditure Interested Expended Operating Expenses Provisional & Contingencies Total Expenditure Profit/ Loss Net Profit of the Year Less : Minority Interest Net Profit/ Loss After minority Interest
Profit/(loss) brought forward TOTAL PROFIT/(LOSS)
2003
2004
2005
2006
96908193 25293011 1340577 23
92443183 45530184 1379733 67
98337569 70976340 1693139 09
14614189 1 11146902 8 25761091 9
81267904 27482541 13791720 1225421 65
71676576 41934253 8566214 1221770 43
68043787 72856592 10313107 1512134 86
10101476 9 10913084 9 23475049 23362069 4
11515558 (4400) 11519958 197889 1171784 7
15796324 (7459) 15803783 10962 1581474 5
18100423 (422853) 18523276 (335960) 1818731 6
23990225 (210673) 24200898 (908834) 23292064
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APPROPRIATIONS/TRANSF ERS Transfer to Statutory Reserve Transfer to Reserve Fund Transfer to Capital Reserve Transfer to Investment Fluctuation Reserve Transfer from Investment Fluctuation Reserve Transfer to Special Reserve Transfer to Revenue and other reserves Proposed equity share dividend Proposed preference share dividend Corporate dividend tax Balance carried over to Balance Sheet TOTAL
3020000 (100000) 2000000 1000000
4093000 2658700 2760000 _
5023226 200000 359156 6185021 6329609 35 999103 (908834) 1818731 6
6360000 222 680000 5900000 (13203350 ) 2778000 14330152 7593326 35 1289284 (2435605) 23292064
500000 100000 4597758 35 589092 10962 1171784 7
339550 _ 5440592 35 858828 (335960) 1581474 5
Earnings per share Basic (Rs.) Diluted (Rs.) Face value per share (Rs.)
18.79 18.77 10.00
25.73 25.52 10.00
25.45 25.25 10.00
30.96 30.64 10.00
Particulars Income Interest Earned Other Income Total Income Expenditure
2007
2008
2009
2010
250012495 163625427 41336379 22
340949565 259581255 60053082 0
362507064 279023743 64153080 7
301537078 294460648 59599772 6
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Interested Expended Operating Expenses Provisional & Contingencies Total Expenditure Profit/ Loss Net Profit of the Year Less : Minority Interest Net Profit/ Loss After minority Interest
Profit/(loss) brought forward TOTAL PROFIT/(LOSS) APPROPRIATIONS/TRANSF ERS Transfer to Statutory Reserve Transfer to Reserve Fund Transfer to Capital Reserve Transfer to Investment Fluctuation Reserve Transfer from Investment Fluctuation Reserve Transfer to Special Reserve Transfer to Revenue and other reserves Proposed equity share dividend Proposed preference share dividend Corporate dividend tax Balance carried over to Balance Sheet TOTAL Earnings per share
176757193 180132128 30414589 38730391 0
257669754 270434081 41274341 56937817 6
264872527 281857874 61006187 60773658 8
207291861 277332381 62939335 54756357 7
26334012 (1272330) 27606342 (2435605) 25170737
31152644 (2829656) 33982300 (73762) 33908628
33794219 (1975285) 35769504 5496834 41266338
48434149 1731204 46702945 5371720 52074665
7800000 1168 1210000
10400000 3138 1270000
9400000 4221 8180000
10070000 2170 4440000 1160000 10369
4677098 593416 9085370 35 1877322 (73672) 25170737
1892500 491080 12239618 35 2071523 5496834 33908628
2870000 1105116 12245771 35 2083664 5371720 41266338
3330000 511464 13378604 35 2284688 16886406 52074665
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Basic (Rs.) Diluted (Rs.) Face value per share (Rs.)
30.92 30.75 10.00
32.19 32.07 10.00
32.13 32.07 10.00
41.93 41.72 10.00
Comparision of consolidate Cash Flow Statement Of ICICI Bank Particulars Cash Flow From Operating Activities
Net Profit Before Taxes Adjustment for Depreciation & Amortisation Net depreciation on Investment Provision in respect of performing assets Provision for contingencies & others Profit /Loss on sales of Fixed Assets 5,201,775 2,442,687 14,822,615 5,608,910 76,365 4,873,127 9778945 5287521 (889859) 9,462,631 8,660,775 8,117,173 7,980,989 19,202,139 24207093 31,198,896
2003
2004
2005
2006
63,900
207,936
85984
203,564
66,586
32,785
9232
(51,832)
30,578,552 Adjustment For Increase or Decrease in Investment Increase/ decrease in Advances 49,371,959
30,001,262
38478916
57,591,207
(67,833,837)
(50917262)
(202,720,286 ) (606,401,452 )
(74,839,746)
(109,741,682 )
(313691838)
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Increase/decrease in borrowing Increase/ decrease in Deposits Increase /decrease in other assets I/d in other liabilities & provisions
(36,281,456) 157,335,842 (16,655,916) 6,084,990
17,149,820 201,280,322 573,749 23,945,784
60,236038 330298939 (28297407) 74907141
82,006,471 713,348,700 (45,598,461) 81,889,315
65,374,156 Payment /refund of taxes Net cash flow from operating activities (A) Cash flow from Investing Activities Purchase of fixed assets Proceeds from sales of fixed assets Purchase or sales of long term assets Acquisition of subsidiaries (net of cash acquired) Net cash generated from investing activities (B) Cash flow from financing activities Proceeds from issue of share capital (including (2,477,199) 103,423 (9,317,190) 108,578,455
85,015,673 (7,015,770) 86,058,228
72535611 (9475531) 101538996
22,524,287 (10,198,463 69,917,031
(6,227,868) 372,836
(5914656) 323177
(6,557,240) 1,010,888
(56,671,432) _
(9,104,638)
(37444165) _
(96,168,425) (688,736)
(59,045,208)
(14,959,670)
(43035644)
(102,403,513 )
31922933
79,039,409
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ESOPs) net of issue expense. Amount received on exercise of stock options & calls in arrears Net proceeds/ (repayment) of bonds (including subordinated debt) Dividend and dividend tax paid Net cash generated from financing activities. (C) Effect of exchange fluctuation on translation reserve (D) 315 539,077 649861 811,100
(112,660,657 )
(41,221,623)
(38366923)
6,534,092
(568) (112,660,910 )
(5,354,941) (46,037,487)
(6381725) (12,175,854)
(7,598,693) 78,785,908
(49,968)
(673,965)
65418
(25,495)
Net increase/ (63,177,631) (decrease) in cash and cash equivalents (A) + (B) + (C) + (D) Cash and cash equivalents at April 1 Cash and cash equivalents at March 31 128,674,627
24,387,106
46392916
46,273,931
65,496,996
89884102
136,277,018
65,496,996
89,884,102
136277018
182,550,949
Particulars
Cash Flow From Operating Activities
2007
2008
2009
2010
Page 68
Net Profit Before Taxes Adjustment for Depreciation & Amortisation Net depreciation on Investment Provision in respect of performing assets Provision for contingencies & others Profit /Loss on sales of Fixed Assets
35,247,100
45,079,134
51,658,808
64,055,237
8,346,161 12,160,982 22,082,234
8,721,642 14,493,875 27,723,909
10,034,785 17,990,288 39,115,672
9,085,111 4,526,200 44,745,424
307,652
1,723,502
(303,901)
513,461
(351,246)
(613,379)
(14,611)
821,610)
77,792,883 Adjustment For Increase or Decrease in Investment Increase/ decrease in Advances Increase/decrease in borrowing Increase/ decrease in Deposits Increase /decrease in other assets I/d in other liabilities & provisions
97,128,683
118,481,041
122,103,823
(173,187,373 (132,276,09 ) 2) (565,891,731 (423,725,12 ) 1) 96,294,679 761,626,500 (27,065,243) 111,407,820 100,659,704 270,566,682 (40,067,589) 173,249,913
(4,416,202)
(216,921,819 ) 358,364,395 (3,820,938) (202,834,572 ) 28,724,367 229,307,649
(185,733,69 7) 41,331,233 (151,274,78 0) (39,234,654) 16,998,654
203,184,652 Payment /refund of taxes Net cash flow (21,192,739) 259,784,796
(51,592,503) (23,865,900) 21,670,280
(322,329,44 6) (18,405,479) (222,253,88
192,819,082 (19,414,369) 295,508,536 Page 69
from operating activities (A) Cash flow from Investing Activities Purchase of fixed assets Proceeds from sales of fixed assets Purchase or sales of long term assets Acquisition of subsidiaries (net of cash acquired) Net cash generated from investing activities (B) Cash flow from financing activities Proceeds from issue of share capital (including ESOPs) net of issue expense. Net proceeds/ (repayment) of bonds (including subordinated debt) Dividend and dividend tax paid Net cash generated from financing activities. (C) Effect of exchange 2,055,383 197,945,383 (8652,868) 1,759,850 (13,779,728) 1,100,906
4)
(13,071,158) 897,114
(6,654,131) 3,374,730
(204,006,388 (278,393,89 ) 7) _ _
90,016,170 (140,002)
(152,852,224 ) _
(210,899,407 (291,072,71 ) 9)
77,702,124
(156,131,625 )
522,062
1,175,994
172,962,927
138,335,874
44,144,641
(1,247,434)
(9,072,081) 165,946,229
(11,124,591) 325,156,666
(14,229,374) 30,437,329
(14,348,954) (14,420,394)
(491,265)
(1,721,319)
11,441,514
(4,129,160)
Page 70
fluctuation on translation reserve (D) Net cash and cash equivalents received from The Sangli Bank Limited on amalgamation (E) Net increase/ 214,340,353 (decrease) in cash and cash equivalents (A) + (B) + (C) + (D) + (E) Cash and cash equivalents at April 1 Cash and cash equivalents at March 31 182,550,949 2,362,563 _ _
56,395,471
(102,672,91 7)
120,827,357
396,891,302
453,286,773
350,613,856
396,891,302
453,286,773
350,613,856
471,441,213
Comparison with Competitors

Banks Last Price 1039.75 2252.45 1219.40 410.35 240.75 288.40 Market Cap 119755.53 104789.76 50106.31 30237.52 11218.23 10011.72 Net Interest Income 25974.05 19928.21 15154.81 4303.56 3589.36 4041.74 Net Profit Total Assets 363399.71 222458.56 242713.37 37346.31 35369.52 36382.50
ICICI Bank
HDFC Bank Axis Bank Kotak Mahindra IndusInd Bank YES BANK
5151.38 3926.39 3388.49 818.18 577.32 727.13
Page 71
Federal Bank Karur Vysya JK Bank ING Vysya Bank
436.10 418.45 802.00 321.20
7455.77 4464.60 3887.92 3886.09
4052.03 1757.94 3713.13 2694.06
587.08 336.03 615.20 318.65
43675.61 21993.49 42546.80 33880.24
Comparison Of Liabilities
1200 000 1000 000 80 0000 60 0000 40 0000 20 0000 0 2006 200 7 2 008 2009 201 0 IC I BANK IC AX BANK IS Y B es ank S BI ING V ya ys HB SC
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Comparison Of Assets
120 0000 100 0000 800000 600000 400000 200000 0 2006 2 007 2008 2009 2010 IC I BANK IC AX BANK IS Y B ES ANK S BI ING V S A YY H BC S
SAMPLING TECHNIQUE For my survey I used Cluster Sampling technique. I selected a sample of 100 employees around the area and interviewed them according to the questionnaire. In the survey I tried to find out their performance of the bank after merge. I also tried to find out that are they satisfaction of customer with the quality of services which provided by the ICICI BANK LIMITED. after merging Q1. Do you think that the merger of ICICI bank and ICICI limited is better then other bank merger?
Opinions Excellent good
No. of Respondents 43 44
Percentage (%) 43 44
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Poor
13
13
13% 43% 44%
excellent
good
poor
INTERPRETATION: Out of 100 respondent only 43 % respondent were told that merger of ICICI bank and ICICI limited is excellent then other company 44% told good while13% told poor.
Q2. Do you think that after merger performance of ICICI bank limited is better?
Opinions Yes No Total
No. of Respondents 86 14 100
Percentage (%) 86 14 100
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INTERPRETATION Out of 100 respondent only 86% respondent were told that after merger performance of ICICI bank limited is better while 14% told no.
Q3 Do you think that services provided by ICICI bank limited after merger is effective then other bank?
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INTERPRETATION Out of 100 respondents only 72% think that services provided by ICICI bank limited after merger is effective then other while 28% dont think that.
Q4. Do you think that merger ICICI limited beneficial for ICICI bank?
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INTERPRETATION
Out of 100 respondents only 14 % respondent were not satisfied while 86% think that merger with ICICI limited is beneficial for ICICI bank.
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Q5 Are you satisfied with the statement merger can provide a multitude of ways to increase efficiency merged bank?
Opinions Satisfied Unsatisfied Total
INTERPRETATION
Out of 100 respondent only 67 % respondent were not satisfied while 33%were not satisfied with the statement merger can provide a multitude of ways to increase efficiency merged bank. .
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Q6 Are you satisfied with the statement after merging with ICICI limited, ICICI bank provide the services as per your expectations?
Percentage (%) 79% 21% 100
INTERPRETATION Out of 100 respondent only 79 % respondent were not satisfied while 21%were not satisfied with the statement after merging with ICICI limited, ICICI bank provide the services as per your expectation
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Q7 Do you think this merger will successfully derived in competition of others banks?
INTERPRETATION
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Out of 100 respondent only 45 % respondent told no while 55%were told yes for merger will successfully derived in competition of others banks .
Q8. Do you think that merger of ICICI limited with ICICI bank is a reason to increase the value of share of ICICI bank in year 2002?
INTERPRETATION
Out of 100 respondents only 17 % respondent told no while 83%were told yes for the statement that merger of ICICI limited with ICICI bank is a reason for increase the value of share of ICICI bank in year 2002.
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Q9 Do you think after merging ICICI bank limited play a very important role in Indian economy for its growth?
INTERPRETATION
Out of 100 respondent only 24 % respondent told no while 76%were told yes after merging ICICI bank limited play a very important role in Indian economy for its growth
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Q10 Are you satisfied by the new schemes launched by the ICICI bank limited after merging in year 2002?
INTERPRETATION
Out of 100 respondent only 67 % respondent were not satisfied while 33%were not satisfied with the statement the new schemes launched by the ICICI bank limited after merging in year 2002.
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LIMITATIONS OF THE STUDY

Following limitations were faced during the study: 1. While designing the questionnaire it was kept in mind to gather more and more information from each target person. For the neither present nor descriptive questions could have served the purpose. Therefore the questionnaire contained in the open-ended questions. 2. The study was conducted in BHOPAL. The sample size was of 100 so that accuracy of data so collected could absurd covered by circulation of questionnaire.
3. The accuracy of indications given by the respondents may not be
consider adequate as whether the language used in the questionnaire is understood by the respondent cannot be taken for granted. 4. The study is based on the information gathered from the employee in bank Therefore in such case it is possible that the information supplied might be biased because the company might have shown partiality towards their information 5. It is rather difficult to give a precise conclusion of merger but I have tried to the best of my capability to give the conclusion on a comprehensive manner
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FINDING
a) Performance of ICICI BANK. After merger with ICICI LTD being
b)
c) d)
e)
f) g)
h)
effective in comparison of other bank. It increases their performance. Most the customer is satisfied by the services provided by the ICICI BANK after merger. It increase the value of the bank in their customer Merger of ICICI BANK & ICICI .LTD are provide a multitude of ways to increase efficiency ICICI BANK.LTD ICICI BANK .LTD provides the facility as per the expectations of their customer. In this way they become successful to achieve their goal. This merger successfully faces the competition of other bank. Merger of ICICI BANK with ICICI.LTD increase the share value of ICICI BANK.LTD Most of the customers are attracted by new scheme of ICICI BANK.LTD after merging. This schemes for attract the customer and it also help to make a distinct image of ICICI BANK.LTD in the competition of present scenario. Merger of ICICI BANK with ICICI.LTD help full for growth of Indian economy.
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CONCLUSION
Merger and acquisition is nothing new in the Indian banking industry. But there has been a change in impetus. Earlier, with the banks firmly under the control of RBI, mergers were forced upon to save weak banks from collapsing. The gradual privatisation and globalisation of the banking industry has now forced banks themselves to go in for merger. Increase in profitability, synergies in operation, global scale and other such reasons have replaced the social and political motives of yesteryears. Successful mergers can lead to prosperity both for the shareholders of the merged company and for the economy as a whole. The true catalyst of a successful merger is the top executive whose pragmatic and dynamic leadership and a clear foresight can help a merger click. The trick is to neutralise the expected pitfalls while bringing the best out of operational synergies. The making of ICICI Bank into a Universal bank has shown the way. This reverse merger has thus opened up a challenge to the banks and financial institutions in India to merge and become financial conglomerate(s) by exploiting the present favourable business environment and also to de-risk their operating environment
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BIBLIOGRAPHY
Periodical: Business World oEconomics time
o ICICI BANK Annual Reports
Research Methodology: C.R.Kothari, 2nd edition. S.N Murty and U Bhojanna
Website Address: www.ICICI.org.com www.ICICI bank.com www.economic time.com www.googlesearch.com
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Rahul Emparical Study

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A PROJECT REPORT ON

PRIST UNIVERSITY Vallam, Thanjavur, 2011

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

Place: Bangalore Date: CM2091860060

Rahul Kumar Reg. No:

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

FACULTY GUIDE Signature: Name: Savitha Rani Qualifications:

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

STUDENT NAME Rahul kumar Registration No. CM2091860060

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

OBJECTIVE OF THE STUDY

1. To study about merger and consolidation of bank.

4. Study about working of the bank after merge.

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

Introduction of Corporate Restructure

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

Types of Corporate restructuring

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

MERGER & CONSOLIDATION: SHAREHOLDERS RIGHTS

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

The sale is fraudulently executed in an effort to avoid liability.

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

(3) (4) (5)

An act by the incorporation,

Purpose of Mergers & Consolidation

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

Procedure Of Merger And Consolidation

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

RBI Guidelines on Mergers & Consolidation of Banks

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

Products & Services Personal Banking

Deposits Loans Cards Investments Insurance Demat Services Wealth Management

Money Transfer Bank Accounts Investments Property Solutions Insurance Loans

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

Merger Of ICICI & ICICI Bank

Boards of ICICI and ICICI Bank Approve Merger.

IMPACT OF MERGER OF ICICI BANK WITH ICICI LIMITED

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

Project Finance and Special Assets

Special Assets Management

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

Strong complementary organizations

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

Competitive advantages of the merged entity

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

Merger process of ICICI BANK AND ICICI LIMITED highlights

Transfer of ICICIs shareholding in ICICI Bank to an SPV prior to the merger

Divestment in FY2003 by way of appropriate placement

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK

Merger process - regulatory issues

SCOPE OF THE STUDY

RESEARCH DESIGN: DESCRIPTIVE

MERGER AND CONSOLIDATION OF ICICI LTD. AND ICICI BANK