ACKNOWLEDGEMENT

“Work is Worship”- so goes the old adage, Herculean task have been
overheard by dedicated and concerted effort of various people who
have sensibly and systematically blended their thoughts. We
acknowledge deep sense of gratitude towards our faculty guide Mr.
Mohit Jain, for giving us time and support. We express our profound
sense of gratitude towards to each and every person in NIAS for have
provided us with facilities and help for the successful completion of the
report and also for the moral support and co-operation. Finally, we
would like to thank our family and all our friends for helping us to
overcome the hurdles that we faced during the preparation of the
report.
 Rupes Dey, Soumen Das,
Suva Biswas, Gourav
Haldar, Debraj Das

INDEX

Introduction 3

History of ICICI Bank 4

Products and service 7

What is merger? 8
Procedure of merger 9
RBI guidelines on mergers and acquisitions 10
Merger of ICICI Bank with ICICI Ltd 11

Merger of ICICI Bank with Bank of Madura 14

Financial standing of ICICI Bank and Bank of Madura 16

Merger of ICICI Bank with Anagram Finance Ltd 16

Merger of ICICI Bank with Sangli Bank 17
5 years balance sheet of ICICI Bank 19

Annual results of ICICI Bank in details 20

SWOT analysis of ICICI Bank 21

TOWS matrix 24
Conclusion 25

INTR DUCTION

ICICI is a diversified financial services company that provides a range of banking and
financial services to customers, including retail banking, project and corporate finance,
working capital finance, insurance, venture capital and private equity, investment
banking, broking, and treasury products and services. The company operates in, India,
the UK, Canada and Russia. It is headquartered in Mumbai, India and employs about
40,686 people. The company recorded revenues of INR600.5 billion (approximately
$14.9 billion) in the financial year ended March 2008, an increase of 45.2% over 2007.
The net profit was INR33.9 billion (approximately $0.8 billion) in the financial year 2008,
an increase of 35.1% over 2007.

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 Ahmedabad as well as the High Court of Judicature at Mumbai and
the Reserve Bank of India.

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.

HISTORY OF ICICI

• 1955 The Industrial Credit and Investment Corporation of India Limited (ICICI)
was incorporated at the initiative of World Bank, the Government of India and
representatives of Indian industry, with the objective of creating a development
financial institution for providing medium-term and long-term project financing to
Indian businesses.

• 1994 ICICI established Banking Corporation as a banking subsidiary. Formerly

Industrial Credit and Investment Corporation of India. Later, ICICI Banking
Corporation was renamed as 'ICICI Bank Limited'. ICICI founded a separate
 legal entity, ICICI Bank, to undertake normal banking operations - taking
deposits, credit cards, car loans etc.

• 2001 ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a Chettiar
bank, and had acquired Chettinad Mercantile Bank (est. 1933) and Illanji Bank
(established 1904) in the 1960s.

• 2002 The Boards of Directors of ICICI and ICICI Bank approved the reverse
merger of ICICI, ICICI Personal Financial Services Limited and ICICI Capital
Services Limited, into ICICI Bank. After receiving all necessary regulatory
approvals, ICICI integrated the group's financing and banking operations, both
wholesale and retail, into a single entity.
○ Also in 2002, ICICI Bank bought the Shimla and Darjeeling branches that
Standard Chartered Bank had inherited when it acquired Grindlays Bank.
○ ICICI started its international expansion by opening representative offices
in New York and London.

• 2003 ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in
the UK it established an alliance with Lloyds TSB.
○ It also opened an Offshore Banking Unit (OBU) in Singapore and
representative offices in Dubai and Shanghai.

• 2004 ICICI opens a rep office in Bangladesh to tap the extensive trade between
that country, India and South Africa.

• 2005 ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with

about US$4mn in assets, head office in Balabanovo in the Kaluga region, and
with a branch in Moscow. ICICI renamed the bank ICICI Bank Eurasia.
○ Also, ICICI established a branch in Dubai International Financial Centre
and in Hong Kong.

• 2006 ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI opened

representative offices in Bangkok, Jakarta, and Kuala Lumpur.
 • 2007 ICICI amalgamated Sangli Bank, which was headquartered in Sangli, in
Maharashtra State, and which had 158 branches in Maharashtra and another 31
in Karnataka State. Sangli Bank had been founded in 1916 and was particularly
strong in rural areas.
○ ICICI also received permission from the government of Qatar to open a
branch in Doha.
○ ICICI Bank Eurasia opened a second branch, this time in St. Petersburg.

• 2008 The US Federal Reserve permitted ICICI to convert its representative

office in New York into a branch.
○ ICICI also established a branch in Frankfurt.
○ ICICI Banks has exposure to Subhiksha Trading Ltd which is facing
Credit Crunch.

Head Office : ICICI Bank

9th Floor, South Towers
ICICI Towers
Bandra Kurla Complex
Bandra (E)
Mumbai

Website : http:// www.icicibank.com

Phone : 91-022-653 7914

Employees : 84,134

Net income : $779.8M

Income growth : 28.6%

Key People : Kundapur V. Kamath – Chairman

Chanda D. Kochhar – Managing Director and CFO

N. S. Kannan – Executive Director and CFO

Total Assets : Rs. 3793.01 billion (US$ 75 billion) at March 31, 2009

PRODUCTS AND 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
 MERGER
What is Merger?
A merger occurs when two companies combine to form a single company. A merger is
very similar to an acquisition or takeover, except that in the case of a merger existing
stockholders of both companies involved retain a shared interest in the new
corporation. By contrast, in an acquisition one company purchases a bulk of a second
company's stock, creating an uneven balance of ownership in the new combined
company.
The entire merger process is usually kept secret from the general public, and often
from the majority of the employees at the involved companies. Since the majority of
merger attempts do not succeed, and most are kept secret, it is difficult to estimate how
many potential mergers occur in a given year. It is likely that the number is very high,
however, given the amount of successful mergers and the desirability of mergers for
many companies.
A merger may be sought for a number of reasons, some of which are beneficial to the
shareholders, some of which are not. One use of the merger, for example, is to
combine a very profitable company with a losing company in order to use the losses as
a tax write-off to offset the profits, while expanding the corporation as a whole.
Increasing one's market share is another major use of the merger, particularly amongst
large corporations. By merging with major competitors, a company can come to
dominate the market they compete in, giving them a freer hand with regard to pricing
and buyer incentives. This form of merger may cause problems when two dominating
companies merge, as it may trigger litigation regarding monopoly laws.
Another type of popular merger brings together two companies that make different, but
complementary, products. This may also involve purchasing a company which controls
an asset your company utilizes somewhere in its supply chain. Major manufacturers
buying out a warehousing chain in order to save on warehousing costs, as well as
making a profit directly from the purchased business, is a good example of this.
PayPal's merger with eBay is another good example, as it allowed eBay to avoid fees
they had been paying, while tying two complementary products together.
A merger is usually handled by an investment banker, who aids in transferring
ownership of the company through the strategic issuance and sale of stock. Some have
alleged that this relationship causes some problems, as it provides an incentive for
investment banks to push existing clients towards a merger even in cases where it may
not be beneficial for the stockholders.

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.

➢ 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 valuer is appointed
to valuate both the banks. The valuer 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 & Acquisitions 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 Co-operative Societies Act
(Central Act) for takeover of a bank/s registered under State Act. While the State
Acts specifically provide for merger of co-operative societies registered under them,
the position with regard to take 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 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.

ICICI merger creates India's 2nd largest bank

ICICI create the nation's first universal bank, or one-stop provider of virtually all types of
financial services. The merged entity represent ICICI to India's second-largest bank
after state-run colossus State Bank of India, which along with its subsidiaries accounts
for a third of the Indian banking industry's loans and deposits.
"This is basically a survival move from ICICI, as their core business doesn't look too
good and they need some kind of a bank because only a bank has access to low-cost
funds."
Another reason for merging is to get access to cheaper funds after the Reserve Bank of
India said it would begin processing applications to create universal banks. The move
towards a universal bank will be positive for the firm in the long term.
Current rules prohibit ICICI and other long-term lenders from raising deposits of less
than one-year maturity, which usually pay lower rates of interest. But that restriction is
not applicable to commercial banks.
That was enable ICICI to compete more effectively in the retail finance market
dominated by banks, to compensate for slowing loan demand from corporations and for
big projects.

MERGER OF ICICI BANK WITH ICICI LTD.

India's largest finance company and largest private bank were merging on 31 March,
2002, thus creating the nation's first universal bank, or one-stop provider of virtually all
types of financial services.
The merged entity was create India's second-largest bank after state-run colossus
State Bank of India, which along with its subsidiaries accounts for a third of the Indian
banking industry's loans and deposits. The swap ratio has been decided at 2:1 that is 1
share of ICICI Bank for every 2 shares held in ICICI Ltd.
It is also include merger of two ICICI subsidiaries, namely, ICICI Personal Finance
Services Limited and ICICI Capital Services Limited with ICICI Bank. The American
Depository Shares (ADS) holder of ICICI would be issued five ADS of ICICI Bank in
exchange for four ADS of ICICI.
The ICICI universal bank was control assets of Rs 940 billion, surpassed only by SBI's
Rs 3.16 trillion and ahead of third-placed state-run Industrial Development Bank of
India with Rs 718 billion.
The merged entities have a capital base of Rs 95 billion, 8,300 employees and a huge
nationwide branch network.
As of September 30, 2002, ICICI Bank had 396 branches, India's largest ATM network
of 601 automatic teller machines, and 3.2 million retail customers, including both
depositors and borrowers.
ICICI founded ICICI Bank eight years ago and owns a 46 per cent stake. Both
companies are listed on the New York Stock Exchange and are based in Bombay, the
Indian financial capital.

Financials
Before merging financial statements of two firms:-

ICICI Bank (Rs. In Crs.)

Particulars Q2 01-02 Q2 00-01 % Change H1 FY02 H1 FY01 % Change

Interest income 464.69 287.34 61.7 933.0 570.9 63.4

Other Income 95.11 34.12 178.8 222.3 65.3 240.2

Total Income 559.80 321.46 74.1 1155.3 636.2 81.6

Operating
139.26 71.56 94.6 277.4 126.2 119.7
expenses

Interest expense 323.58 191.36 69.1 642.1 389.5 64.9

Gross Profit 96.96 58.54 65.6 235.6 120.4 95.7

Provisions & cont. 1.25 22.43 -94.4 46.91 36.5 28.5

PBT 95.71 36.11 165.1 188.7 83.9 124.9

Tax 29.56 6.05 388.6 57.3 13.7 318.1

PAT 66.15 30.06 120.1 131.4 70.2 87.2

Int. exp/Int. inc. (%) 69.6 66.6 68.8 68.2

NPM (%) 11.8 9.4 11.4 11.0

EPS (Rs) 3.00 1.53 5.96 3.57

Financial Highlights:
• Net Profit up by 120 per cent to Rs 66.2 crs.
• Operating Profit up by 66 per cent to Rs 97 crs.
• Total Deposits up by 80 per cent to Rs 17515 crs since September ’00.
• Total customer assets up by 80.4 per cent to Rs 11409 crs.
• Return on Assets up from 1.29 per cent to 1.37 per cent on annualized basis.
• Return on Net Worth up from 11.85 per cent to 19.07 per cent on annualized
basis.
 • Market share in Deposits up from 0.97 per cent to 1.52 per cent in the first half.
• Market share in customer assets up from 1.26 per cent to 2.01 per cent in first
half.
• Cost to Income ratio up from 51.2 per cent to 54.1 per cent in first half.
ICICI Ltd.

% %
Particulars Q2 FY02 Q2 FY01 H1 FY02 H1 FY01
Change Change

Income from
2381.17 2191.91 8.6 4809.7 4329.68 11.1
Operations

Other Income 24.49 15.01 63.2 47.86 31.04 54.2

Total Income 2405.66 2206.92 9.0 4857.56 4360.72 11.4

Total Expenditure 195.19 193.09 1.1 410.6 397.88 3.2

Interest Expense 1739.33 1639.56 6.1 3474.48 3176.08 9.4

Gross Profit 471.14 374.27 25.9 972.48 786.76 23.6

Depreciation 115.28 97.35 18.4 230.98 196.37 17.6

PBT 355.86 276.92 28.5 741.5 590.39 25.6

Provision for Tax

Current Tax 26.45 23 15.0 74.45 49 51.9

Deffered Tax 47.55 0 59.55 0

PAT 281.86 253.92 11.0 607.5 541.39 12.2

Int. exp/Total
73% 75% 72% 73%
Income

NPM 14.9% 12.6% 15.4% 13.6%

EPS 3.6 3.2 7.7 6.9

Financial Highlights:
• Net Profit up by 11 per cent to Rs 282 crs.
• Total assets up by 8.7 per cent to Rs 74371 crs.
• Return on Assets remained stable at 1.8 per cent on an annualized basis in the
first half.
• Return on Net Worth up from 13.5 per cent to 14.7 per cent on annualized basis
in the first half.
• Overheads / Net Income from Operations down from 18.5 per cent to 14.2 per
cent on an annualized basis in the first half.
• Overheads / Average net assets down from 0.6 per cent to 0.5 per cent on an
annualized basis in the first half.
MERGER OF ICICI BANK WITH BANK OF MADURA

The merger between ICICI Bank and Bank of Madura (BoM) is a remarkable one. The
pre--merger market capitalization of ICICI Bank was roughly Rs.2500 crore while BoM
was at roughly Rs.100 crore. BoM is known to have a poor asset portfolio.

As a benchmark calculation, however, suppose we pretend that there are no synergies,

and focus on a purely financial evaluation of the merged entity. This is not easy to do
using conventional accounting measures. Instead, arguments based on option pricing
theory yield useful insights.

In applying these ideas to ICICI Bank and to BoM, we need to believe that the stock
market effectively processes information to produce estimates of the price and volatility
of the shares of both these banks. This assumption is suspect, because both securities
have poor stock market liquidity. Hence, we should be cautious in interpreting the
numbers shown here. There are many other aspects in which this reasoning leans on
models, which are innately imperfect depictions of reality.

Pre-Merger status ofICICI Bank: The pre--merger status of ICICI Bank is as follows: it
had liabilities of Rs.12,073 crore, equity market capitalization of Rs.2,466 crore and
equity volatility of 0.748. Working through options reasoning, we find that this share
price and volatility are consistent with assets worth Rs.13,249 crore with volatility 0.15.
Thus, ICICI bank had assets which are 9.7% ahead of liabilities, which is roughly
consistent with the spirit of the Basle Accord, and has leverage of 5.37 times.

Pre-Merger Status ofBank of Madura: The pre--merger status of Bank of Madura is

as follows: it had liabilities of Rs.4,444 crore, equity market capitalization of Rs.100
crore and equity volatility of 0.69. Working through options reasoning, we may say that
the stock market thinks that its assets are worth Rs.4,095 crore with a volatility of 0.02.
Hence, BoM is bankrupt (with assets which are Rs.350 crore behind liabilities) and has
a leverage of 41 times. If we needed to bring BoM up to a point where its assets were
10% ahead of liabilities, which is broadly consistent with the Basle Accord, this would
require an infusion of Rs.800 crore of equity capital.
How do we combine these to think of the merged entity? Assets and liabilities are
additive, so the total assets of the merged entity would prove to be roughly Rs.17,345
crore and the liabilities would prove to be Rs.16,517 crore. The merged entity would
hence need roughly Rs.800 crore of fresh equity capital in order to come up to a point
where assets were at least 10% ahead of liabilities.
How can we estimate the market capitalization of the merged entity? The value of
equity is the value of a call option on the assets of the merged entity. Pricing the call
requires an estimate of the volatility of the merged assets, i.e. it requires a knowledge
of the extent to which the assets of the two banks are uncorrelated. We find that using
values of the correlation coefficient ranging from 80% to 95%, the volatility of assets of
the merged entity proves to be around 0.12. In this case, the valuation of the call
option, i.e. an estimate of the market capitalization of the merged entity, proves to be
roughly Rs.2,500 crore.
This number is not far from the pre--merger market capitalization of ICICI Bank, which
was Rs.2,466 crore. Hence, we can say that on purely financial arguments, the merger
is roughly neutral to ICICI Bank shareholders if BoM was merged into ICICI Bank for
free. Indeed, if banking regulators took their jobs more seriously, they would force the
shareholders of BoM to walk into such a merger at a zero share price as a way of
reducing the number of bankrupt banks in India by one. Such a forced-merger would be
a politically easier alternative for the RBI when compared with closing down BoM.
The shareholders of ICICI Bank have paid a non-zero fee for BoM. This reflects a hope
that the products and processes of ICICI Bank will rapidly improve the value of assets
of BoM in order to compensate. In addition, the merged entity will have to rapidly raise
roughly Rs.800 crore of equity capital to obtain a 10% buffer between assets and
liabilities.
Hence, this proposed merger is a godsend for BoM, which was otherwise a bankrupt
entity which was headed for closure given the low probability that it would manage to
raise Rs.800 crore of equity on a base of Rs.100 crore of market capitalization. It is
useful to observe that BoM probably did not see things in this way, given the
willingness of India's banking regulators to interminably tolerate the existence of
bankrupt banks. Closure of BoM would normally involve pain for BoM's shareholders
and workers; instead both groups will get an extremely pleasant ride if the merger goes
through.
The proposed merger is a daunting problem for ICICI Bank. It will need to rapidly find
roughly Rs.800 crore in equity. If India's banking regulators were serious about capital
adequacy, ICICI Bank should have to pay roughly zero to merge with BoM (it is doing a
favor to BoM and to India's banking system); instead ICICI Bank has paid a positive
price for BoM. The key question that will be answered in the next two/three years is:
Will ICICI Bank's superior knowledge of products and processes revitalise the assets
and employees of BoM, and generate shareholder value in the merged entity? ICICI's
top management clearly thinks so, and it would be a very happy outcome if this did
indeed happen.
The proposed merger is a good thing for India's economy, since the headcount of
bankrupt banks will go down by one, and there is a possibility of obtaining higher value
added out of the poorly utilized assets and employees of BoM. If the merger goes
through, then it will reduce the say of the management team of BoM in India's resource
allocation, which is a good thing

Financial standing of ICICI Bank & Bank of Madura

Parameters ICICI Bank Bank of Madura

1998-1999 1999-2000 1998-1999 1999-2000
Net worth 308.33 1129.90 211.32 247.83
Total Deposit 6072.94 9866.02 3013.00 3631.00
Advances 3377.60 5030.96 1393.92 1665.42
Net Profit 63.75 105.43 30.13 45.58

Share Capital 165.07 196.81 11.08 11.08

 Capital Adequacy Ratio 11.06% 19.64% 18.83% 14.25%

Gross Advances / Gross 4.72% 2.54% 8.13% 11.09%

NP’s
Net Advances / 2.88% 1.53% 4.66% 6.23%
Net NP’s

MERGER OF ICICI BANK WITH ANAGRAM FINANCE LTD

Anagram Finance Ltd (AFL), a non banking finance company, amalgamated with the
Industrial Credit and Investment Corporation of India (ICICI). The swap ratio for the
amalgamation is expected to be in the region of 1:10-1:15.

Financial Performance of Anagram Finance Ltd (Rs. In crore):

PARTICULARS 1997 1996

Total Income 140.06 142.45

Interest 71.33 71.36

Gross Profit 52.72 51.56

Depreciation 48.16 26.70

Tax 00.00 2.25

Net Profit 4.56 22.61

The impending merger of Anagram Finance Ltd (AFL) with the Industrial Credit and
Investment Corporation of India (ICICI) resulting in leveraging the complementary
strengths of the two companies. AFL, which is merged with ICICI, has presence in retail
car and truck financing. It has 50 branches in Gujarat, Rajasthan and Maharashtra and
a depositor base of 250,000. ICICI is expected to benefit from the merger as AFL will
give it a foothold in the western part of India.

MERGER OF ICICI BANK WITH SANGLI BANK

The merger, that was announced on APRIL’18, 2007 between ICICI Bank and SANGLI
Bank. All branches of Sangli Bank functions as branches of ICICI Bank from April 19,
said the Reserve Bank of India.
Sangli Bank is an unlisted private bank headquartered at Sangli in Maharashtra. As on
March 31, 2006, Sangli Bank had deposits of Rs. 2,004 crore, advances of Rs. 888
crore, net NPA (non-performing assets) ratio of 2.3 per cent and capital adequacy of
1.6 per cent. Its loss at the end of 2005-06 amounted to Rs. 29 crore.

It has 198 branches and extension counters, including 158 branches in Maharashtra
and 31 branches in Karnataka.

About 50 per cent of the total branches are located in rural and semi-urban areas and
50 per cent in metropolitan and urban centers. The bank has about 1,850 employees.
ICICI Bank is the second largest bank in India and the biggest in terms of market
capitalization.

As on September 30, 2006, ICICI Bank had total assets of Rs. 282,373 crore. In the six
months ended September 30, 2006, it made a net profit of Rs. 1,375 crore.
It had 632 branches and extension counters and 2,336 ATMs as on that date, and is in
the process of setting up additional branches and ATMs pursuant to authorizations
granted by the RBI. It has about 31,500 employees.

ICICI Bank offers a wide range of financial products and services directly and through
subsidiaries in the areas of life and general insurance, asset management and
investment banking.

Its shares are listed on the Bombay Stock Exchange Limited and the National Stock
Exchange of India Limited and its American Depositary Shares are listed on the New
York Stock Exchange

Merger profile of ICICI Bank and Sangli Bank

(In Rs cr.)

ICICI Bank Sangli Bank

Advances 1,55,400 888
Deposits 1,90,000 2,004
Net NPAs(%) 0.9 2.3
CAR(%) 14.3 1.6
Branches 198 632
(Figures for ICICI Bank are as on Sept.’30, 2006 and for Sangli Bank as on March’31, 2006)

5 YEARS BALANCE SHEET OF ICICI BANK LTD.

(All Items in Millions)
 03/31/09 03/31/08 03/31/07 03/31/06 03/31/05
Assets
Cash & Equivalents -93,406.48 11,326.50 9,208.61 4,104.11 5,300
Receivables N/A 0 0 0 23,317
Notes Receivable N/A 0 0 0 0
Inventories N/A 0 0 0 0
Other Current Assets N/A 0 0 0 1,699
Total Current Assets 6,592.52 11,326.50 9,208.61 4,104.11 30,316
Net Property & Equipment 6,152.52 1,169 1,006.99 931.40 597
Investments & Advances 22,672.76 39,991.69 27,985.31 18,888.01 8,841
Other Non-Current Assets N/A 0 0 0 0
Deferred Charges N/A 0 0 0 278
Intangibles N/A 0 0 0 266
Deposits & Other Assets 48,028.40 68,856.20 53,292 38,403.20 2,422
Total Assets 83,446.22 121,343.47 91,492.97 62,326.79 42,720

Liabilities & Shareholder's Equity

Notes Payable N/A 0 0 0 3,807
Accounts Payable 48,036.56 69,211.20 57,682.97 38,770.45 23,304
Current Portion Long-Term Debt N/A 0 0 0 0
Current Portion Capital Leases N/A 0 0 0 0
Accrued Expenses N/A 0 0 0 410
Income Taxes Payable N/A 0 0 0 0
Other Current Liabilities N/A 0 0 0 556
Total Current Liabilities 48,036.56 69,211.20 57,682.97 38,770.45 28,077
Mortgages N/A 0 0 0 0
Deferred Taxes/Income N/A 0 0 0 13
Convertible Debt N/A 0 0 0 0
Long-Term Debt 20,417.10 21,130.94 14,306.15 10,116.89 8,425
Non-Current Capital Leases N/A 0 0 0 0
Other Non-Current Liabilities 4,018.30 19,556.19 13,744.07 8,298.54 3,199
Minority Interest (Liabilities) N/A 182.70 118.22 61.81 47
Total Liabilities 72,471.96 110,081.04 85,851.43 57,247.70 39,761

Shareholder's Equity
Preferred Stock 77 0 0 0 24
Common Stock (Par) N/A 0 0 0 169
Capital Surplus 244.86 365.48 289.87 278.74 2,220
Retained Earnings 10,652.40 10,896.93 5,351.66 4,800.34 472
Other Equity N/A 0 0 0 74
Treasury Stock N/A 0 0 0 0
Total Shareholder's Equity 10,974.26 11,262.42 5,641.54 5,079.08 2,959
Total Liabilities & Shareholder's Equity 83,446.22 121,343.47 91,492.97 62,326.79 42,720
 Total Common Equity 10,897.26 11,262.42 5,641.54 5,079.08 2,935
Shares Outstanding 556.50 547.50 447.10 444.70 368.20
Book Value Per Share 19.58 20.57 12.62 11.42 7.97

Annual results of ICICI bank in details:-

Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05
Other income 7,603.72 8,810.77 5,929.17 4,983.14 3,416.14
Stock adjustment - - - - -
Raw material - - - - -
Power and fuel - - - - -
Employee expenses 1,971.70 2,078.90 1,616.75 1,082.29 737.41
Excise - - - - -
Admin and selling expenses - - - - -
Research and development
- - - - -
expenses
Expenses capitalised - - - - -
Other expenses 5,073.41 6,075.28 5,073.81 3,918.86 2,561.74
Provisions made 3,808.26 2,904.59 2,226.36 1,594.07 428.80
Depreciation - - - - -
Taxation 1,358.84 898.37 537.82 556.53 522.00
Net profit / loss 3,758.13 4,157.73 3,110.22 2,540.07 2,005.20
Extra ordinary item - - - - -
Prior year adjustments - - - - -
Equity capital 1,113.29 1,112.68 899.34 889.83 736.78
Equity dividend rate - - - - -
Agg.of non-prom. shares (Lacs) 11132.51 11126.87 8992.67 8898.24 7367.15
Agg.of non promotoHolding (%) 100.00 100.00 100.00 100.00 100.00
OPM (%) 65.09 64.08 61.22 53.90 60.38
GPM (%) 23.06 20.10 20.31 24.32 23.05
NPM (%) 9.71 10.50 10.75 13.17 15.63
 SWOT ANALYSIS OF ICICI

STRENGHTS:

1) Online Services: ICICI Bank provides online services of all its banking facilities. It
also provides D-Mart account facilities on-line, so a person can access his account
from anywhere he is.

[D-Mart is a dematerialized account opened by a salaried person for purchase & sale of
shares of different companies.]

2) Advanced Infrastructure: Branches of ICICI Bank are well equipped with advanced
technology to provide the customers with taster banking services. All the computerized
machines are located in suitable manner & are very useful to the customers & staff of
the bank.

3) Friendly Staff: The staff of ICICI Bank in all branches is very friendly & helps the
customers in all cases. They provide faster services along with bonding & personal
relationship with the customers.

4) 12 hrs. Banking services: Compared to other bank ICICI bank provides long hrs. of
services i.e. 8-8 services to the customers. This service is one of its kinds & is very
helpful for the customers who are in urgent need of money.
5) Other Facilities to the Customers & Employees: ICICI Bank also provides other
facilities like drinking water facilities, proper sitting arrangements to the customers. And
there are also proper Ventilation & sanitary facilities for the employees of the bank.

6) Late night ATM services: ICICI bank provides late night ATM services to the
customers. The ATM centers of ICICI bank works even after 11:00pm. at night in
certain branches.

WEAKNESSES:

1) High Bank Service Charges: ICICI bank charges highly to customers for the
services provided by them when compared to other bank & that are why it is only in the
reach of higher class of society.

2) Less Credit Period: ICICI bank provides credit facilities but only up to limited
period. Even when the credit period is not over it sends reminder letters to the
customers which may annoy them.

OPPORTUNITIES:

1) Bank –Insurance services: The bank should also provide insurance services. That
means the bank can have a tie-up with an insurance company. The bank will advertise
& promote the different policies introduced by the insurance company & convince their
customers to buy insurance policies.
 2) Increase in percentage of Returns on increase: The bank should provide higher
returns on deposits in comparison of the present situation. These will also up to large
extent help the bank earn profits & popularity.

3) Recruit professionally guided students: Bank & Insurance is a special non-aid

course where the students specialize in the functioning & services of the bank & also
are knowledge about various tax policies. The bank can recruit these students through
tie-ups with colleges. Such students will surely prove as an asset to the bank.

4) Associate with social cause: The bank can also associate itself with social causes
like providing relief aid patients, funding towards natural calamities. But this falls in the
4th quadrant so the bank should neglect it

THREATS:

1) Competition: ICICI Bank is facing tight competition locally as well as

internationally. Bank like CITI Bank, HSBC, ABM, Standard Chartered, HDFC also
provide equivalent facilities like ICICI do and also ICICI do not have consistency in its
international operation.

2) Net Services: ICICI Bank provides all kind of services on-line. There can be easy
access to the e-mail ids of the customers through wrong people. The confidential
information of the customers can be leaked easily through the e-mail ids.

3) Decentralized Management: Each branch manager is given the authority of taking

decisions in their respective branches. The decisions made by different managers are
diverse and any one wrong decision can laid to heavy losses to the bank.
 4) No Proper Facilities to Uneducated customers: ICICI Bank provides all services
through electronic computerized machines. This creates problems to the less educated
people. But this threat falls in the 4th quadrant so it’s negligible. The company can avoid
this threat.

TOWS MATRIX

STRENGTHS WEAKNESSES
O

P S-O STRATEGIES W-O STRATEGIES

R Strength: Large capital base. Weakness: Workforce responsiveness.

U Opportunity: Market expansion. Opportunity: Outsourcing of Non-Core

business.
N

T Strategy: Deep penetration into rural

market. Strategy: Outsource Customer Care &
I other E-helps.
E

S-T STRATEGIES W-T STRATEGIES

T Strength: Low operating costs. Weakness: Not equal to international

standers.
H

R Threat: Increased competition from

other private banks. Threat: Entry of many foreign banks.
E

A
 T

S Strategy: Steps to ensure loyalty by Strategy: Consider additional benefits.

old customers.

Conclusion

Thus, ICICI has been able to use technology to provide value-added service to its
customers during the last few years. For ICICI, technology is an integral part of their
business. However, their overall progress could have been smoother but for certain
internal and extraneous factors and also a pressure on spread due to a competitive
market. E-banking has become a necessary survival weapon and is fundamentally
changing the banking industry worldwide. Today, the click of the mouse offers
customers banking services at a much lower cost and also empowers them with
unprecedented freedom in choosing vendors for their financial service needs. No
country today has a choice- whether to implement E-banking or not given the global
and competitive nature of the economy. ICICI have to upgrade and constantly think of
new innovative customized packages and services to remain competitive. The invasion
of banking by technology has created an information age and commoditization of
banking services. ICICI have come to realize that survival in the new e-economy
depends on delivering some or all of their banking services on the Internet while
continuing to support their traditional infrastructure. The rise of E-banking is redefining
business relationships and the most successful banks will be those that can truly
strengthen their relationship with their customers. Without any doubt, the international
scope of E-banking provides new growth perspectives and Internet business is a
catalyst for new technologies and new business processes.

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