A TRAINING PROJECT REPORT ON

ANALYSIS OF FINANCIAL STATEMENT OF ICICI BANK

(SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR BACHELOR IN BUSINESS ADMINISTRATION, DISTANCE EUCATION) PUNJAB TECHNICAL UNIVERSITY, JALNDHAR Project Guide: Submitted By: Ms. RICHA DIXIT SUMIT KUMAR Enrolment No.: 820121167 Specializa tion: Finance Remark of External Examiner Name: Marks Scored: Designation: Signature:

(Asst. Professor)

Session 2008-11

INDRAPRASTHA INSTITUTE OF TECHNOLOGY & MANAGEMENT, NEW DELHI PUNJAB TECHNICAL UNIVERSITY, JALANDHAR ACKNOWLEDGEMENT
Getting a project ready requires the work and effort of many people. I would like to pay my sincere gratitude and thanks to those people, who directed me at every step in this project work. The present report is based on ANALYSIS OF FINANCIAL STATEMENT- CASE STUDY OF ICICI BANK.

I extended my sincere thank and gratitude to Ms. RICHA DIXIT, internal faculty, for her help and valuable support throughout the term of the project. It was a learning experience to work under her guidance.

I am also very thankful to Mr. SAURABH SINGH who has given me the opportunity to do this project report. I am also thankful to my parents, all my friends and other sources who gave me their much needed support and inspiration in preparing this project report.

(SUMIT KUMAR)

PREFACE

Theoretical knowledge without practical knowledge is pf little value. In order to achieve the concrete and positive result practical knowledge must be their. To fulfill these needs, the management course has a provision for the practical training program. I shall be thankful to the university to provide such opportunity so that the students can have the actual feeling of industrial life.

I have done my Project Report in ICICI bank. I got ample of opportunities to view overall working and processing of case study of ICICI bank.

In the coming pages an attempt has been made to present a comprehensive report concerning different aspects.

TABLE OF CONTENT
S.NO. 1. COMPANY PROFILE ICICI Bank TOPIC

History Board of Directors Board Committees Organizational Structure Products & Services Risk Aspects Subsidiary companies Key Group Companies Public Recognition
2.

INTRODUCTION TO TOPIC CHOSEN

A brief Introduction Study of Profit & Loss A/C Study of Balance-Sheet Study of cash flow statement Financial Statement Analysis

3. 4. 5. 6.

RATIONALE OF THE TOPIC CHOSEN OBJECTIVES RESEARCH MEHODOLOGY

ANALYSIS AND INTERPRETATION OF DATA
Management Discussion & Analysis Comparative Income Statement Comparative Financial Position Statement Ratio Analysis- Financial Statement Cash Flow Statement

7.

CONCLUSION

8. 9.

BIBLIOGRAPHY ANNEXURE

Profit & Loss Account Balance-Sheet

CHAPTER-1

COMPANY PROFILE

ICICI BANK
ICICI Bank is Indias second-largest bank with total assets of Rs.3, 446.58 billion (US$ 79 billion) at March 31, 2009 and profit after tax Of Rs.3 1 .1 0 billion for fiscal 2009. ICICI Bank is the most valuable Bank in India in terms of market capitalization and is ranked h ire amongst all the companies listed on the Indian stock exchanges. In terms of free float market capitalization*. The Bank has a network of about9 5 0Branches a n d 3,300 ATMs in India and presence in 17 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customer through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Center and representative offices in the United States, United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. UK subsidiary has established a branch in Belgium. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) of India Limited audits American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

HISTORY
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning fee- based income and the ability to participate in the payments system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various

business segments, particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Cist of Gujarat at Ahmedabad in March 2002, and by the High Cist of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking operations, both wholesale and retail, have been integrated in a single entity.

BOARD OF DIRECTORS
MR. N.Vaghul (CHAIRMAN) MR. Sridar Iyengar MR. Lakshmi N. Mittal MR. Narendra Murkumbi MR. Anupam Puri MR. Vinod Rai MR. M. K. Sharma MR. P.M. Sinha Prof. Marti G. Subrahmanyam MR. T. S. Vijayan MR. V. Prem Wasta MR. K. V. Kamath (MANAGING DIRECTOR & CEO) MR. Chanda Kochhar (JOINT MANAGING DIRECTOR) MR. Nachiket MOR (DEPUTY MANAGING DIRECTOR) MR. V. Vaidyanathan, (EXECUTIVE DIRECTOR) MR. Sonjoy Chatterjee (EXECUTIVE DIRECTOR)

BOARD COMMITTEES

Audit Committee

Board Governance & Remuneration Committee Mr. N. Vaghul Mr. Anupam Puri Mr. M. K. Sharma Mr. P. M. Sinha Prof. Marti G. Subrahmanyam Credit Committee Risk Committee Mr. N. Vaghul Mr. Sridar Iyengar Prof. Marti G. Subrahmanyam Mr. V. Prem Watsa Mr. K. V. Kamath Asset-Liability Management Committee Ms. Chanda D. Kochhar Dr. Nachiket Mor Ms. Madhabi Puri-Buch Mr. V. Vaidyanathan -----------

Mr. Sridar Iyengar Mr. Narendra Murkumbi Mr. M. K. Sharma

Customer Service Committee Fraud Monitoring Committee Mr. M. K. Sharma Mr. Narendra Murkumbi Mr. K. V. Kamath Ms. Chanda D. Kochhar Mr. V. Vaidyanathan

Share Transfer & Shareholders/ Investors Grievance Committee Mr. M. K. Sharma Mr. Narendra Murkumbi Ms. Chanda D. Kochhar Ms. Madhabi Puri-Buch Committee of Directors Mr. K. V. Kamath Ms. Chanda D. Kochhar Dr. Nachiket Mor Ms. Madhabi Puri-Buch Mr. V. Vaidyanathan

ORGANISATIONAL STRUCTURE OF ICICI BANK

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ICICI Banks organization structure is designed to be flexible and customerfocused, while seeking to ensure effective control and supervision and consistency in standards across the organization and align all areas of operations to overall organizational objectives. The organization structure is divided into six principal groups Retail Banking, Wholesale Banking, International Banking, Rural (Micro-Banking) Corporate Center. and Agriculture Banking, Government Banking and

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

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

INTERNATIONAL BANKING The International Banking Group is responsible for its international operations, including operations in various overseas markets as well as its products and services for non-resident Indians and its international trade finance and correspondent banking relationships .

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RURAL AND AGRICULTURAL BANKING The Rural, Micro-Banking & Agro-Business Group is responsible for envisioning and implementing rural banking strategy, including agricultural banking and micro-finance.

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

BUSINESS REVIEW During fiscal 2009, the Bank continued to grow and diversify its asset base and the and revenue past retail streams years. by It leveraging maintained its the its growth platforms created in over retail scaled few leadership base and position

credit, achieved robust growth in its fee income from both corporate customers, grew deposit significantly up its international operations and rural reach.

RETAIL BANKING ICICI is the largest provider of retail credit in India. ICICIs total retail disbursements in fiscal 2009 were approximately Rs. 777.00 billion, compared to approximately Rs. 627.00 billion in fiscal 2008. Its total retail portfolio increased from Rs. 921.98 billion at March 31, 2008 to Rs. 1,277.03 billion at March 31, 2009, constituting 65% of its total loans at that date. It continued its

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focus on retail deposits to create a stable funding base. At March 31, 2009 it had more than 25 million retail customer accounts. During fiscal 2009, it expanded its branch network. At March 31, 2009, it had 755 branches and extension counters compared to 614 branches and extension counters at March 31, 2008. Pursuant to the amalgamation of The Sangli Bank Limited with it effective April 19, 2009, it acquired over 190additional branches and extension counters. It continued to expand its electronic channels, namely internet banking, mobile banking, call centers, point of sale terminals and ATMs, and migrate customer transaction volumes to these channels. During fiscal 2009, over 80% of customer induced transactions took place through these electronic channels. It increased its ATM network to 3,271 ATMs.

SMALL AND MEDIUM ENTERPRISES In this segment its strategy has been focused around customer convenience in transaction banking services, and working capital loans to suppliers or dealers of large corporations and clusters of small enterprises that have a homogeneous profile. During fiscal 2009, its customer base increased by more than 50% to over 900,000 transaction banking customers. These customers are serviced by over 580 branches of the Bank, covering over 200 locations. During fiscal 2009, the Emerging India Award entered in the Limca Book of Records as the biggest business award in India.

CORPORATE BANKING Its corporate banking strategy is based on providing comprehensive and customized financial solutions to its corporate customers. It offer a complete range of corporate banking products including rupee and foreign currency debt, working capital credit, structured financing, syndication and transaction banking products and services. Fiscal 2009 saw continuing demand for credit from the corporate sector, with growth and additional investment demand in almost all sectors. It is now a

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preferred partner for Indian companies for syndication of external commercial borrowings and other fund raising in international markets. RURAL BANKING Its rural strategy is based on enhancing value at every level of the supply chain in all important farm and non-farm sectors. Towards this end, it offer a range of financial products and services that cater to the rural masses in all the important sectors like infrastructure, horticulture, food processing, dairy, poultry, seeds, fertilizer and agrochemical industries. Customized financial solutions are offered to individual customers, agric small & medium enterprises, agree corporate and members of their supply chains. On the rural retail side, the Bank offers crop loans, farm equipment financing, commodity-based loans, and working capital loans for agric-enterprises, microfinance loans, jewel loans as well as savings, investment and insurance products. In addition bank is introducing products like rural housing finance to cater to the needs of rural customers. During fiscal 2009, it introduced loans to rural educational institutions for expansion of their facilities. It has developed a hybrid distribution channel strategy, a combination of branch and non-branch channels (credit access points). It has embarked on a no white spaces strategy wherein it aims to setup an ICICI Bank touch point within 10 km of any customer. The amalgamation of Sangli Bank would extend its outreach in rural areas. During fiscal 2009, a provision of Rs. 0.9 billion (USS$ 22 million) was made on account of identified frauds in warehouse receipt financing business of agricultural credit. INTERNATIONAL BANKING ICICI Bank has established a strong franchise among non-resident Indians (NRI). It has established strong customer relationships by offering a comprehensive product suite, technology-enabled access for overseas customers, a wide distribution network in India and alliances with local banks in various markets. It has over 450,000 NRI customers. It has undertaken

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significant brand-building initiatives in international markets and has emerged as a well-recognized financial services brand for NRIs. Its market share in inward remittances into India has increased to over 25%. It has consolidated its global remittance initiative, targeting non-Indian communities, by leveraging its core capabilities of technology-based service delivery. A large number of remittance products were introduced to complement the existing suite of products. The business focus has been on rolling out successful products across multiple geographies and getting into high volume correspondent arrangements.

PRODUCTS AND SERVICES

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

YOUNG STARS ACCOUNT A special portal for children to learn banking basics, manage personal finances and have a lot of fun. BANK@CAMPUS This student banking services gives students access to their account details at the click of a mouse. Plus, the student gets a chequebook, debit card and annual statements.

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

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

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

LIFE INSURANCE The ICICI group provides the many life insurance products through ICICI Prudential Life Insurance Company. GENERAL INSURANCE The ICICI group provides the many general insurance products like motor, travel

and home insurance through ICICI Lombard General Insurance Company. LOANS ICICI bank offers a range of deposits solutions to meet varying needs at every stage of life. It offers a range of tenures and other features to suit all requirements.

HOME LOAN The No. 1 Home Loans Provider in the country, ICICI Bank Home Loans

offers some unbeatable benefits to its customers -Doorstep Service, Simplified Documentation and Guidance throughout the Process. It's really easy!

PERSONAL LOAN

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ICICI Bank Personal Loans are easy to get and absolutely hassle free. With minimum documentation you can now secure a loan for an amount up to Rs. 15 lakhs. VEHICLE LOANS The No. 1 financier for car loans in the country. Network of more than 2500 channel partners in over 1000 locations. Tie-ups with all leading automobile manufacturers to ensure the best deals. Flexible schemes & quick processing are the main advantages are here. Avail attractive schemes at competitive interest rates from the No 1 Financier for Two Wheeler Loans in the country. Finance facility up to 90% of the On Road Cost of the vehicle, repayable in convenient repayment options and comfortable tenors from 6 months to 36 months.

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

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

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

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

MOBILE BANKING Bank on the move with ICICI Bank Mobile Banking. With ICICI Bank, Banking is no longer what it used to be. ICICI Bank offers Mobile Banking facility to all its Bank, Credit Card, Demat and Loan customers. ICICI Bank Mobile Banking can be divided into two broad categories of facilities: Alert facility: ICICI Bank Mobile Banking Alerts facility keeps you informed about the significant transactions in its Accounts. It keeps you updated wherever you go. Request facility: ICICI Bank Mobile Banking Requests facility enables you to query for its account balance.

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

ICICI Bank Tax Saving Bonds 17

 Government of India Bonds Investment in Mutual Funds Initial Public Offers by Corporate Investment in "Pure Gold" Foreign Exchange Services Senior Citizens Savings Scheme, 2 0 0 4 TRADE-SERVICES: ICICI Bank offers online remittances as well as online processing of letters of credit and bank guarantees. ASSET-MANAGEMENT: Prudential ICICI Asset Management Company offers a wide range of retail mutual fund products tailored to suit varied risk and maturity profiles. CASH MANAGEMENT: ICICI Bank offers a complete range of highly customized solutions for managing both the collections and payments requirements of clients by leveraging technology. Daily customized transactions reports and real time webenabled Downloads, provide on-tap information facilitating effective working capital management. CORPORATE BANKING: ICICI Bank offers comprehensive and customized financial syndication products and services. INTERNET BANKING: Internet banking is available to all ICICI bank savings and loan world deposit customers. of account Internet holders, banking with services credit service such card, offers as demat customers balance and a enquiry, solutions for and its corporate transaction clients, including banking rupee and foreign currency debts; working capital credit structured financing

convenience

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transaction

history,

account

statement,

bill

payments,

fund

transfers and accounts related service requests. ATMs: With more than 2500 ATMs across the country, ICICI Bank has one of the largest ATM networks in India PHONE BANKING: Phone banking offers 24*7 service across liability, asset and investment products to both retail and corporate customers. NRI-BANKING: A gamut of services to take care of all NRI banking needs including deposits, money transfers and private banking. MONEY2INDIA: A complete range of online and offline money transfer solutions to send money to India. PROPERTY: For millions of home buyers across the country, ICICI Bank offers not just great deals on home loans but also a wealth of expert advice. ICICI Bank offers home search service which can help a customer identify the property of his choice based on his budget and other requirements.

DEMAT ACCOUNTS: ICICI Banks demat services after unique features like econstructions, consolidation, digitally signed statements, mobile requests and corporate benefit tracking. RURAL-BANKING: areas. MICROFINANCE: ICICI Bank assists over 2.5 million low income clients to build livelihoods by partnering with over 100 microfinance institutions. BRANCHES: ICICI Bank has a network of over 630 branches (of which 51 are extension counters) across the country. The network puts a wide range of banking products and financial services with in easy reach of retail and corporate customers. Bank offers technology-based solutions, financial

innovations and multiple delivery channels to meet the financial needs of rural

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RISK ASPECTS OF ICICI BANK

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

CREDIT RISK Credit risk is the risk that a borrower is unable to meet its financial obligations to the lender. Bank measure, monitor and manage credit risk for each borrower and also at the portfolio level. Bank has standardized credit-approval processes, which include a well-established procedure for comprehensive credit appraisal and rating. ICICI Bank has well developed internal credit rating methodologies for rating obligors. The rating factors in quantitative, qualitative issues and credit enhancement features specific to the transaction. The rating serves as a key input in

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the approval as well as post-approval credit processes. Industry knowledge is constantly updated through field visits and interactions with clients, regulatory bodies and industry experts. In retail credit operations, the Board or a Board Committee approves all products, policies and authorizations. Credit approval authority lies only with the credit officers who are distinct from the sales team. Credit scoring models are used in the case of certain products like credit cards. External agencies such as field investigation agencies and credit processing agencies are used to facilitate a comprehensive due diligence process including visits to offices and homes in the case of loans to individual borrowers. MARKET RISK Market risk is the risk of loss resulting from changes in interest rates, foreign currency exchange rates, equity prices and commodity prices. The objective of market risk management is to minimize the impact of losses on earnings and equity capital due to market risk. Market risk policies include the Investment Policy and the Asset-Liability Management (ALM) Policy. The policies are approved by the Board of Directors. The Asset Liability Management Committee (ALCO) of the Board of Directors stipulate liquidity and interest rate risk limits, monitors adherence to limits, articulates the organizations interest rate view and determines the strategy in light of the current and expected environment. These policies and processes are articulated in the ALPM policy. The investment policy addresses issues related to investment in various trading products. RMG exercises independent control over the process of market risk management and recommends changes in process and methodologies for measuring market risk Interest rate risk is measured through the use of re-pricing gap analysis and duration analysis. Liquidity risk is measured through gap analysis. Bank ensure adequate liquidity at all time through systematic funds planning and maintenance of liquid investment as well as focusing on more stable funding sissies such as retail deposits. ICICI Bank limit exposure to exchange rate risk by stipulating position limits. The treasury Middle Office Group monitors the asset-liability position under the supervision of the ALCO. The Treasury Middle Office Group is also 21

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

SUBSIDIARY COMPANIES
DOMESTIC SUBSIDIARIES ICICI Home Finance Company Limited ICICI Investment Management Company Limited 22

ICICI Lombard General Insurance Company Limited ICICI Prudential Life Insurance Company Limited ICICI Securities Limited ICICI Trusteeship Services Limited ICICI Venture Funds Management Company Limited ICICI Securities Primary Dealership Limited ICICI Prudential Asset Management Company Limited ICICI Prudential Trust Limited

INTERNATIONAL SUSIDIARIES ICICI Bank Canada ICICI Bank Eurasia Limited Liability Company ICICI International Limited ICICI Securities Holding Inc ICICI Securities Inc ICICI Bank U.k. Limited

KEY GROUP COMPANIES

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ICICI PRUDENTIAL INSURANCE COMPANY ICICI Life continued to maintain its market leadership among private sector life insurance companies with a market share of 29% on the basis of weighted received premium. Life insurance companies worldwide make losses in the 24

initial years, in view of business set-up and customer acquisition costs in the initial years as well as reserving for actuarial liability. While the growing operations of ICICI Life had a negative impact of Rs. 480 crore (US$ 110 million) on the Banks consolidated profit after tax in FY2009 on account of the above reasons, the companys unedited New Business Achieved Profit (NBAP) for FY2009 was Rs. 881 crore (US$ 203 million) as compared to Rs. 528 crore (US$ 121 million) in FY2008.

ICICI LOMBARD GENERAL INSURANCE COMPANY ICICI Lombard General Insurance Company (ICICI General) enhanced its leadership position with a market share of about 35% among private sector general insurance companies and an overall market share of about 12.4% during April 2006-February 2009. ICICI Generals gross written premium grew by 89% from Rs. 1,592 crore (US$ 366 million) in FY2008 to Rs. 3,004 crore (US$ 691 million) in FY2009. ICICI General is required to expense upfront, on origination of a policy, all sticking expenses related to the policy. While ICICI Generals profit after tax for FY2009 was Rs. 68 crore (US$ 16 million), its combined ratio for FY2009 was 97%. The combined ratio is the sum of net claims and expenses as a percentage of premiums and indicates the surplus generated on an annualized basis from the business written during a period (excluding investment income). The surplus based on the combined ratio, and investment income aggregated Rs. 180 crore (US$ 41 million) on a pre tax basis in FY2009.

ICICI PRUDENTIAL AMC & TRUST At March 31, 2009, ICICI Prudential Asset Management Company (ICICI AMC) was among the top two asset management companies in India with assets under management of over Rs. 37,900 crore (US$ 8.7 billion). ICICI AMCs profit after

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tax increased by 55% to Rs. 48 crore (US$ 11 million) in FY2009 from Rs. 31 crore in FY2008 (US$ 7 million). ICICI SECURITIES LIMITED The securities and primary dealership business of the ICICI group have been reorganized. ICICI Securities Limited has been renamed as ICICI Primary Dealership Limited. ICICI Brokerage Services Limited has been renamed as ICICI Securities Limited and has become a direct subsidiary of ICICI Bank. Erstwhile ICICI Web trade Limited was amalgamated with ICICI Securities Limited during fiscal 2007. ICICI Securities achieved a profit after tax of Rs. 0.63 billion and ICICI Securities Primary Dealership achieved a profit after tax of Rs. 1.33 billion, in fiscal 2009.

ICICI VENTURE FUNDS MANAGEMENT COMPANY LIMITED ICICI Venture Funds Management Company Limited (ICICI Venture)

strengthened its leadership position in private equity in India, with funds under management of about Rs. 98.00 billion at year-end fiscal 2009. ICICI Venture achieved a profit after tax of Rs. 0.70 billion in fiscal 2009 compared to Rs. 0.50 billion in fiscal 2008.

PUBLIC RECOGNITION
During fiscal 2009, ICICI Bank received several prestigious awards in recognition of overall business strategies, specific objectives and technology focus:

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Bank of the Year 2008 India by The Banker Best Transaction Bank in India by Asset Triple AAA Best Trade Finance in India by Asset Triple AAA Best Domestic Custody in India by Asset Triple AAA Best Bank of the Year 2008 by Business India Business Leadership Award in the Banking category by NDTV National Award for Excellence in Energy Management by CII Most Admired Bank by Business Baron Best Integrated Consumer Bank Site in Asia by Global Finance Best Presentment and Payment in Asia by Global Finance Best Consumer Internet Bank in India by Global Finance Best Corporate/Institutional Internet Bank in India by Global Best Retail Bank India by Asian Banker Excellence in Multi Channel Distribution by Asian Banker Excellence in Automobile Lending Award by Asian Banker Most Trusted Brand Award by Readers Digest Finance Profit

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CHAPTER-2

INTRODUCTION TO TOPIC CHOSEN

A BRIEF INTRODUCTION

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In any organization, the two important financial statements are the Balance Sheet & Profit and loss account of the business. Balance sheet is a statement of the financial position of an enterprise at a particular point of time. Profit and loss account shows the net profit or net loss of a company for a specified period of time. When these statements of the last few year of any organization are studied and analyzed, significant conclusions may be arrived regarding the changes in the financial position, the important policies followed and trends in profit and loss etc. Analysis and interpretation of the financial statement has now become an important technique of credit appraisal. The investors, financial experts, management executives and the bankers all analyze these statements. Though the basic technique of appraisal remains the same in all the cases but the approach and the emphasis in analysis vary. A banker interprets the financial statement so as to evaluate the financial soundness and stability, the liquidity position and the profitability or the earning capacity of borrowing concern. Analysis of financial statement is necessary because it help in depicting the financial position on the basis of past and current records. Analysis of financial statement helps in making the future decision and strategies. Therefore, it is very necessary for every organization whether it is a financial or manufacturing etc. to make financial statement and to analyze it.

STUDY OF PROFIT& LOSS A/C

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MEANING: It is a financial statement, which shows net loss of a company for a specified period. The accounting year means calendar year of 12 months or less or more than 12 months. CONTENTS: This presents the revenues and expenses of a company and shows the excess of revenues over expenses for profit and vice versa for a loss. FORMAT: The Companies act does not provide any specific format for this account. However it is required to be prepared on the basis of the instructions given in part ii of schedule (vi) of the companies act. MAIN ITEMS OF PROFIT AND LOSS ACCOUNT Turnover or sales: The aggregate amount of sales and connected items with the sales such as commission paid to sole-selling agents and other selling agents and brokerage and discounts on sales other than usual trade discount. Depreciation: The amount of depreciation of fixed assets and the arrears of depreciation as per section 205(2) shall be disclosed by way of foot-note. Interest on loans and debentures: Interest on loans and debentures has to be stated separately. It will include the amount of interest paid as well as outstanding. Miscellaneous expenses: In this head items such as rates and taxes, insurance premium etc., must be stated separately. Preliminary expenses: Such expenses include the costs of formation of a company and since their amount is usually large, it is not desirable to write off them in one year. Provision for taxation: The profit and loss account of a company must be debited with the estimated liabilities for tax on the current profits at current rates of taxation.

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Unclaimed dividends: it is shown on the liabilities side of the balance sheet under the heading current liabilities . Interim dividends: It is an item of appropriation. It is transferred to the debit side of the Profit and loss appropriation account. Final dividend as an item of the trial balance: This is shown in the debit side of the appropriation section of the profit and loss account. Proposed dividend or final dividend proposed: Since it is an adjustment item, it has to be shown at two places- In the debit side of the profit and loss appropriation account and on the liabilities side of the balance sheet under the head current liabilities and provisions. Political donations: It must be shown as a separate item in the profit and loss account. Dividend on interest income: This item is transferred to the credit side of the profit and loss account. Payment to auditors: It must be stated separately. This will include consultancy fee, auditing fees management services etc. Managerial remuneration: This includes the payments made to managerial remuneration directors fee, pension, other allowances and commission.

STUDY OF BALANCE SHEET

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

LEARN THE DIFFERENT ASSETS Current assets: Current assets include cash and other assets that in the normal course of events are converted into cash within the operating cycle. For example, a manufacturing enterprise will use cash to acquire inventories of materials. These inventories of materials are converted into finished products and then sold to customers. Cash is collected from the customers. This circle from cash back to cash is called an operating cycle. In a merchandising business one part of the cycle is

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eliminated. Materials are not purchased for conversion into finished products. Instead, the finished products are purchased and are sold directly to the customers. Several operating cycles may be completed in a year, or it may take more than a year to complete one operating cycle. The time required to complete an operating cycle depends upon the nature of the business. It is conceivable that almost all of the assets that are used to conduct your business, such as buildings, machinery, and equipment, can be converted into cash within the time required to complete an operating cycle. However, your current assets are only those that will be converted into cash within the normal course of your business. The other assets are only held because they provide useful services and are excluded from the current asset classification. If you happen to hold these assets in the regular course of business, you can include them in the inventory under the classification of current assets. Current assets are usually listed in the order of their liquidity and frequently consist of cash, temporary investments, accounts receivable, inventories and prepaid expenses. Cash: Cash is simply the money on hand and/or on deposit that is available for general business purposes. It is always listed first on a balance sheet. Cash held for some designated purpose, such as the cash held in a fund for eventual retirement of a bond issue, is excluded from current assets. Marketable Securities: These investments are temporary and are made from excess funds that you do not immediately need to conduct operations. Until you need these funds, they are invested to earn a return. Accounts Receivable: Simply stated, accounts receivables are the amounts owed to you and are evidenced on your balance sheet by promissory notes. Accounts receivable are the amounts billed to your customers and owed to you on the balance sheet's date. You should label all other accounts receivable appropriately and show them apart from the accounts receivable arising in the course of trade. If these other amounts are currently collectible, they may be classified as current assets.

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Inventories: Your inventories are your goods that are available for sale, products that you have in a partial stage of completion, and the materials that you will use to create your products. The costs of purchasing merchandise and materials and the costs of manufacturing your various product lines are accumulated in the accounting records and are identified with either the cost of the goods sold during the fiscal period or as the cost of the inventories remaining. Prepaid expenses: These expenses are payments made for services that will be received in the near future. Strictly speaking, your prepaid expenses will not be converted to current assets in order to avoid penalizing companies that choose to pay current operating costs in advance rather than to hold cash. Often your insurance premiums or rentals are paid in advance. Investments: Investments are cash funds or securities that you hold for a designated purpose for an indefinite period of time. Investments include stocks or the bonds you may hold for another company, real estate or mortgages that you are holding for income-producing purposes. Your investments also include money that you may be holding for a pension fund. Plant Assets: Often classified as fixed assets, or as plant and equipment, your plant assets include land, buildings, machinery, and equipment that are to be used in business operations over a relatively long period of time. It is not expected that you will sell these assets and convert them into cash. Plant assets simply produce income indirectly through their use in operations. Intangible Assets: Your other fixed assets that lack physical substance are referred to as intangible assets and consist of valuable rights, privileges or advantages. Although your intangibles lack physical substance, they still hold value for your company. Sometimes the rights, privileges and advantages of your business are worth more than all other assets combined. Other Assets: During the course of preparing your balance sheet you will notice other assets that cannot be classified as current assets, investments, plant assets, or 34

intangible assets. These assets are listed on your balance sheet as other assets. Frequently, your other assets consist of advances made to company officers, the cash surrender value of life insurance on officers, the cost of buildings in the process of construction, and the miscellaneous funds held for special purposes. LEARN THE DIFFERENT LIABILITIES Current Liabilities: On the equity side of the balance sheet, as on the asset side, you need to make a distinction between current and long-term items. Your current liabilities are obligations that you will discharge within the normal operating cycle of your business. In most circumstances your current liabilities will be paid within the next year by using the assets you classified as current. The amount you owe under current liabilities often arises as a result of acquiring current assets such as inventory or services that will be used in current operations. You show the amounts owed to trade creditors that arise from the purchase of materials or merchandise as accounts payable. If you are obligated under promissory notes that support bank loans or other amounts owed, your liability is shown as notes payable. Other current liabilities may include the estimated amount payable for income taxes and the various amounts owed for wages and salaries of employees, utility bills, payroll taxes, local property taxes and other services. Long-Term Liabilities: Your debts those are not due until more than a year from the balance sheet date are generally classified as long-term liabilities. Notes, bonds and mortgages are often listed under this heading. If a portion of your long-term debt is due within the next year, it should be removed from the long-term debt classification and shown under current liabilities.

Deferred Revenues: Your customers may make advance payments for merchandise or services. The obligation to the customer will, as a general rule, be settled by delivery of the products or services and not by cash payment. Advance

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collections received from customers are classified as deferred revenues, pending delivery of the products or services. Owner's Equity: Your owner's equity must be subdivided on your balance sheet: One portion represents the amount invested directly by you, plus any portion of retained earnings converted into paid-in capital. The other portion represents your net earnings that are retained. This rigid distinction is necessary because of the nature of any corporation. Ordinarily, stockholders, or owners, are not personally liable for the debts contracted by a company. A stockholder may lose his investment, but creditors usually cannot look to his personal assets for satisfaction of their claims. Under normal circumstances, the stockholders may withdraw as cash dividends an amount measured by the corporate earnings. The distinction in this rule gives the creditors some assurance that a certain portion of the assets equivalent to the owner's investment cannot be arbitrarily withdrawn. Of course, this portion could be depleted from your balance sheet because of operating losses. The owner's equity in an unincorporated business is shown more simply. The interest of each owner is given in total, usually with no distinction being made between the portion invested and the accumulated net earnings. The creditors are not concerned about the amount invested. If necessary, creditors can attach the personal assets of the owners. Basis of balance-sheet: Assets = Liability + Equity BALANCE-SHEET STRUCTURE The following Balance sheet structure is just an example. It does not show all possible kind of assets, equity and liabilities, but it shows the most usual ones. It could be a consolidated balance sheet. Monetary values are not shown and summary (total) rows are missing as well.

Assets
Current Assets

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Cash and cash equivalents Inventories Account receivable Investment held for trading other current assets Non-Current Assets Property, plant and equipment Goodwill Other intangible fixed assets Investment in associates Deferred tax assets Miscellaneous Expenditure

Equity and Liabilities

Capital & Reserve Share capital reserve Revaluation reserve Translation reserve Retained earnings Minority interest Non-Current Liabilities Bank loan Issued debt securities deferred tax liability Current Liabilities Accounts payable Current income tax liability Short-term part of bank loans Short-term provisions Other current liabilities EQUITY VALUATION: The real value to a purchaser of the business or a shareholder may be different from the net assets shown by the balance sheet. This is because factors that affect the value of a business may not be recorded yet. For example, a purchaser will be interested in the future earnings of the business, whether assets such as property have been revalued recently, and whether there are potential liabilities in the future such as lawsuits. The value of the assets in the balance has also been based on the assumption that the business is a going concern;

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otherwise the break-up value of the assets may be far less than the value in the balance sheet. PREPAIRING A BALANCE-SHEET Title and Heading: In practice, the most widely used title is Balance Sheet; however Statement of Financial Position is also acceptable. Naturally, when the presentation includes more than one time period the title "Balance Sheets" should be used. Heading: In addition to the statement title, the heading of your balance sheet should include the legal name of your company and the date or dates that your statement is presented. For example, a comparative presentation might be headed: XYZ CORPORATION BALANCE SHEETS December 31, 2009 Format: There are two basic ways that balance sheets can be arranged. In Account Form, your assets are listed on the left-hand side and totaled to equal the sum of liabilities and stockholders' equity on the right-hand side. Another format is Report Form, a running format in which your assets are listed at the top of the page and followed by liabilities and stockholders' equity. Sometimes total liabilities are deducted from total assets to equal stockholders' equity. Captions: Captions are headings within your statement that designate major groups of accounts to be totaled or subtotaled. Your balance sheet should include three primary captions: Assets, Liabilities and Stockholders' Equity. In the report form of presentation, the placement of your primary captions would be as follows: 2008 ASSETS, LIABILITIES AND STOCKHOLDERS EQUITY. Except in certain specialized industries your balance sheet should include the following secondary captions: CURRENT ASSETS CURRENT LIABILITIES

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Order of Presentation of Captions: First, start with items held primarily for conversion into cash and rank them in the order of their expected conversion. Then, follow with items held primarily for use in operations but that could be converted into cash, and rank them in the order of liquidity. Finally, finish with items whose costs you will defer to future periods or that you cannot convert into cash. Following these guidelines, your major assets should normally be presented in the following order: Cash Short-term marketable securities Trade notes and accounts receivable Inventories Long-term investments Property and equipment Intangible assets Deferred charges Liabilities are ordinarily presented in the order of maturity as follows: Demand notes Trade accounts payable Accrued expenses Long-term debt Other long-term liabilities

Components of stockholders' equity are usually presented the following Order: Preferred stock Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock

STUDY OF CASH FLOW STATEMENT

39

MEANING: Cash flow statement or statement of cash flows is a financial statement that shows a company's incoming and outgoing money (sources and uses of cash) during a time period (often monthly or quarterly). The statement shows how changes in balance sheet and income accounts affected cash and cash equivalents, and breaks the analysis down according to operating, investing, and financing activities. As an analytical tool the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills. PURPOSE: The cash flow statement reflects a firms liquidity or solvency. The main purposes to make cash flow statement are as follows: 1. Provide information on a firm's liquidity and solvency and its ability to change cash flows in future circumstances 2. Provide additional information for evaluating changes in assets, liabilities and equity 3. Improve the comparability of different firms' operating performance by eliminating the effects of different accounting methods 4. Indicate the amount, timing and probability of future cash flows ACTIVITIES INVOLVED IN CASH FLOW: The cash flow statement is partitioned into cash flow resulting from operating activities, cash flow resulting from investing activities, and cash flow resulting from financing activities. Operating activities: Operating activities include the production, sales and delivery of the company's product as well as collecting payment from its customers. This could include purchasing raw materials, building inventory, and advertising. Investing activities: Investing activities focus on the purchase of the long- term assets a company needs in order to make and sell its products, and the selling of any long-term assets.

40

Financing activities: Financing activities include the inflow of cash from investors such as banks and shareholders, as well as the outflow of cash to shareholders as dividends as the company generates income. Other activities which impact the long-term liabilities and equity of the company are also listed in the financing activities section of the cash flow statement. Analysis of cash flow statement is necessary for every organization to depict its cash inflow and outflow.

FINANCIAL STATEMENT ANALYSIS

MEANING: Financial statement analysis is the process of examining relationships among financial statement elements and making comparisons with relevant information. It is a valuable tool used by investors and creditors, financial analysts, and others in their decision-making processes related to stocks, bonds, and other financial instruments. With a great understanding of the balance sheet & p&l account and how it is constructed, we can look at some techniques to analyze the information contained within the balance sheet & p&l account. PURPOSE: The main purposes of analyzing the financial statement are the following: To assess past performance and current financial position. To make predictions about the future performance of a company.

TOOLS FOR ANALYSING 1. PERCENTAGE CALCULATION

41

There are two popular methods by which we can analyze the financial statement by calculating percentage as taking a common base. Horizontal Analysis When an analyst compares financial information for two or more years for a single company, the process is referred to as horizontal analysis, since the analyst is reading across the page to compare any single line item, such as sales revenues. In addition to comparing dollar amounts, the analyst computes percentage changes from year to year for all financial statement balances, such as cash and inventory. Alternatively, in comparing financial statements for a number of years, the analyst may prefer to use a variation of horizontal analysis called trend analysis. Trend analysis involves calculating each year's financial statement balances as percentages of the first year, also known as the base year. When expressed as percentages, the base year figures are always 100 percent, and percentage changes from the base year can be determined. If we want to calculate % change in sales then we apply the following formula: Percentage=change in sales /Base Year Sales*100 Vertical Analysis When using vertical analysis, the analyst calculates each item on a single financial statement as a percentage of a total. The term vertical analysis applies because each year's figures are listed vertically on a financial statement. The total used by the analyst on the income statement is net sales revenue, while on the balance sheet it is total assets. This approach to financial statement analysis, also known as component percentages, produces common-size financial statements. Common-size balance sheets and income statements can be more easily compared, whether across the years for a single company or across different companies. If we want to calculate % change of current assets then we apply the following formula: Percentage: current assets/total assets*100

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2. RATIO ANALYSIS Financial ratio analysis uses formulas to gain insight into the company and its operations. For the balance sheet, using financial ratios (like the debt-to-equity ratio) can show you a better idea of the companys financial condition along with its operational efficiency. It is important to note that some ratios will need information from more than one financial statement, such as from the balance sheet and the income statement. Ratio analysis facilitates inter-firm and intra- firm comparison. Ratios are often classified using the following terms: LIQUIDITY RATIO Liquidity ratios are measures of the short-term ability of the company to pay its debts when they come due and to meet unexpected needs for cash. Current Ratio: The current ratio is a rough indication of a firm ability to service

its current obligations. Generally, the higher the current ratio, the greater the cushion between current obligations and a firm ability to pay them. The stronger ratio reflects a numerical superiority of current assets over current liabilities Current ratio is calculated as follows: Current ratio= Current Assets/Current Liabilities Quick Ratio: It is also known as the acid test ratio; this is a refinement of

the current ratio and is a more conservative measure of liquidity. The quick ratio expresses the degree to which a companys current liabilities are recovered by the most liquid current assets. Quick ratio is calculated as follows: Quick ratio= (cash + marketable securities + Receivables)/current Liabilities

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

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Debt/Worth Ratio: This ratio expresses the relationship between capital contributed by creditors and that contributed by owners. It expresses the degree of protection provided by the owners for the creditors. The higher the ratio, the greater the risk being assumed by creditors. The lower the ratio, the greater the long-term financial safety. A firm with a low debt/worth ratio usually has a greater flexibility to borrow in the future. A more highly leveraged company has a more limited debt capacity. Debt/worth ratio=Total Liabilities / Tangible Net Worth PROFITABILITY RATIO Profitability ratios are gauges of the company's operating success for a given period of time. Return on Assets: Return on assets is a measure of Return on Assets= Net Income/Total Assets Return on Equity: Return on equity is the bottom line measure for the shareholders, measuring for the profits earned for each rupee invested in business. It is calculated as follows: Return on Equity= Net income/shareholders equity Fixed/Worth Ratio: This ratio measures the extent to which owners equity (capital) has been invested in plant and equipment (fixed assets). A lower ratio indicates a proportionately smaller investment in fixed assets in relation to net worth and a better cushion for creditors in case Of liquidation. Similarly, a higher ratio would indicate the opposite situation. The presence of substantial leased fixed assets (not shown on the balance sheet) may deceptively lower this ratio. Fixed Worth Ratio=Net Fixed Assets/ Tangible Net Worth how effectively the

firms assets are being used to generate profit. It is calculated as follows:

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CHAPTER-3
OBJECTIVES

OBJECTIVE

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

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CHAPTER-4

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

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Data Collection Techniques: This project consists of two parts. The first part is a study of the banking industry, ICICI Bank using secondary data sources. This secondary information has been sourced from the internet and from business related magazines and newspapers. The second part of the study has been done using an exploratory research process and a structured questionnaire was developed for this purpose. For the collection of primary data this was the only method used. The reason I used this method is because a need was felt for the free influx of information about the products. Also this method allowed the use of skills gained in class. Sample Design: The population considered for the purpose of the survey was people residing in Delhi and the National Capital Region (NCR). Sampling Technique Used: Since the information required was not of a very technical nature and also looking at the scope of the project and the extent of the target segment, the sampling technique employed was Convenience Sampling. I administered the questionnaires. Sample Size: I have restricted the sample size to 50 respondents. This was done keeping in mind the time constraints and the fact that I felt that this number would be enough to serve the information needs required to show the trends.

Customer Satisfaction:

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Customer satisfaction is equivalent to making sure that product and service performance meets customer expectations. It is the perception of the customer that the outcome of a business transaction is equal to or greater than his/her expectation. Customer satisfaction occurs when the acquisition of products and /or services provides a minimum negative departure from expectations when compared with other acquisitions and when the marginal utility of a transaction is equal to or greater than preceding acquisitions. A service by the customer meets or exceeds his/her perceived sacrifice. The perception is a consequence of matching past purchase and consumption experience with the current purchase. Customer Service and Satisfaction: When we talk about customer service and/or satisfaction, we talk about creativity. Creativity allows us to handle or diffuse problems at hand or later on rather in the process of conducting the everyday business. We talk about how, or what, does the organization have to do to gain not only the sale but also the loyalty of the customer. We want to know the payoff of the transaction both in the short and long term. We want to know what our customers Want? We want to know if our customers are satisfied. Satisfaction, Of course, means that what we delivered to a customer met the customers Approval. We want to know if customers are delighted and willing to come Back, and so on. Fleiss 2 and Feldman 3 present examples of that delightfulness in their writings. Fleiss has written about Ben and Jerrys ice cream and Feldman has discussed excellence in a cab ride. As important as delightfulness is, some of us minimize it, or even totally disregard it. At this point, we fail. Some of the issues that will guarantee failure in sales, satisfaction, and loyalty are: Employees must adhere to a rigid chain of command

Employees are closely supervised

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Conflictin whatever formis not allowed

Rewards are based on carrot-and-stick principles

Wrong objectives are measure.

We must understand customer expectation levels concerning quality. We must also understand the strategy for customer service quality, and next we must understand the measurement and feedback cycles of Customer satisfaction. The customer is the person or unit receiving the output of a process on the system. In fact, it is Worth emphasizing that a customer can be the immediate, intermediate, or ultimate customer. Also, a customer may be a person or persons, or a process or processes. Customer satisfaction, however, is when the customer is satisfied with a product/service that meets the customers needs, wants, and expectations. There are at least three levels of customer expectations about quality: Level 1. Expectations are very simple and take the form of assumptions, must have, or take it For granted. For example, I expect the airline to be able to take off, fly to my destination, and land safely. I expect to get the correct blood for my blood transfusion and I expect the bank to deposit my money to my account and to keep a correct tally for me. Level 2. Expectations are a step higher than that of level 1 and they require some form of Satisfaction through meeting the requirements and/or specifications. For example, I expect to be treated courteously by all airline personnel. I went to the hospital expecting to have my hernia repaired, to be in some pain after it was done, to be out on the same day, and to receive a correct bill. And I went to the bank expecting the bank teller to be friendly, informative, and helpful with my transactions. 50

Level 3. Expectations are much higher than for levels 1 and 2. Level 3 requires some kind of Delightfulness or a service that is so good that it attracts me to it. For example, an airline gives Passengers traveling coach class the same superior food service that other airlines provide only for first-class passengers. In fact, I once took a flight where the flight attendants actually baked Cookies for us right there on the plane. When I went to the hospital, I expected staff to treat me with respect and they carefully explained things to me. But I was surprised when they called me at home the next day to find out how I was doing. And at my house closing, the bank officer, representing the bank holding my mortgage, not only treated me with respect and answered all my questions about my new mortgage, but just before we shook hands to close the deal, he gave me a housewarming gift.

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CHAPTER-5
ANALYSIS AND INTERPRETATION OF DATA

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MANAGEMENT DISCUSSION & ANALYSIS

SUMMARY: Profit before provisions and tax increased 51.1% to Rs. 58.74 billion in fiscal 2009 from Rs. 38.88 billion in fiscal 2008 primarily due to an increase in net interest income by 40.9% to Rs. 66.36 billion in fiscal 2009 from Rs. 47.09 billion in fiscal 2008 and an increase in non- interest income by 39.4% to Rs. 59.14 billion in fiscal 2009 from Rs. 42.42 billion in fiscal 2008, offset, in part, by an increase in non- interest expenses by 33.8% to Rs. 66.91 billion in fiscal 2009 from Rs. 50.01 billion in fiscal 2008. Provisions increased significantly during fiscal 2009 due to higher provisions created on standard assets and lower level of write-backs. Profit before general provisioning and tax increased 27.4% to Rs. 43.79 in fiscal 2009 from Rs. 34.36 billion in fiscal 2008. Profit after tax increased 22.4% to Rs. 31.10 billion in fiscal 2009 from Rs. 25.40 billion in fiscal 2008. Net interest income increased 40.9% to Rs. 66.36 billion in fiscal 2007 from Rs. 47.09 billion in fiscal 2008, reflecting an increase of 49.8% in the average volume of interest-earning assets. Non-interest income increased by 39.4% to Rs. 59.14 billion in fiscal 2009 from Rs. 42.42 billion in fiscal 2008 primarily due to a 45.4% increase in fee income. Non-interest expenses increased 33.8% to Rs. 66.91 billion in fiscal 2009 from Rs. 50.01 billion in fiscal 2008 primarily due to49.4% increase in employee expenses and 41.9% increase in other administrative expenses. Provisions and contingencies (excluding provision for tax) increased to Rs. 22.26 billion in fiscal 2009 from Rs. 7.92 billion in fiscal 2008 primarily due to higher provisions created on standard assets in accordance with the

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revised guidelines issued by RBI, a higher level of specific provisioning on retail loans due to change in the portfolio mix towards non collateralized loans and seasoning of the loan portfolio and lower level of write-backs. Total assets increased 37.1% to Rs. 3,446.58 billion at year-end fiscal 2009 from Rs. 2,513.89 billion at year-end fiscal 2008 primarily due to an increase in loans by 34.0% and an increase in investments by 27.5%. FEE INCOME Fee income increased by 45.4% to Rs. 50.12 billion in fiscal 2009 from Rs. 34.47 billion in fiscal 2008 primarily due to growth in fee income from retail products and services, including fee arising from retail assets products and retail liability related fee income like account servicing charges and third party distribution fees. Fees from corporate banking and international business also witnessed a strong growth.

TREASURY INCOME The gross treasury income increased to Rs. 10.14 billion in fiscal 2009 from Rs. 7.40 billion in fiscal 2008 primarily due to higher level of gains from equity divestments, offset in part by 24.6% increase in premium amortization on Government securities to Rs. 9.99 billion in fiscal 2009 from Rs. 8.02 billion in fiscal 2008 and lower profits on proprietary trading as a result of the sharp fall in the equity markets in May 2008 and adverse conditions in debt markets. The amortization of premium on Government securities contingencies which has was been earlier shown under as provisions from and

reclassified

income

treasury-related

activities as per the revised guidelines of RBI.

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LEASE & OTHER INCOME Lease income decreased by 34.1% to Rs. 2.38 billion in fiscal 2009 from Rs. 3.61 billion in fiscal 2008 primarily because of a decrease in leased assets to Rs. 10.03 billion at year-end fiscal 2009 compared to Rs. 11.74 billion at year-end fiscal 2008 since we are not entering into new lease transactions. Other income increased by 53.0% to Rs. 6.64 billion for fiscal 2009 compared to Rs. 4.34 billion in fiscal 2008 primarily due to increase in income by way of dividend from our subsidiary companies and increase in profit on sale of land, buildings and other assets. PROVISIONS AND TAX Provisions and contingencies (excluding provision for tax) increased to Rs. 22.26 billion in fiscal 2009 from Rs. 7.92 billion in fiscal 2008 primarily due to higher provisions created on standard assets, in accordance with the revised guidelines issued by RBI, a higher level of specific provisioning on retail loans due to change in the portfolio mix towards non collateralized loans and seasoning of the loan portfolio and lower level of write-backs. Its total assets increased by 37.1% to Rs. 3,446.58 billion at year-end fiscal 2009 from Rs. 2,513.89 billion at year-end fiscal 2008 primarily due to increase in advances and investments. Net advances increased by 34.0% to Rs. 1,958.66 billion at year-end fiscal 2009 from Rs. 1,461.63 billion at year-end fiscal 2008 primarily due to increase in retail advances in accordance with our strategy of growth in our retail portfolio, offset, in part, by reduction in advances due to repayments and securitization. Retail advances increased 38.5% to Rs. 1,277.03 billion at year-end fiscal 2009 from Rs. 921.98 billion at year-end fiscal 2008. Total investments at year-end fiscal 2009 increased by 27.5% to Rs. 912.58 billion compared to Rs. 715.47 billion at year-end fiscal 2008 primarily due to 31.9% increase in investment in Government and other approved

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securities in India to Rs. 673.68 billion at year-end fiscal 2009 from 510.74 billion at year-end fiscal 2008 in line with the increase in our net demand and time liabilities. Banks in India are required to maintain a specified percentage, currently 25.0%, of their net demand and time liabilities by way of liquid assets like cash, gold or approved unencumbered securities. Other investments (including debentures and bonds) increased by 16.7% to Rs. 238.90 billion at year-end fiscal 2009 compared to Rs. 204.73 billion at year-end fiscal 2008, reflecting an increase in investments in insurance and international subsidiaries, pass through certificates and credit linked notes. Total assets (gross) of overseas branches (including overseas banking unit in Mumbai) increased by 90.2% to Rs. 524.71 billion at year-end fiscal 2009 from Rs. 275.86 billion at year-end fiscal 2008. Its equity share capital and reserves at year-end fiscal 2009 increased to Rs. 243.13 billion as compared to Rs. 222.06 billion at year-end fiscal 2008 primarily due to retained earnings for the year and exercise of employee stock options. As per the transition provision of Accounting Standard 15 - (Revised) on for the retirement in benefits the in financial on account statements of of

Accounting employer,

difference

liability

retirement

benefits created by the Bank at March 31, 2008 due to the revised standard have been adjusted in Reserves and Surplus. Total deposits increased 39.6% to Rs. 2,305.10 billion at year end fiscal 2009 from Rs. with 1,650.83 our billion of at year-end to Rs. fiscal 2008. through This at is commensurate Our savings fiscal from Rs. year-end 2009 from focus deposits to Rs. increased funding deposits.

account increased 41.3%

increased 213.76

288.38 at

billion

2009 from Rs. 209.37 billion at year-end fiscal 2008, while current deposits Rs. billion billion at 56 year-end fiscal 2009 Rs. 165.73 billion at year-end fiscal 2008. Term deposits increased by to 1,802.96 year-end fiscal

1,275.73 billion at yearend fiscal 2008. Total deposits at year-end fiscal 2009 constituted and 486.66 increased to 76.5% Rs. at of debts). 706.61 year-end our billion fiscal funding at (i.e. (including year-end primarily deposit, fiscal due 2009 to borrowings debt) Rs. in from increase subordinated billion Borrowings 2008 subordinated

borrowings of foreign branches. Contingent liabilities increased by 42.5% or Rs. 1,679.25 billion to Rs. 5,629.60 billion at year-end fiscal 2009 from Rs. 3,950.35 billion at yearend fiscal 2008 primarily due to a 35.4% increase in interest rate swaps and currency options and a 45.0% increase in liability on account of outstanding forward exchange contracts. NPAS (NON PERFORMING ASSETS)

The ratio of net non-performing assets to net customer assets increased to 0.98% at yearend fiscal 2009 compared to 0.71% at year-end fiscal 2008. At year-end fiscal 2009, the gross non- performing assets (net of write-offs and unpaid interest) were Rs. 41.68 billion compared to Rs. 22.73 billion at year end fiscal 2008. Gross of technical write-offs, the gross non-performing assets at year- end fiscal 2009 were Rs. 48.50 billon compared to Rs. 29.63 billion at year-end fiscal 2008. The coverage ratio (i.e. total provisions and technical write-offs made against non-performing assets as a percentage of gross non performing assets) at year-end fiscal 2009 was 58.37% compared to 63.72% at year-end fiscal 2008. In addition, total general provision made against standard assets was Rs. 12.95 billion at year-end fiscal 2009. Our investments in security receipts issued by Asset Reconstruction Company (India) Limited, a reconstruction company registered with RBI were Rs. 25.38 billion at year-end fiscal 2009. Our net restructured standard loans decreased from Rs. 53.16 billion at year-end fiscal 2006 to Rs. 48.83 billion at yearend fiscal 2009. The effective tax rate of 14.7% for fiscal 2009 was lower compared to the statutory tax rate of 33.66% primarily due to confessional rate of tax on

57

capital gains, exemption of dividend income, deduction towards special reserve and deduction of income of offshore banking unit. March March YEAR ENDED 31, 2007 31, 2008 March 31, 2009

GROSS NPA NET NPA NET CUSTOMER ASSETS

34.37 19.83 978.94

22.73 10.75 1,520.07

41.68 20.19 2,053.74

% OF NET NPA TO NET CUSTOMER ASSETS

2.03%

0.71%

0.98%

DIVIDEND The Board has recommended a higher dividend of 100% for FY2009 i.e. Rs. 10 per equity share (equivalent to US$ 0.46 per ADS) as compared to 85% for FY2008 primarily due to higher provisions created on standard assets, a higher level of specific provisioning on retail loans. CONSOLIDATED PROFIT The consolidated profit after tax increased 14% to Rs. 2,761 crore (US$ 635 million) in FY2009 from Rs. 2,420 crore (US$ 557 million) in FY2008. The consolidated profit was lower than the standalone profit due to the accounting losses of ICICI Prudential Life Insurance Company (ICICI Life). Its profit under US GAAP accounts was Rs. 31.27 billion as compared to consolidated profit of Rs. 27.61 billion under Indian GAAP in fiscal 2009.

COMPARATIVE INCOME STATEMENT

TREND ANALYSIS

58

PARTICULARS Interest income Interest expense Net interest income Non-interest income Fee income Lease income Others Core operating income Operating expenses Direct marketing agency (DMA) expense Lease depreciation, net of lease equalization Core operating profit Net treasury income Operating profit Provisions, net of writebacks Profit before tax Tax, net of deferred tax Profit after tax

SUMMARISED PROFIT & LOSS A/C (ON 31 MARCH, 2009) 2007 Rs. 2008 Rs. 2009 Rs. % Change (2008) 94.10 143.06 229.94 45.6% 65.71 95.97 163.8 46.1% 28.39 47.09 66.36 47.5% 27.05 20.98 4.01 2.06 55.44 25.14 4.85 42.42 34.47 3.61 4.34 89.51 35.47 11.77 59.14 50.12 2.38 6.64 125.50 49.79 15.24 49.9% 55.3% 10.0% 11102% 48.7% 40.9% 35.1%

% Change (2009) 60.7% 70.4% 40.9% 39.4% 45.4% 34.1% 53.0% 40.2% 40.3% 29.5%

2.97

2.77

1.88

6.7

31.9

22.45 29.56 4.29

39.5 0.62 38.88 7.92

58.59 0.15 58.74 22.26

67.6% 58.7% 84.67%

48.3% 51.1% 181.1%

25.27 5.22 20.05

30.97 5.56 25.40

36.48 5.38 31.10

22.6% 6.7% 26.7%

17.8% 3.2 22.7%

By analyzing the summarized profit & loss account of ICICI Bank, the following trends are presented:

59

 Operating profit increased 51% to Rs. 5,874 crore for FY2009 from Rs. 3,888 crore for FY2008 which is less than as compared to increased 58.7% to Rs. 3,888 crore for FY 2008 from Rs. 2,956 crore for FY2007. Profit after tax increased 22% to Rs. 3,110 crore for FY2009 from Rs. 2,540 crore for FY2008 which is less than as compared to increased 26.7% to Rs. 2,540 crore for FY2008 from Rs. 2,005 crore for FY2007. Profit before tax increased 18% to Rs. 3,648 crore for FY2009 from Rs. 3,097 crore for FY2008 which is also less than as compared to increased to 22.6 % to Rs. 3,097 crore for FY2008 from Rs. 2,527 crore for FY2007. Net interest income increased 41% to Rs. 6,636 crore for FY2009 from Rs. 4,709 crore for FY2008 which is less than as compared to increased 47.5% to Rs. 4,709 crore for FY2008 from Rs. 2,839 crore for FY2007. Fee income increased 45% in 2009 which is less than as compared to 55.3% increased in 2008 Interest expenses increased at a very high rate from 46.1% in 70% in FY2009. Interest income is increased at a higher rate than the previous 47% in 2008 to 61% in 2009. Increase in non-interest income is less than in 2009 49% as increase in 2008 39%. Provision is increased at a high rate as compared to previous in 2008 to 181% in 2009. FY2008 to year i.e.

compared to

years 85%

COMPARATIVE FINANCIAL POSITION STATEMENT

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TREND ANALYSIS SUMMARIZED BALANCE-SHEET (ON MARCH 31, 2009) PARTICULARS Cash balance with banks & SLR -Cash & Bank Balances -SLR Investment Advances Other Investment Fixed & other Assets TOTAL ASSETS Net worth -Equity Capital -Reserves Preference Capital Deposits Erstwhile ICICI Borrowings Other Borrowing Other Liabilities TOTAL LIABILITIES 2007 Rs. 47,412 12,930 34,482 91,705 2,857 12,836 167,659 12,550 734 11,813 350 99,819 19,348 22,405 13,187 167,659 2008 Rs. 68,115 17,010 51,075 146,163 20,473 16,638 251,389 22,206 890 21,316 350 165,083 13,190 35,477 15,083 251,389 2009 Rs. 104,489 37,121 67,368 195,866 23,890 20,413 344,658 27,313 899 23,414 350 230,510 10,837 59,823 18,824 344,658 (Rs In crore) %Change %Change in (2008) in (2009) 43.7 53 31.8 48.1 59.9 41.9 29.6 49.9 76.9 20.8 80.7 65.4 31.16 58.2 14.4 49.9 40 18 69 25 37 118 32 34 17 23 37 9 1 10

By analyzing the balance sheet of ICICI Bank, the following trends are presented:

Total assets and total liabilities are increased in 2009 from Rs. 251389 crore to Rs. 344658 Crore i.e. 37% which is less than as compared to increase in 2008 from Rs. 167659 crore to Rs. 251389 crore i.e. 49.9%. Increase in cash balance with bank in 2009 is more 2008. In 2008 it is 32% and in 2009 it is 118%. than in the previous year

61

 But increase in SLR investment in 2009 is less than the it is 48% and in 2009 it is 32%.

previous year. In 2008 is less than as

Increase in advances in 2009 is 60% from 2008 which compared to increase in advances in 2008 is 34% from 2007. Increase in fixed and other assets is also less than in as compared to 30% in 2006 from 2007.

2009 from 2008 i.e. 23% but rate of decreasing

Erstwhile ICICI borrowings is decreasing in both years is less in 2009 i.e. 18% but in 2008 it is 31%. Increase in net worth is also less than from previous 2008 to 9% in 2009.

year in 2009 i.e. 80% in

Increase in equity capital is only 1% in 2009 whereas in 2008 it is 21% and increase in reserve in 2009 is very less as compared to increase in 2008 i.e. from 10% to 80%. 40%Deposits is increased in 2009 from 2008 which is to 65% increase in deposits in 2006 from 2007. Increase in other liabilities is more in 2009 than in 2008 to 25% in 2009. less than as compared i.e. from 14% in 2008 more than as

69%borrowing is increased in 2009 from 2008 which is compared to 58% increase in borrowing in 2008 from 2007.

RATIO ANALYSIS
1) CURRENT RATIO: Current Ratio= Current Assets/Current Liabilities In 2008: Current Assets=170.40+1461.63=1632.03 billion (cash + advances)

62

Current Liabilities=165.73+354.77+131.90=652.40billion borrowings) Current Ratio=1632.03/652.40=2.5:1

(short-term

deposits+

In 2009: Current Assets=371.21+1958.66=2329.87billion (cash + advances) Current Liabilities=213.76+108.37+598.23=920.36 billion (short-term deposits+ borrowings) Current Ratio=2329.87/920.36=2.6:1 2) QUICK RATIO: Quick Ratio=Quick Assets/Current Liabilities In 2008: Quick Assets=170.40billion (cash in hand and other bank) Current Liabilities=652.40billion Quick Ratio=170.40/652.40=0.26:1 In 2009: Quick Assets=371.21billion (cash in hand and other bank) Current Liabilities=920.30billion Quick Ratio=371.21/920.30=0.40:1 3) RETURN ON AVERAGE ASSETS: Return on average assets= Net income/average assets*100 average assets= total assets at the beginning + total assets at the end/2 In 2008: net income=25.40 billion Average assets= (1676.59+ 2513.89)/2= 2095.24 Return on average assets= 25.40/2095.24*100 =1 .2 1 % In 2009: net income= 31.10 billion Average assets= (2513.89+ 3446.58)/2= 2980.24 Return on average assets= 31.10/2980.24*100=1.04% 4) RETURN ON AVERAGE EQUITY: Return on average equity = Net income/average equity*100 average equity= total equity at the beginning + total equity at the end/2 In 2008: net income=25.40 billion Average equity= (129.00+225.56)/2= 177.28 Return on average equity= 25.40/177.28*100 =1 7 .5 4 % In 2009: net income= 31.10 billion Average equity= (225.56+246.63)/2= 236.10 Return on average equity = 31.10/236.10*100=13.17%

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5) FIXED/WORTH RATIO: Fixed Worth Ratio=Net Fixed Assets/ Tangible Net Worth In 2008: Net Fixed Assets= 39.80 billion Tangible Net Worth= 225.55 billion Fixed Worth Ratio=39.80/225.55=0 .1 8: 1 In 2009: Net Fixed Assets= 39.23 billion Tangible Net Worth= 246.62 billion Fixed Worth Ratio=39.23/246.62 =0 .1 6: 1 6) OPERATING PROFIT TO WORKING FUNDS Operating Profit to Working Funds=operating profit/ average assets*100 In 2008: Operating profit=38.80 billion Average assets=2095.24 Operating profit to working fund=38.80/2095.24*100= 1.85% In 2009: Operating profit=58.84 billion Average assets=2980.84 Operating profit to working fund=58.84/2980.84*100= 1.98% RATIOS Current Ratio Quick Ratio Return On Assets Return On Equity Fixed/worth Ratio Operating profit working funds 2008 2.5:1 0.26:1 121% 17.54% 0.18:1 1.85% (Approximately) 2009 2.6:1 0.40:1 1.04% 13.17% 0.16:1 1.98%

to

The above table shows that: - both current ratio and quick ratio is liquidity ratio. The ideal ratio for current ratio is 2:1 and ideal ratio for quick ratio is 1:1. In this table current ratio of both years is higher than the ideal ratio which shows that there are enough current assets which make the bank able to pay its current liabilities on time

64

but quick ratio is lower than the ideal ratio which shows that bank have not enough liquid assets to pay their current liabilities. Therefore bank should keep some assets in the form of liquid assets such as cash, marketable securities etc. Return on equity, return on assets and operating profit to working funds are profitability ratio. The higher the profitability ratio of any organization is show the better position of that organization. The profitability ratio of ICICI bank is very low. It is deceasing from the previous year. Fixed/worth ratio measures the extent to which owners equity has been invested in plant and equipment. A lower ratio indicates a proportionately smaller investment in fixed assets. This ratio shows that bank has invested more in current assets than the fixed assets. It could be a good position in case of liquidation.

CASH FLOW STATEMENT

(AS ON YEAR ENDED ON 31ST MARCH, 2009) PARTICULAR FY 2009 Cash flow from operating activities Net Profit before taxes 36,480,391 65 (rs. In 000s) FY 2008 30,966,076

Adjustments for: Depreciation and amortization Net (appreciation) / depreciation on investments Provision in respect of non-performing assets Provision for contingencies & others Dividend from subsidiaries (Profit) / Loss on sale of fixed assets Adjustment for: Increase/decrease in investments Increase/decrease in advances Increase/decrease in borrowings Increase/decrease in deposits Increase/decrease in other assets Increase/decrease in other liabilities and provisions Refund/(payment) of direct taxes Net cash generated from operating activities(A) Cash flow from investing activities Investments in subsidiaries and/or joint ventures Income received on above investments 66

7,639,002 9,918,419

9,021,206 8,301,403

21,592,999

7,947,244

251,311 4,487,915 1,152,224 70,244,982 19,666,157 511,255,267 57,039,927 654,270,149 28,758,999 26,886,199

226,801 3,386,929 71,222 53,004,579 141,019,247 552,112,941 65,476,052 652,643,939 36,704,232 13,861,469

178,515,85 18,141,312 230,619,52 2 15,758,166

2,145,040 8,620,283 46,529,336

8,509,194

4,487,915

3,386,929

Purchase of fixed assets Proceeds from sale of fixed assets (Purchase)/sale of held to maturity securities Net cash generated from investing activities(B) Cash flow from financing activities Proceeds from issue of share capital Net proceeds/(repayment) of bonds Dividend and dividend tax paid Net cash generated from financing activities(C) Effect of exchange fluctuation on translation reserve(D) Net increase/(decrease) in cash and cash equivalents)(A+B+C+D Cash and cash equivalents at 1st April Cash and cash equivalents at 31st March

4,924,623 4,347,300 171,776,137

5,477,001 942,843 69,286,381

183,626,70 8 2,077,414 160,717,380 8,646,021 154,145,77

78,939,804

79,813,833 869,592 7,174,390 73,509,035

327,587

3,955

200,811,00

41,102,522

170,402,245 371,213,247

129,299,723 170,402,245

67

CHAPTER-6

CONCLUSION

RECOMMENDATION & SUGGESTION

Some of the recommendation and suggestion are as follows:

68

O The attention is required on the areas of growth, profitability, service level and building talent. o To increase the profit of bank, bank should decrease their operating expenses and increase their income. o To increase its liquidity, bank should keep some more cash in its hand instead of giving more and more advances. o Introduce quality consciousness and standardization of the work system and procedures. o Make manager competitive and introduce spirit of market-orientation and culture of working for customer satisfaction. o There is need to build the knowledge and skill base among the employees in the context of technology. o Performance measure should not only cover financial aspects i.e. quantitatively aspects but also the qualitative aspects. o It is high time to focus on work than the work-achieved. o Bank should increase its retail portfolio. o Bank should manage its all risk such as credit, market and operational risk properly and should be managed by a person who are highly skilled and qualified.

Bank should pay attention on its subsidiary ICICI Prudential Life Insurance Company Limited

CONCLUSION
The balance-sheet along with the income statement is an important tool for investors and many other parties who are interested in it to gain insight into a company and its

69

operation. The balance sheet is a snapshot at a single point of time of the companys accounts- covering its assets, liabilities and shareholders equity. The purpose of the balance-sheet is to give users an idea of the companys financial position along with displaying what the company owns and owes. It is important that all investors know how to use, analyze and read balance-sheet. P & L account tells the net profit and net loss of a company and its appropriation.

In the case of ICICI Bank, during fiscal 2009, the bank continued to grow and diversify its assets base and revenue streams. Bank maintained its leadership in all main areas such as retail credit, wholesale business, international operation, insurance, mutual fund, rural banking etc. Continuous increase in the number of branches, ATM and electronic channels shows the growth take place in bank. Trend analysis of profit & loss account and balance sheet shows the % change in items of p & l a/c and balance sheet i.e. % change in 2008 from 2007 and % change in 2009 from 2008. It shows that all items are increased mostly but increase in this year is less than as compared to increase in previous year. In p & l a/c, all items like interest income, non-interest income, interest expenses, operating expenses, operating profit, profit before tax and after tax is increased but in mostly cases it is less than from previous year but in some items like interest income, interest expenses, provision % increase is more. Some items like tax, depreciation, lease income is decreased. Similarly in balance sheet all items like advances, cash, liabilities, and deposits are increased except borrowings which are decreased. % increase in some item is more than previous year and in some items it is less. Ratio analysis of financial statement shows that banks current ratio is better than the quick ratio and fixed/worth ratio. It means bank has invested more in current assets than the fixed assets and liquid assets. Banks have given more advances to its customer and they have less cash in their hand. Profitability ratio of bank is lower

70

than as compared to previous year. Return on equity is better than the return on assets.

The cash flow statement shows that net increase in cash generated from operating and financing activities is much more than the previous year but cash generated from investing activities is negative in both years. There is increase of 159,708,479 thousand RS. In Increase in cash & cash equivalents from previous year. Therefore analysis of cash flow statement shows that cash inflow is more than the cash outflow in ICICI Bank. Thus, the ratio analysis and trend analysis and analysis of cash flow statement show that ICICI Banks financial position is good. Banks profitability is increasing but not at high rate. Banks liquidity position is fair but not good because bank invests more in current assets than the liquid assets. As we all know that ICICI Bank is on the first position among the entire private sector bank of India in all areas but it should pay attention on its profitability and liquidity. Banks position is stable.

71

CHAPTER-7
BIBLIOGRAPHY

BIBLIOGRAPHY

REFERENCE BOOKS

72

 P.N. VARSHNEY Banking Law and Practices Sultan Chand & Chand & Sons

Sons

SUNDRAM & VARSHNEY Banking, Theory Law and Practices Sultan DR. S. N. MAHESHWARI Principles of Accounting Sultan Chand Sons &

WEBSITES www.icicibank.com www.pruicici.com www.investopedia.com

73

CHAPTER-8

APPENDIX

(I)

PROFIT AND LOSS A/C

(RS. IN 000S) AS ON 31.03.2008

For The Year Ended March 31, 2009

PARTICULAR 1. INCOME SHEDULE AS ON 31.03.2009

74

Interest earned Other income TOTAL INCOME 2. EXPENDITURE Interest expended Operating expenses Provision & contingencies TOTAL EXPENDITURE 3. PROFIT & LOSS Net profit for the year Profit brought forward TOTAL PROFIT & LOSS 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

13 14 15 16 17

229,942,916 59,291,686 289,234,602 163,584,984 66,905,564 27,641,854 258,132,402

143,061,325 41,808,859 184,870,184 95,974,483 50,011,537 13,483,417 159,469,437

31,102,200 2,934,416 34,036,616 APPROPRIATIONS / TRANSFERS 7,800,000 1,168 1,210,000 -

25,400,747 1,882,221 27,282,221 6,360,000 222 680,000 5,900,000

13,203,350

4,500,000 9,011,694 35 1,530,978 75

2,750,000 13,203,350 7,593,326 35 1,064,969

tax Balance carried over to balance sheet TO TAL Significant policies& notes to accounts EARNING PER SHARES Basic (rs.) Diluted (rs.) Face value per share (rs.)

982,741 34,036,616 18

2,934,416 27,282,968

34.84 34.64 10.00

32.49 32.15 10.00

(II)B A L A N C E - S H E E T
(Balance sheet of ICICI bank as on March 31, 2009) (Rs. In 000s) PARTICULAR SHEDULE AS ON 31.03.2009 AS ON 31.03.2008 Rs. Rs.

76

CAPITAL & LIABILITY Capital Reserve and surplus Deposits Borrowing Other liabilities and provisions TOTAL CAPITAL AND LIABILITIES ASSETS Cash & balance with reserve bank of India Balances with banks & money at calls & short notice Investment Advances Fixed assets Other assets TOTAL ASSETS Contingent liabilities Bills of collection Significant accounting policies & notes to accounts.

1 2 3 4 5

12,493,437 234,139,207 2,305,101,863 512,560,263 382,286,356 3,476,581,126

12,398,345 213,161,571 1,650,831,713 385,219,136 252,278,777 2,513,889,542

6 7 8 9 10 11 12 18

187,068,794 184,144,452 912,578,418 1,958,655,996 39,234,232 164,889,234 3,446,581,126 5,629,594,060 40,465,610

83,343,737 81,058,508 715,473,944 1,461,631,089 39,807,115 126,575,149 2,513,889,542 3,950,336,655 43,384,648

(The Schedule refer to above form an integral part of balance sheet)

77