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 Miss.Divya Devasiya,

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 thankful to my parents, all my friends and other sources who gave me their much needed support and inspiration in preparing this project report.

(Sneha Hiwale)

CERTIFICATE

This is to certify that “Ms. Sneha Hiwale” has accomplished the project

titled “ANALYSIS OF FINANCIAL STATEMENT- CASE STUDY OF

ICICI BANK” under my guidance and supervision.

She has submitted this project in the partial fulfillment for the award

of degree of Bachelor of Business Administration (B.B.A[B&I]) from

BARKATULLA UNIVERSITY.

The work has not been anywhere else for the award of degree. All source

of information have been duly mentioned.

Miss. Divya Devasiya(Lecturer)(BHOPAL SCHOOL OF SOCIAL SCIENCE)

CONTENT

PAGE NO.1. INTRODUCTION 1-25

A Brief Introduction2

1.1Objectives 21.2ICICI Bank 3

History 41.2.1Board of Directors 51.2.2Board Committees 61.2.3

1.2.4 Organisational Structure 7Products & Services 121.2.5Risk Aspects 181.2.6Subsidiary companies 211.2.7Key Group Companies 221.2.8Public Recognition 241.2.9

2. FINANCIAL STATEMENT AND IT’SANALYSIS 26-44

Study of Profit & Loss A/C 272.12.2 Study of Balance-Sheet 282.3 Study of cash flow statement 382.3 Financial Statement Analysis 40

3. ANALYSIS OF FINANCIAL STATEMENT OFICICI BANK 45-61

Management Discussion & Analysis 463.13.2 Comparative Income Statement 533.3 Comparative Financial Position Statement 55

3.4 Ratio Analysis- Financial Statement 573.5 Cash Flow Statement 60

4. CONCLUSION 62-645. RECOMMENDATION & SUGGESTION 65-66

BIBLIOGRAPHY 67

ANNEXURE 68-70

Profit & Loss Account 69Balance-Sheet

CHAPTER-1INTRODUCTION

1.1 A BRIEF INTRODUCTION

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 help 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 analyse it .

1.2 OBJECTIVE

The main objective 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 analyse the financial statement i.e P&L account and

Balance sheet of ICICI BANK.

To learn about P&L Account, Balance-sheet and

different type of Assets& Liabilities.

To understanding the meaning and need of Balance

Sheet and profit and loss account.

The purpose is to portray the financial position of ICICI

BANK with the help of balance sheet and profit and

loss account.

To evaluate the financial soundness ,stability and

liquidity of ICICI BANK.

1.3 ICICI BANK

ICICI Bank is India’s second-largest bank with total assets of Rs.

3,446.58 billion (US$ 79 billion) at March 31, 2007 and profit after tax

of Rs. 31.10 billion for fiscal 2007. ICICI Bank is the most valuable

bank in India in terms of market capitalization and is ranked third

amongst all the companies listed on the Indian stock exchanges. In terms of

free float market capitalization*. The Bank has a network of about 950

branches and 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 and its

American Depositary Receipts (ADRs) are listed on the New York Stock Exchange

(NYSE).

1.3.1HISTORY

ICICI Bank was originally promoted in 1994 by ICICI Limited , an Indian

financial institution, and was its wholly owned subsidiary. ICICI's

shareholding in ICICI Bank was reduced to 46% through a public offering of

shares in India in fiscal 1998, an equity offering in the form of ADRs listed

on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura

Limited in an all-stock amalgamation in fiscal 2001, and secondary market

sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI

was formed in 1955 at the initiative of the World Bank, the Government of

India and representatives of Indian industry. The principal objective was to

create a development financial institution for providing medium-term and

long-term project financing to Indian businesses. In the 1990s, ICICI

transformed its business from a development financial institution offering

only project finance to a diversified financial services group offering a wide

variety of products and services, both directly and through a number of

subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first

Indian company and the first bank or financial institution from non-Japan

Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the

context of the emerging competitive scenario in the Indian banking industry,

and the move towards universal banking, the managements of ICICI and

ICICI Bank formed the view that the merger of ICICI with ICICI Bank

would be the optimal strategic alternative for both entities, and would create

the optimal legal structure for the ICICI group's universal banking strategy.

The merger would enhance value for ICICI shareholders through the merged

entity's access to low-cost deposits, greater opportunities for earning fee-

based income and the ability to participate in the payments system and

provide transaction-banking services. The merger would enhance value for

ICICI Bank shareholders through a large capital base and scale of

operations, seamless access to ICICI's strong corporate relationships built up

over five decades, entry into new business segments, higher market share in

various business segments, particularly fee-based services, and access to the

vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of

Directors of ICICI and ICICI Bank approved the merger of ICICI and two of

its wholly-owned retail finance subsidiaries, ICICI Personal Financial

Services Limited and ICICI Capital Services Limited, with ICICI Bank. The

merger was approved by shareholders of ICICI and ICICI Bank in January

2002, by the High Citst of Gujarat at Ahmedabad in March 2002, and by the

High Citst of Judicature at Mumbai and the Reserve Bank of India in April

2002. Consequent to the merger, the ICICI group's financing and banking

operations, both wholesale and retail, have been integrated in a single entity.

ICICI Bank has formulated a Code of Business Conduct and Ethics for its

directors and employees.

1.3.2 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)

1.3.3 BOARD COMMITTEES

Audit Committee Board Governance& Remuneration

Committee

Mr. Sridar Iyengar Mr. N. VaghulMr. Narendra Murkumbi Mr. Anupam Puri

Mr. M. K. Sharma Mr. M. K. SharmaMr. P. M. Sinha

Prof. Marti G. Subrahmanyam

Credit CommitteeCustomer Service Committee

Mr. N. Vaghul Mr. N. VaghulMr. Narendra Murkumbi Mr. Narendra Murkumbi

Mr. M.K. Sharma Mr. M .K. SharmaMr. P.M. Sinha Mr. P. M. Sinha

Mr. K. V. Kamath Mr. K. V. Kamath

Risk CommitteeFraud Monitoring CommitteeMr. M. K. Sharma Mr. N. Vaghul

Mr. Narendra Murkumbi Mr. Sridar IyengarMr. K. V. Kamath Prof. Marti G. Subrahmanyam

Ms. Chanda D. Kochhar Mr. V. Prem WatsaMr. V. Vaidyanathan Mr. K. V. Kamath

Share Transfer & Asset-Liability ManagementShareholders/ Investors CommitteeGrievance Committee

Mr. M. K. Sharma Ms. Chanda D. KochharMr. Narendra Murkumbi Dr. Nachiket MorMs. Chanda D. Kochhar Ms. Madhabi Puri-BuchMs. Madhabi Puri-Buch Mr. V. Vaidyanathan

Committee of -Directors

Mr. K. V. KamathMs. Chanda D. Kochhar

Dr. Nachiket MorMs. Madhabi Puri-Buch

Mr. V. Vaidyanathan

1.3.4 ORGANISATIONAL STRUCTURE OF ICICI

BANK

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

focused, while seeking to ensure effective control and supervision and

consistency in standards across the organisation and align all areas of

operations to overall organisational objectives. The organisation structure is

divided into six principal groups – Retail Banking, Wholesale Banking,

International Banking, Rural (Micro-Banking) and Agriculture

Banking, Government Banking and Corporate Center.

RETAIL BANKINGThe 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 BANKINGThe 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 BANKINGThe International Banking Group is responsible for its international

operations, including operations in various overseas markets as well as

its products and services for non-resident Indians and its international

trade finance and correspondent banking relationships.

RURAL AND AGRICULTURAL BANKINGThe Rural, Micro-Banking & Agri-Business Group is responsible for

envisioning and implementing rural banking strategy, including

agricultural banking and micro-finance.

GOVERNMENT BANKINGThe Government Banking Group is responsible for government banking

initiatives.

CORPORATE CENTERThe Corporate Center comprises the internal control environment functions

(including operations, risk management, compliance, audit and legal);

finance (including financial reporting, planning and strategy, asset liability

management, investor relations and corporate communications); human

resitsces management; and facilities management & administration.

BUSINESS REVIEW

During fiscal 2007, the Bank continued to grow and diversify its asset base

and revenue streams by leveraging the growth platforms created over

the past few years. It maintained its leadership position in retail

credit, achieved robust growth in its fee income from both corporate

and retail customers, grew its deposit base and significantly scaled

up its international operations and rural reach .

RETAIL BANKINGICICI is the largest provider of retail credit in India. ICICI’s total retail

disbursements in fiscal 2007 were approximately Rs. 777.00 billion,

compared to approximately Rs. 627.00 billion in fiscal 2006. It’s total

retail portfolio increased from Rs. 921.98 billion at March 31, 2006 to

Rs. 1,277.03 billion at March 31, 2007, constituting 65% of it’s total

loans at that date. It continued its focus on retail deposits to create a

stable funding base. At March 31, 2007 it had more than 25 million

retail customer accounts.

During fiscal 2007, it expanded its branch network. At March 31, 2007,

it had 755 branches and extension counters compared to 614 branches

and extension counters at March 31, 2006. Pursuant to the

amalgamation of The Sangli Bank Limited with it effective April 19,

2007, it acquired over 190additional branches and extension counters. It

continued to expand its electronic channels, namely internet banking,

mobile banking, call centres, point of sale terminals and ATMs, and

migrate customer transaction volumes to these channels. During fiscal

2007, over 80% of customer induced transactions took place through

these electronic channels. It increased its ATM network to 3,271 ATMs.

SMALL AND MEDIUM ENTERPRISESIn this segment it’s 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 2007, it’s

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 2007, the

Emerging India Award entered in the Limca Book of Records as the

biggest business award in India.

CORPORATE BANKINGIt’s corporate banking strategy is based on providing comprehensive and

customized financial solutions to its corporate customers. It offer a complete

range of corporate banking products including rupee and foreign currency

debt, working capital credit, structured financing, syndication and

transaction banking products and services.

Fiscal 2007 saw continuing demand for credit from the corporate sector,

with growth and additional investment demand in almost all sectors. It is

now a preferred partner for Indian companies for syndication of external

commercial borrowings and other fund raising in international markets.

RURAL BANKINGIt’s rural strategy is based on enhancing value at every level of the supply

chain in all important farm and non-farm sectors. Towards this end, it offer a

range of financial products and services that cater to the rural masses in all

the important sectors like infrastructure, horticulture, food processing, dairy,

poultry, seeds, fertiliser and agrochemical industries. Customised financial

solutions are offered to individual customers, agri small & medium

enterprises, agri corporates and members of their supply chains. On the rural

retail side, the Bank offers crop loans, farm equipment financing,

commodity-based loans, working capital loans for agri-enterprises,

microfinance loans, jewel loans as well as savings, investment and insurance

products. In addition bank is introducing products like rural housing finance

to cater to the needs of rural customers. During fiscal 2007, it introduced

loans to rural educational institutions for expansion of their facilities.

it have 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 aim 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 2007, 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 BANKINGICICI 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 significant brand-building initiatives in international

markets and have emerged as a well-recognised financial services brand

for NRIs. It’s market share in inward remittances into India has

increased to over 25%. It has consolidated it’s global remittance

initiative, targeting non-Indian communities, by leveraging it’s core

capabilities of technology-based service delivery. A large number of

remittance products were introduced to complement the existing suite of

products. The business focus has been on rolling out successful products

across multiple geographies and getting into high volume correspondent

arrangements.

1.3.5 PRODUCTS AND SERVICES

BANKING ACCOUNTS

ICICI Bank offers a wide range of banking accounts such as Current, Saving, Life Plus Senior, Recurring Deposit, Young Stars,

Salary Account etc. tailor-made for every customer segments, from children to senior citizens. Convenience and ease to access are the

benefits of ICICI Bank accounts.

YOUNG STARS ACCOUNT

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

finances and have a lot of fun.

BANK@CAMPUS

This student banking services gives students access to their account

details at the click of a mouse. Plus, the student gets a chequebook, debit

card and annual statements.

SAVINGS ACCOUNTS

Convenience is the name of the game with ICICI bank’s savings account.

whether it is an ATM/debit card, easy withdrawal, easy loan options or

internet banking, ICICI bank’s saving account always keep you in touch

of money.

FIXED DEPOSITS

ICICI Bank offers a range of deposit solutions to meet varying needs at

every stage of life. It offers a range of tenures and other features to suit

all requirements.

INSURANCEThe ICICI group offers a range of insurance products to cover varying needs ranging from life, pensions and health, to home, motor

and travel insurance. The products are made accessible to customers through a wide network of advisors, banking partners,

Corporate agents and brokers with the added convenience of being able to buy online.

LIFE INSURANCE

The ICICI group provides the many life insurance product through

ICICI Prudential Life Insurance Company.

GENERAL INSURANCE

The ICICI group provides the many general insurance products like

motor, travel and home insurance through ICICI Lombard General

Insurance Company.

LOANS

ICICI bank offers a range of deposits solutions to meet varying needs at

every stage of life. It offers a range of tenures and other features to suit all

requirements.

HOME LOAN

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

Home Loans offers some unbeatable benefits to its customers -

Doorstep Service, Simplified Documentation and Guidance

throughout the Process. It's really easy !

PERSONAL LOAN

ICICI Bank Personal Loans are easy to get and absolutely hassle

free. With minimum documentation you can now secure a loan

for an amount upto Rs. 15 lakhs.

VEHICLE LOANS

The No. 1 financier for car loans in the country. Network of more

than 2500 channel partners in over 1000 locations. Tie-ups with

all leading automobile manufacturers to ensure the best deals.

Flexible schemes & quick processing are the main advantages are

here. Avail attractive schemes at competitive interest rates from

the No 1 Financier for Two Wheeler Loans in the country . Finance

facility upto 90% of the On Road Cost of the vehicle, repayable in

convenient repayment options and comfortable tenors from 6

months to 36 months

CARDSICICI Bank offers a variety of cards to suit different transactional

needs. Its range includes Credit Cards, Debit Cards and Prepaid cards.

These cards offer you convenience for financial transactions like cash

withdrawal, shopping and travel. These cards are widely accepted both

in India and abroad.

CREDIT CARD

ICICI Bank Credit Cards give you the facility of cash,

convenience and a range of benefits, anywhere in the world. These

benefits range from life time free cards, Insurance benefits, global

emergency assistance service, discounts, utility payments, travel

discounts and much more.

DEBIT CARD

The ICICI Bank Debit Card is a revolutionary form of cash that

allows customers to access their bank account around the clock,

around the world. The ICICI Bank Debit Card can be used for

shopping at more than 3.5 Lakh merchants in India and 24

million merchants worldwide.

TRAVEL CARD

ICICI Bank Travel Card. The Hassle Free way to Travel the

world. Traveling with US Dollar, Euro, Pound Sterling or Swiss

Francs; Looking for security and convenience; take ICICI Bank

Travel Card. Issued in duplicate. Offers the Pin based security.

Has the convenience of usage of Credit or Debit card.

MOBILE BANKINGBank on the move with ICICI Bank Mobile Banking. With ICICI Bank,

Banking is no longer what it used to be. ICICI Bank offers Mobile

Banking facility to all its Bank, Credit Card, Demat and Loan

customers.

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

facilities:

Alert facility : ICICI Bank Mobile Banking Alerts facility keeps you

informed about the significant transactions in yits Accounts. It keeps

you updated wherever you go.

Request facility : ICICI Bank Mobile Banking Requests facility enables

you to query for yits account balance .

INVESTMENT PRODUCTS: Along with Deposit products and Loan

offerings, ICICI Bank assists you to manage yits finances by providing

various investment options ranging from ICICI Bank Tax Saving Bonds

to Equity Investments through Initial Public Offers and Investment in

Pure Gold. ICICI Bank facilitates following investment products:

ICICI Bank Tax Saving Bonds•

Government of India Bonds•

Investment in Mutual Funds•

Initial Public Offers by Corporates•

Investment in "Pure Gold"•

Foreign Exchange Services•

Senior Citizens Savings Scheme, 2004•

TRADE-SERVICES: ICICI Bank offers online remittances as well as

online processing of letters of credit and bank guarantees.

ASSET-MANAGEMENT: Prudential ICICI Asset Management Company

offers a wide range of retail mutual fund products tailored to suit varied risk

and maturity profiles.

CASH MANAGEMENT:ICICI Bank offers a completerange of highly customized solutions for managing

both the collections and payments requirements

of clients by leveraging technology. Daily

customized transactions reports and real time

web-enabled downloads, provide on-tap

information facilitating effective working capital

management.

CORPORATE BANKING ICICI Bank offers comprehensive and:

customized financial solutions for its corporate clients, including

rupee and foreign currency debts, working capital credit,

structured financing syndication and transaction banking

products and services.

INTERNET BANKING : Internet banking is available to all ICICI bank

savings and deposit account holders, credit card, demat and

loan customers. Internet banking service offers customers a

world of convenience with services such as balance enquiry,

transaction history, account statement, bill payments, fund

transfers and accounts related service requests.

ATMs With more than 2500 ATMs across the country, ICICI Bank has one:

of the largest ATM networks in India

PHONE BANKING: Phone banking offers 24*7 service across

liability, asset and investment products to both retail and

corporate customers.

NRI-BANKING: A gamut of services to take care of all NRI banking

needs including deposits, money transfers and private banking.

MONEY2INDIA: A complete range of online and offline money

transfer solutions to send money to India.

PROPERTY: For millions of home buyers across the country, ICICI Bank offers not just great deals on home loans but also a wealth

of expert advice. ICICI Bank offers home search service which can help a customer identify the property of his choice based on his

budget and other requirements.

DEMAT ACCOUNTS: ICICI Bank’s demat services after unique features

like e-constructions, consolidation, digitally signed statements, mobile

requests and corporate benefit tracking.

RURAL-BANKING: Bank offers technology-based solutions, financial

innovations and multiple delivery channels to meet the financial needs of

rural areas.

MICROFINANCE: ICICI Bank assists over 2.5 million low income clients

to build livelihoods by partnering With over 100 microfinance institutions.

BRANCHES: ICICI Bank has a network of over 630 branches ( of which

51 are extension counters) across the country. The network puts a wide

range of banking products and financial services with in easy reach of retail

and corporate customers.

1.3.6 RISK ASPECTS OF ICICI BANK

RISK MANAGEMENT

Risk is an integral part of the banking business and bank aim at

delivering superior shareholder value by achieving an appropriate

trade-off between risk and returns. Bank is exposed to various risks,

including credit risk, market risk and operational risk. Bank’s risk

management strategy is based on a clear understanding of various risks,

disciplined risk assessment and measurement procedures and

continuous monitoring. The policies and procedures established for this

purpose are continuously benchmarked with international best

practices. Bank has two dedicated groups, the RISK MANAGEMENT

GROUP (RMG) and COMPLIANCE & AUDIT GROUP (CAG) which

is responsible for assessment, management and mitigation of risk in

ICICI Bank. These groups from part of the corporate center are

completely independent of all business operations and are accountable

to the Risk and Audit committees of the Board of directors. RMG is

further organized into the Credit Risk Management group, Market

Risk Management group, Retail Risk Management group and

Operational Risk Management group. CAG is further organised into

the Credit Policies, RBI Inspection & Anti-Money Laundering Group

and the Internal Audit Group.

CREDIT RISKCredit risk is the risk that a borrower is unable to meet its financial obligations to the lender. Bank measure, monitor and manage

credit risk for each borrower and also at the portfolio level. Bank has standardized credit-approval processes, which include a well-

established procedure for comprehensive credit appraisal and rating. ICICI Bank has well developed internal credit rating

methodologies for rating obligors. The rating factors in quantitative, qualitative issues and credit enhancement features specific to the

transaction. The rating serves as a key input in the approval as well as post-approval credit processes. Industry knowledge is

constantly updated through field visits and interactions with clients, regulatory bodies and industry experts. In retail credit operations,

the Board or a Board Committee approves all products, policies and authorizations. Credit approval authority lies only with the credit

officers who are distinct from the sales team. Credit scoring models are used in the case of certain products like credit cards.

External agencies such as field investigation agencies and credit processing agencies are used to facilitate a comprehensive due

diligence process including visits to offices and homes in the case of loans to individual borrowers.

MARKET RISK

Market risk is the risk of loss resulting from changes in interest rates, foreign currency exchange rates, equity prices and commodity

prices. The objective of market risk management is to minimize the impact of losses on earnings and equity capital due to market risk.

Market risk policies include the Investment Policy and the Asset-Liability Management (ALM) Policy. The policies are approved by

the Board of Directors. The Asset Liability Management

Committee (ALCO) of the Board of Directors stipulate liquidity and interest rate risk limits, monitors adherence to limits, articulates

the organisation’s interest rate view and determines the strategy in light of the current and expected environment. These policies and

processes are articulated in the ALPM policy. The investment policy addresses issues related to investment in various trading

products. RMG exercises independent control over the process of market risk management and recommends changes in process and

methodologies for measuring market risk Interest rate risk is measured through the use of re-pricing gap analysis and duration

analysis. Liquidity risk is measured through gap analysis. Bank ensure adequate liquidity at all time through systematic funds planning

and maintenance of liquid investment as well as focusing on more stable funding sitsces such as retail deposits. ICICI Bank limit

exposure to exchange rate risk by stipulating position limits. The treasury Middle Office Group monitors the asset-liability position

under the supervision of the ALCO. The Treasury Middle Office Group is also responsible for processing treasury transactions,

tracking the daily funds position and complying with all treasury related management and regulatory reporting requirements.

OPREATIONAL RISKOperational risk is the risk of loss that can result from a variety of

factors, including failure to obtain proper internal authorizations,

improperly documented transactions, failure of operational and

information security procedures, computer systems, software or

equipment, fraud, inadequate training and employee errors. Bank’s

approach to operational risk management is designed to mitigate

operational risk by maintaining a comprehensive system of internal

controls, establishing systems and procedures to monitor transactions,

maintaining key back-up procedures and undertaking regular

contingency planning. Effective operational risk management system

would ensure that bank has sufficient information to make appropriate

decisions about additional controls, adjustments to controls, or other

risk responses. Operational risk management policy aims at minimizing

losses and customer dissatisfaction due to failure in processes, focusing

on flaws in products and their design that can expose the bank to losses

due to fraud, analyzing the impact of failures in systems, developing

mitigants to minimize the impact and developing plans to meet external

shocks that can adversely impact continuity in the bank’s operations.

1.3.7 SUBSIDIARY COMPANIES

DOMESTIC SUBSIDIARIES

ICICI Home Finance Company Limited

ICICI Investment Management Company Limited

ICICI Lombard General Insurance Company Limited

ICICI Prudential Life Insurance Company Limited

ICICI Securities Limited

ICICI Trusteeship Services Limited

ICICI Venture Funds Management Company Limited

ICICI Securities Primary Dealership Limited

ICICI Prudential Asset Management Company Limited

ICICI Prudential Trust Limited

INTERNATIONAL SUSIDIARIES

ICICI Bank Canada

ICICI Bank Eurasia Limited Liability Company

ICICI International Limited

ICICI Securities Holding Inc

ICICI Securities Inc

ICICI Bank Uk Limited

1.3.8 KEY GROUP COMPANIES

ICICI PRUDENTIAL INSURANCE COMPANY

ICICI Life continued to maintain its market leadership among private

sector life insurance companies with a market share of 29% on the basis

of weighted received premium. Life insurance companies worldwide

make losses in the initial years, in view of business set-up and customer

acquisition costs in the initial years as well as reserving for actuarial

liability. While the growing operations of ICICI Life had a negative

impact of Rs. 480 crore (US$ 110 million) on the Bank’s consolidated

profit after tax in FY2007 on account of the above reasons, the

company’s unaudited New Business Achieved Profit (NBAP) for

FY2007 was Rs. 881 crore (US$ 203 million) as compared to Rs. 528

crore (US$ 121 million) in FY2006.

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 2007. ICICI General’s gross written premium

grew by 89% from Rs. 1,592 crore (US$ 366 million) in FY2006 to Rs.

3,004 crore (US$ 691 million) in FY2007. ICICI General is required to

expense upfront, on origination of a policy, all sitscing expenses related to

the policy. While ICICI General’s profit after tax for FY2007 was Rs. 68

crore (US$ 16 million), its combined ratio for FY2007 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 annualised 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 FY2007.

ICICI PRUDENTIAL AMC & TRUST

At March 31, 2007, 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

AMC’s profit after tax increased by 55% to Rs. 48 crore (US$ 11 million) in

FY2007 from Rs. 31 crore in FY2006 (US$ 7 million).

ICICI SECURITIES LIMITED

The securities and primary dealership business of the ICICI group have been

reorganised. 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 Webtrade 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 2007.

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 2007. ICICI

Venture achieved a profit after tax of Rs. 0.70 billion in fiscal 2007

compared to Rs. 0.50 billion in fiscal 2006.

1.3.9 PUBLIC RECOGNITION

During fiscal 2007, ICICI Bank received several prestigious

award in recognition of overall business strategies, specific

objectives and technology focus:

Bank of the Year 2006 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 2006 by Business India

Business Leadership Award in the Banking category by NDTV

Profit

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

Finance

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

CHAPTER-2

STUDY

OFFINANCIALSTATEMENT

AND IT’S ANALYSIS

2.1 STUDY OF PROFIT& LOSS A/C

MEANING: It is a financial statement, which shows net loss of a company for a specified period. The accounting year meanscalendar 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 andvice 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.

Unclaimed dividends: it is shown on the liabilities side of the balance sheet under the

heading ‘current liabilities ‘.

Interim dividends: It is an item of appropriation. It is transferred to the

debit side of the Profit and loss appropriation account.

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

appropriation section of the profit and loss account.

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

item, it has to be shown at two places- In the debit side of the profit and loss

appropriation account and on the liabilities side of the balance sheet under

the head ‘current liabilities and provisions’ .

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

loss account.

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

and loss account.

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

consultancy fee, auditing fees management services etc.

Managerial remuneration: This includes the payments made to managerial

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

2.2 STUDY OF BALANCE SHEET

MEANING:The balance sheet is a financial snapshot of a company's

condition at a single point in time. A balance sheet contains a listing of the

company's asset, liability and Capital accounts. When someone, whether a

creditor or investor, asks you how your company is doing, you'll want to

have the answer ready and documented. The way to show off the success of

your company is a balance sheet. A balance sheet is a documented report of

your company's assets and obligations, as well as the residual ownership

claims against your equity at any given point in time. It is a cumulative

record that reflects the result of all recorded accounting transactions since

your enterprise was formed. You need a balance sheet to specifically know

what your company's net worth is on any given date. With a properly

prepared balance sheet, you can look at a balance sheet at the end of each

accounting period and know if your business has more or less value, if your

debts are higher or lower, and if your working capital is higher or lower. By

analyzing your balance sheet, investors, creditors and others can assess

your ability to meet short-term obligations and solvency, as well as your

ability to pay all current and long-term debts as they come due. The balance

sheet also shows the composition of assets and liabilities, the relative

proportions of debt and equity financing and the amount of earnings that

you have had to retain. Collectively, external parties to help assess your

company’s financial status, which is required by both lending institutions

and investors before they will allot any money toward your business, will

use this information.

LEARN THE DIFFERENT ASSETS

Current assets : Current assets include cash and other assets that in the

normal course of events are converted into cash within the operating cycle.

For example, a manufacturing enterprise will use cash to acquire inventories

of materials. These inventories of materials are converted into finished

products and then sold to customers. Cash is collected from the customers.

This circle from cash back to cash is called an operating cycle. In a

merchandising business one part of the cycle is eliminated. Materials are not

purchased for conversion into finished products. Instead, the finished

products are purchased and are sold directly to the customers. Several

operating cycles may be completed in a year, or it may take more than a year

to complete one operating cycle. The time required to complete an operating

cycle depends upon the nature of the business. It is conceivable that almost

all of the assets that are used to conduct your business, such as buildings,

machinery, and equipment, can be converted into cash within the time

required to complete an operating cycle. However, your current assets are

only those that will be converted into cash within the normal course of your

business. The other assets are only held because they provide useful services

and are excluded from the current asset classification. If you happen to hold

these assets in the regular course of business, you can include them in the

inventory under the classification of current assets. Current assets are usually

listed in the order of their liquidity and frequently consist of cash, temporary

investments, accounts receivable, inventories and prepaid expenses.

Cash: Cash is simply the money on hand and/or on deposit that is available

for general business purposes. It is always listed first on a balance sheet.

Cash held for some designated purpose, such as the cash held in a fund for

eventual retirement of a bond issue, is excluded from current assets.

Marketable Securities: These investments are temporary and are made

from excess funds that you do not immediately need to conduct operations.

Until you need these funds, they are invested to earn a return.

Accounts Receivable: Simply stated, accounts receivables are the amounts

owed to you and are evidenced on your balance sheet by promissory notes.

Accounts receivable are the amounts billed to your customers and owed to

you on the balance sheet's date. You should label all other accounts

receivable appropriately and show them apart from the accounts receivable

arising in the course of trade. If these other amounts are currently collectible,

they may be classified as current assets.

Inventories: Your inventories are your goods that are available for sale,

products that you have in a partial stage of completion, and the materials that

you will use to create your products. The costs of purchasing merchandise

and materials and the costs of manufacturing your various product lines are

accumulated in the accounting records and are identified with either the cost

of the goods sold during the fiscal period or as the cost of the inventories

remaining.

Prepaid expenses: These expenses are payments made for services that will

be received in the near future. Strictly speaking, your prepaid expenses will

not be converted to current assets in order to avoid penalizing companies

that choose to pay current operating costs in advance rather than to hold

cash. Often your insurance premiums or rentals are paid in advance.

Investments: Investments are cash funds or securities that you hold for a

designated purpose for an indefinite period of time. Investments include

stocks or the bonds you may hold for another company, real estate or

mortgages that you are holding for income-producing purposes. Your

investments also include money that you may be holding for a pension fund.

Plant Assets: Often classified as fixed assets, or as plant and equipment,

your plant assets include land, buildings, machinery, and equipment that are

to be used in business operations over a relatively long period of time. It is

not expected that you will sell these assets and convert them into cash. Plant

assets simply produce income indirectly through their use in operations.

Intangible Assets: Your other fixed assets that lack physical substance are

referred to as intangible assets and consist of valuable rights, privileges or

advantages. Although your intangibles lack physical substance, they still

hold value for your company. Sometimes the rights, privileges and

advantages of your business are worth more than all other assets combined.

Other Assets : During the course of preparing your balance sheet you will

notice other assets that cannot be classified as current assets, investments,

plant assets, or intangible assets. These assets are listed on your balance

sheet as other assets. Frequently, your other assets consist of advances made

to company officers, the cash surrender value of life insurance on officers,

the cost of buildings in the process of construction, and the miscellaneous

funds held for special purposes.

LEARN THE DIFFERENT LIABILITIES

Current Liabilities : On the equity side of the balance sheet, as on the asset

side, you need to make a distinction between current and long-term items.

Your current liabilities are obligations that you will discharge within the

normal operating cycle of your business. In most circumstances your current

liabilities will be paid within the next year by using the assets you classified

as current. The amount you owe under current liabilities often arises as a

result of acquiring current assets such as inventory or services that will be

used in current operations. You show the amounts owed to trade creditors

that arise from the purchase of materials or merchandise as accounts

payable. If you are obligated under promissory notes that support bank loans

or other amounts owed, your liability is shown as notes payable. Other

current liabilities may include the estimated amount payable for income

taxes and the various amounts owed for wages and salaries of employees,

utility bills, payroll taxes, local property taxes and other services.

Long-Term Liabilities : Your debts that are not due until more than a year

from the balance sheet date are generally classified as long-term liabilities.

Notes, bonds and mortgages are often listed under this heading. If a portion

of your long-term debt is due within the next year, it should be removed

from the long-term debt classification and shown under current liabilities.

Deferred Revenues: Your customers may make advance payments for

merchandise or services. The obligation to the customer will, as a general

rule, be settled by delivery of the products or services and not by cash

payment. Advance collections received from customers are classified as

deferred revenues, pending delivery of the products or services.

Owner's Equity: Your owner's equity must be subdivided on your balance

sheet: One portion represents the amount invested directly by you, plus any

portion of retained earnings converted into paid-in capital. The other portion

represents your net earnings that are retained. This rigid distinction is

necessary because of the nature of any corporation. Ordinarily, stockholders,

or owners, are not personally liable for the debts contracted by a company. A

stockholder may lose his investment, but creditors usually cannot look to his

personal assets for satisfaction of their claims. Under normal circumstances,

the stockholders may withdraw as cash dividends an amount measured by

the corporate earnings. The distinction in this rule gives the creditors some

assurance that a certain portion of the assets equivalent to the owner's

investment cannot be arbitrarily withdrawn. Of course, this portion could be

depleted from your balance sheet because of operating losses. The owner's

equity in an unincorporated business is shown more simply. The interest of

each owner is given in total, usually with no distinction being made between

the portion invested and the accumulated net earnings. The creditors are not

concerned about the amount invested. If necessary, creditors can attach the

personal assets of the owners.

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

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, 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 CORPORATIONBALANCE SHEETS

December 31, 2006

Format: There are two basic ways that balance sheets can be arranged. In

Account Form, your assets are listed on the left-hand side and totaled to

equal the sum of liabilities and stockholders' equity on the right-hand side.

Another format is Report Form, a running format in which your assets are

listed at the top of the page and followed by liabilities and stockholders'

equity. Sometimes total liabilities are deducted from total assets to equal

stockholders' equity.

Captions: Captions are headings within your statement that designate major

groups of accounts to be totaled or subtotaled. Your balance sheet should

include three primary captions: Assets, Liabilities and Stockholders' Equity.

In the report form of presentation, the placement of your primary captions

would be as follows: 2006 ASSETS, LIABILITIES AND

STOCKHOLDER’S EQUITY.

Except in certain specialized industries your balance sheet should include

the following secondary captions:

CURRENT ASSETS

CURRENT LIABILITIES

: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 followingorder:

Preferred stock•

Common stock•

Additional paid-in capital•

Retained earnings•

Accumulated other comprehensive income•

Treasury stock•

2.3 STUDY OF CASH FLOW STATEMENT

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.

The cash flow statement reflects a firms liquidity or solvency.PURPOSE:

The main purpose to make cash flow statement are as follows:

provide information on a firm's liquidity and solvency and its ability1.

to change cash flows in future circumstances

2. provide additional information for evaluating changes in assets,

liabilities and equity

improve the comparability of different firms' operating performance3.

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,

advertising.

Investing activities: Investing activities focus on the purchase of the long-

term assets a company needs in order to make and sell its products, and the

selling of any long-term assets.

Financing activities: 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 organisation to depict its cash inflow and outflow.

2.4 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 purpose of analyzing the financial statement are the

following:-

To assess past performance and current financial position.

To make predictions about the future performance of a company.

TOOLS FOR ANALYSING

1. PERCENTAGE CALCULATION

There are two popular methods by which we can analyze the

financial statement by calculating percentage as taking a common

base.

Horizontal Analysis

When an analyst compares financial information for two or more

years for a single company, the process is referred to as horizontal

analysis, since the analyst is reading across the page to compare

any single line item, such as sales revenues. In addition to

comparing dollar amounts, the analyst computes percentage

changes from year to year for all financial statement balances,

such as cash and inventory. Alternatively, in comparing financial

statements for a number of years, the analyst may prefer to use a

variation of horizontal analysis called trend analysis . Trend

analysis involves calculating each year's financial statement

balances as percentages of the first year, also known as the base

year. When expressed as percentages, the base year figures are

always 100 percent, and percentage changes from the base year

can be determined.

If we want to calculate % change in sales then we apply the

following formula:

Percentage=change in sales /Base Year Sales*100

Vertical Analysis

When using vertical analysis, the analyst calculates each item on a

single financial statement as a percentage of a total. The term

vertical analysis applies because each year's figures are listed

vertically on a financial statement. The total used by the analyst

on the income statement is net sales revenue, while on the balance

sheet it is total assets. This approach to financial statement

analysis, also known as component percentages, produces

common-size financial statements. Common-size balance 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

2. RATIO ANALYSIS

Financial ratio analysis uses formulas to gain insight

into the company and its operations. For the balance

sheet, using financial ratios (like the debt-to-equity

ratio) can show you a better idea of the company’s

financial condition along with its operational efficiency.

It is important to note that some ratios will need

information from more than one financial statement,

such as from the balance sheet and the income

statement. Ratio analysis facilitates inter-firm and intra-

firm comparison.

Ratios are often classified using the following terms:

LIQUIDITY RATIO

Liquidity ratios are measures of the short-term ability of

the company to pay its debts when they come due and

to meet unexpected needs for cash.

• Current Ratio : The current ratio is a rough indication

of a firm ability to service its current obligations.

Generally, the higher the current ratio, the greater the

cushion between current obligations and a firm ability

to pay them. The stronger ratio reflects a numerical

superiority of current assets over current liabilities

Current ratio is calculated as follows:

Current ratio= Current Assets/Current Liabilities

• Quick Ratio : It is also known as the “acid test” ratio,

this is a refinement of the current ratio and is a more

conservative measure of liquidity. The quick ratio

expresses the degree to which a company’s current

liabilities are recovered by the most liquid current

assets. quick ratio is calculated as follows:

Quick ratio= (cash + marketable securities +

Receivables)/current

liabilities

SOLVENCY RATIO

Solvency ratios indicate the ability of the company to

meet its long-term obligations on a continuing basis

and thus to survive over a long period of time.

Debt/Worth Ratio: This ratio expresses the relationship between•

capital contributed by creditors and that contributed by owners. It

expresses the degree of protection provided by the owners for the

creditors. The higher the ratio, the greater the risk being assumed by

creditors. The lower the ratio, the greater the long-term financial

safety. A firm with a low debt/worth ratio usually has a greater

flexibility to borrow in the future. A more highly leveraged company

has a more limited debt capacity.

Debt/worth ratio=Total Liabilities / Tangible Net Worth

PROFITABILITY RATIO

Profitability ratios are gauges of the company's

operating success for a given period of time.

• Return On Assets: Return on assets is a measure of

how effectively the firm’s assets are being used to

generate profit. It is calculated as follows:

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/shareholder’s equity

Fixed/Worth Ratio: This ratio measures the extent to which owner’s

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

CHAPTER-3ANALYSIS OF

FINANCIAL STATEMENTOF

ICICI BANK

3.1 MANAGEMENT DISCUSSION &ANALYSIS

SUMMARY :

• Profit before provisions and tax increased 51.1% to Rs. 58.74 billion

in fiscal 2007 from Rs. 38.88 billion in fiscal 2006 primarily due to an

increase in net interest income by 40.9% to Rs. 66.36 billion in fiscal

2007 from Rs. 47.09 billion in fiscal 2006 and an increase in non-

interest income by 39.4% to Rs. 59.14 billion in fiscal 2007 from Rs.

42.42 billion in fiscal 2006, offset, in part, by an increase in non-

interest expenses by 33.8% to Rs. 66.91 billion in fiscal 2007 from Rs.

50.01 billion in fiscal 2006.

Provisions increased significantly during fiscal 2007 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 2007 from Rs. 34.36 billion in fiscal 2006. Profit after

tax increased 22.4% to Rs. 31.10 billion in fiscal 2007 from Rs. 25.40

billion in fiscal 2006.

• Net interest income increased 40.9% to Rs. 66.36 billion in fiscal

2007 from Rs. 47.09 billion in fiscal2006, 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

2007 from Rs. 42.42 billion in fiscal 2006 primarily due to a 45.4%

increase in fee income.

• Non-interest expenses increased 33.8% to Rs. 66.91 billion in

fiscal 2007 from Rs. 50.01 billion in fiscal 2006 primarily due to

49.4% 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 2007 from Rs. 7.92 billion in fiscal 2006

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 retailloans due to change in the portfolio

mix towards non collateralised 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 2007 from Rs. 2,513.89 billion at year-end fiscal 2006

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 2007

from Rs. 34.47 billion in fiscal 2006 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 2007

from Rs. 7.40 billion in fiscal 2006 primarily due to higher level of gains

from equity divestments, offset in part by 24.6% increase in premium

amortisation on Government securities to Rs. 9.99 billion in fiscal 2007

from Rs. 8.02 billion in fiscal 2006 and lower profits on proprietory

trading as a result of the sharp fall in the equity markets in May 2006 and

adverse conditions in debt markets. The amortisation of premium on

Government securities which was earlier shown as provisions and

contingencies has been reclassified under income from treasury-related

activities as per the revised guidelines of RBI.

LEASE & OTHER INCOME

Lease income decreased by 34.1% to Rs. 2.38 billion in fiscal 2007

from Rs. 3.61 billion in fiscal 2006 primarily because of a decrease in

leased assets to Rs. 10.03 billion at year-end fiscal 2007 compared to

Rs. 11.74 billion at year-end fiscal 2006 since we are not entering into

new lease transactions. Other income increased by 53.0% to Rs. 6.64

billion for fiscal 2007 compared to Rs. 4.34 billion in fiscal 2006

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 2007 from Rs. 7.92 billion in fiscal 2006

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 collateralised loans and seasoning of the loan

portfolio and lower level of write-backs.

It’s total assets increased by 37.1% to Rs. 3,446.58 billion at year-end•

fiscal 2007 from Rs. 2,513.89 billion at year-end fiscal 2006 primarily

due to increase in advances and investments. Net advances increased

by 34.0% to Rs. 1,958.66 billion at year-end fiscal 2007 from Rs.

1,461.63 billion at year-end fiscal 2006 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 securitisation. Retail advances increased 38.5% to Rs. 1,277.03

billion at year-end fiscal 2007 from Rs. 921.98 billion at year-end

fiscal 2006.

Total investments at year-end fiscal 2007 increased by 27.5% to Rs.•

912.58 billion compared to Rs. 715.47 billion at year-end fiscal 2006

primarily due to 31.9% increase in investment in Government and

other approved securities in India to Rs. 673.68 billion at year-end

fiscal 2007 from 510.74 billion at year-end fiscal 2006 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 2007 compared to Rs. 204.73 billion at year-end fiscal

2006, 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 2007 from Rs. 275.86 billion at year-end fiscal 2006.

• It’s equity share capital and reserves at year-end fiscal 2007 increased

to Rs. 243.13 billion as compared to Rs. 222.06 billion at year-end

fiscal 2006 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

“Accounting for retirement benefits in financial statements of

employer”, the difference in the liability on account of retirement

benefits created by the Bank at March 31, 2006 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 2007 from

Rs. 1,650.83 billion at year-end fiscal 2006. This is commensurate

with our focus of increased funding through deposits. Our savings

account deposits increased to Rs. 288.38 billion at year-end fiscal

2007 from Rs. 209.37 billion at year-end fiscal 2006, while current

deposits increased to Rs. 213.76 billion at year-end fiscal 2007 from

Rs. 165.73 billion at year-end fiscal 2006. Term deposits increased by

41.3% to Rs. 1,802.96 billion at year-end fiscal 2007 from Rs.

1,275.73 billion at yearend fiscal 2006. Total deposits at year-end

fiscal 2007 constituted 76.5% of our funding (i.e. deposit, borrowings

and subordinated debts). Borrowings (including subordinated debt)

increased to Rs. 706.61 billion at year-end fiscal 2007 from Rs.

486.66 billion at year-end fiscal 2006 primarily due to increase in

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 2007 from Rs. 3,950.35 billion

at year-end fiscal 2006 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 exchang econtracts.

NPA (NON PERFORMING ASSETS)• S

The ratio of net non-performing assets to net customer assets

increased to 0.98% at year-end fiscal 2007 compared to 0.71% at

year-end fiscal 2006. At year-end fiscal 2007, 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 2006.

Gross of technical write-offs, the gross non-performing assets at year-

end fiscal 2007 were Rs. 48.50 billon compared to Rs. 29.63 billion at

year-end fiscal 2006. 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 2007

was 58.37% compared to 63.72% at year-end fiscal 2006. In addition,

total general provision made against standard assets was Rs. 12.95

billion at year-end fiscal 2007. 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 2007. Our net restructured standard loans decreased

from Rs. 53.16 billion at year-end fiscal 2006 to Rs. 48.83 billion at

year-end fiscal 2007.

• The effective tax rate of 14.7% for fiscal 2007 was lower compared to

the statutory tax rate of 33.66% primarily due to concessional rate of

tax on capital gains, exemption of dividend income, deduction

towards special reserve and deduction of income of offshore banking

unit.

(RS. IN BILLION)YEAR ENDED March March March 31,

31, 2005 31, 2006 2007

GROSS NPA 34.37 22.73 41.68

NET NPA 19.83 10.75 20.19

NET CUSTOMER 978.94 1,520.07 2,053.74ASSETS

% OF NET NPA TO 2.03% 0.71% 0.98%NET CUSTOMER

ASSETS

• DIVIDEND

The Board has recommended a higher dividend of

100% for FY2007 i.e. Rs. 10 per equity share

(equivalent to US$ 0.46 per ADS) as compared to 85%

for FY2006 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 FY2007 from Rs. 2,420 crore (US$ 557 million)

in FY2006. 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 2007.

3.2 COMPARATIVE INCOME STATEMENT

TREND ANALYSISSUMMARISED PROFIT & LOSS A/C

(ON 31 MARCH, 2007)(RS. IN BILLION)

PARTICULARS 200 200 2007 %Change %Change5 6 (2006) (2007)(RS.)

(RS.) (RS.)Interest income 94.10 143.06 229.94 46.5% 60.7%

Interest expense 65.71 95.97 163.8 46.1% 70.4%Net interest income 28.39 47.09 66.36 47.5% 40.9%Non-interest income 27.05 42.42 59.14 49.9% 39.4%– Fee income 20.98 34.47 50.12 55.3% 45.4%– Lease income 4.01 3.61 2.38 (10.0) (34.1)– Others 2.06 4.34 6.64 111.2% 53.0%Core operating income 55.44 89.51 125.50 48.7% 40.2%Operating expenses 25.17 35.47 49.79 40.9% 40.3%

Direct marketing agency 4.85 11.77 15.24 35.1% 29.5%(DMA) expenseLease depreciation, net of 2.97 2.77 1.88 (6.7) (31.9)lease equalizationCore operating profit 22.45 39.50 58.59 67.6% 48.3%Net treasury income - (0.62) 0.15 - -Operating profit 29.56 38.88 58.74 58.7% 51.1%Provisions, net of write- 4.29 7.92 22.26 84.61% 181.1%backsProfit before tax 25.27 30.97 36.48 22.6% 17.8%Tax, net of deferred tax 5.22 5.56 5.38 6.7% (3.2)Profit after tax 20.05 25.40 31.10 26.7% 22.4%

By anlysing the summarized profit & loss account of ICICI

Bank, the following trends are presented:

Operating profit increased 51% to Rs. 5,874 crore for FY2007

from Rs. 3,888 crore for FY2006 which is less than as compared

to increased 58.7% to Rs. 3,888 crore for FY 2006 from Rs. 2,956

crore for FY2005.

Profit after tax increased 22% to Rs. 3,110 crore for FY2007

from Rs. 2,540 crore for FY2006 which is less than as compared

to increased 26.7% to Rs. 2,540 crore for FY2006 from Rs. 2,005

crore for FY2005.

Profit before tax increased 18% to Rs. 3,648 crore for FY2007

from Rs. 3,097 crore for FY2006 which is also less than as

compared to increased to 22.6 % to Rs. 3,097 crore for FY2006

fom Rs. 2,527 crore for FY2005.

Net interest income increased 41% to Rs. 6,636 crore for FY2007

from Rs. 4,709 crore for FY2006 which is less than as compared

to increased 47.5% to Rs. 4,709 crore for FY2006 from Rs. 2,839

crore for FY2005.

Fee income increased 45% in 2007 which is less than as compared

to 55.3% increased in 2006

Interest expenses increased at a very high rate from 46.1% in

FY2006 to 70% in FY2007.

Interest income is increased at a higher rate than the previous

year i.e. 47% in 2006 to 61% in 2007.

Increase in non-interest income is less than in 2007 49% as

compared to increase in 2006 39%.

Provision is increased at a high rate as compared to previous

years 85% in 2006 to 181% in 2007.

3.3 COMPARATIVE FINANCIAL POSITIONSTATEMENT

TREND ANALYSISSUMMARIZED BALANCE-SHEET

(ON MARCH 31, 2007)(RS. In crore)

PARTICULARS 2005 2006 2007 %Change %Change(2006) (2007)(RS.) (RS.) (RS.)

Cash balance with 47,412 68,115 104,489 43.7% 53%banks & SLR

-Cash & bank balances 12,930 17,040 37,121 31.8% 118%-SLR investment 34,482 51,075 67,368 48.1% 32%Advances 91,405 146,163 195,866 59.9% 34%Other Investment 2,854 20,473 23,890 41.9% 17%Fixed and other Assets 12,836 16,638 20,413 29.61% 23%

TOTAL 167,659 251,389 344,658 49.9% 37%ASSETS

Net Worth 12,550 22,206 24,313 76.9% 9%-Equity Capital 737 890 899 20.8% 1%-Reserves 11,813 21,316 23,414 80.4% 10%Preference Capital 350 350 350 - -Deposits 99,819 165,083 230,510 65.4% 40%Erstwhile ICICI 19,348 13,190 10,837 (31.16%) (18%)BorrowingsOther Borrowings 22,405 35,477 59,823 58.2% 69%Other Liabilities 13,187 15,083 18,824 14.4% 25%

TOTAL 167,659 251,389 344,658 49.9% 37%LIABILITIES

By anlysing the balance sheet of ICICI Bank, the following

trends are presented:

Total assets and total liabilities are increased in 2007

from Rs. 251389 crore to Rs. 344658 Crore i.e. 37%

which is less than as compared to increase in 2006

from Rs. 167659 crore to Rs. 251389 crore i.e. 49.9%.

Increase in cash balance with bank in 2007 is more

than in the previous year 2006. In 2006 it is 32% and in

2007 it is 118%.

But increase in SLR investment in 2007 is less than the

previous year. In 2006 it is 48% and in 2007 it is 32%.

Increase in advances in 2007 is 60% from 2006 which

is less than as compared to increase in advances in

2006 is 34% from 2005.

Increase in fixed and other assets is also less than in

2007 from 2006 i.e 23% as compared to 30% in 2006

from 2005.

Erstwhile ICICI borrowings is decreasing in both years

but rate of decreasing is less in 2007 i.e. 18% but in

2006 it is 31%.

Increase in net worth is also less than from previous

year in 2007 i.e 80% in 2006 to 9% in 2007.

Increase in equity capital is only 1% in 2007 whereas in

2006 it is 21% and increase in reserve in 2007 is very

less as compared to increase in 2006 i.e. from 10% to

80%.

40%Deposits is increased in 2007 from 2006 which is

less than as compared to 65% increase in deposits in

2006 from 2005.

Increase in other liabilities is more in 2007 than in 2006

i.e from 14% in 2006 to 25% in 2007.

69%borrowing is increased in 2007 from 2006 which is

more than as compared to 58% increase in borrowing

in 2006 from 2005.

3.4 RATIO ANALYSIS

1)CURRENT RATIO:

Current Ratio= Current Assets/Current Liabilities

In 2006:

Current Assets=170.40+1461.63=1632.03 billion (cash +

advances)

Current Liabilities=165.73+354.77+131.90=652.40billion

(short-term deposits+ borrowings)

Current Ratio=1632.03/652.40= 2.5:1

In 2007:

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 2006:

Quick Assets=170.40billion (cash in hand and other bank)

Current Liabilities=652.40billion

Quick Ratio=170.40/652.40= 0.26:1

In 2007:

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 2006 : net income=25.40 billion

Average assets= (1676.59+ 2513.89)/2= 2095.24

Return on average assets= 25.40/2095.24*100 = 1.21%

In 2007 : 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 2006 : net income=25.40 billion

Average equity= (129.00+225.56)/2= 177.28

Return on average equity= 25.40/177.28*100 = 17.54%

In 2007 : 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%

5)FIXED/WORTH RATIO:

Fixed Worth Ratio=Net Fixed Assets/ Tangible Net

Worth

In 2006:

Net Fixed Assets= 39.80 billion

Tangible Net Worth= 225.55 billion

Fixed Worth Ratio=39.80/225.55= 0.18:1

In 2007:

Net Fixed Assets= 39.23 billion

Tangible Net Worth= 246.62 billion

Fixed Worth Ratio=39.23/246.62 = 0.16:1

6)OPERATING PROFIT TO WORKING FUNDS

Operating Profit To Working Funds=operating profit/

average assets*100

In 2006:

Operating profit=38.80 billion

Average assets=2095.24

Operating profit to working fund=38.80/2095.24*100=

1.85%

In 2007:

Operating profit=58.84 billion

Average assets=2980.84

Operating profit to working fund=58.84/2980.84*100=

1.98%

(approximately)

RATIOS IN 2006 IN 2007Current Ratio 2.5:1 2.6:1Quick Ratio 0.26:1 0.40:1Return On Assets 1.21% 1.04%Return On Equity 17.54% 13.17%Fixed/worth Ratio 0.18:1 0.16:1Operating profit to working funds 1.85% 1.98%

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 these table current

ratio of both year is higher than the ideal ratio which shows

that there is enough current assets which make the bank

able to pay its current liabilities on time 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 owner’s

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.

3.5 CASH FLOW STATEMENT

(AS ON YEAR ENDED ON 31 MARCH, 2007)ST (rs. In “000’s)PARTICULARS FY2007

FY2006

Cash flow from operating activitiesNet profit before taxes . 36,480,391 30,966,076Adjustments for:Depreciation and amortisation 7,639,002 9,021,206Net (appreciation) / depreciation on 9,918,419 8,301,403investmentsProvision in respect of non-performing 21,592,999 7,947,244assetsProvision for contingencies & others 251,311 226,801Dividend from subsidiaries (4,484,915) (3,386,929)(Profit) / Loss on sale of fixed assets (1,152,224) (71,222)

70,244,982 53,004,579Adjustments for:

(19,666,157) (141,019,247)Increase/decrease in investmentsIncrease/decrease in advances (511,255,267) (552,112,941)Increase/decrease in borrowings 57,039,927 65,476,052Increase/decrease in deposits 654,270,149 652,643,939Increase/decrease in other assets (28,758,999) (36,704,232)Increase/decrease in other liabilities and 26,886,199 13,861,469provisions

178,515,85 2,145,0402

(18,141,312) (8,620,283)Refund/(payment) of direct taxesNet cash generated from operating 230,619,52 46,529,336

activities(A) 2Cash flow from investing activitiesInvestments in subsidiaries and/or joint (15,758,166) (8,509,194)venturesIncome received on above investments 4,484,915 3,386,929Purchase of fixed assets (4,924,623) (5,474,001)Proceeds from sale of fixed assets 4,347,300 942,843(Purchase)/sale of held to maturity (171,776,134) (69,286,381)securitiesNet cash generated from investing (183,626,70 (78,939,804)activities(B) 8)Cash flow from financing activitiesProceeds from issue of share capital 2,074,414 79,813,833Net proceeds/(repayment) of bonds 160,717,380 869,592Dividend and dividend tax paid (8,646,021) (7,174,390)Net cash generated from financing 154,145,77 73,509,035activities(C) 4

Effect of exchange fluctuation on (327,587) 3,955translation reserve(D)Net increase/(decrease) in cash and cash 200,811,00 41,102,522equivalents)(A+B+C+D) 1

Cash and cash equivalents at 1st April 170,402,245 129,299,723Cash and cash equivalents at 31st March 371,213,247 170,402,245

CHAPTER-4CONCLUSION

The balance-sheet along with the income statement is an

important tools for investors and many other parties who are

interested in it to gain insight into a company and its

operation. The balance sheet is a snapshot at a single point

of time of the company’s accounts- covering its assets,

liabilities and shareholder’s equity. The purpose of the

balance-sheet is to give users an idea of the company’s

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 2007, 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 2006 from 2005 and % change in 2007 from

2006. 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, deposits is

increased except borrowings which is decreased. % increase

in some item is more than previous year and in some items

it is less.

Ratio analysis of financial statement shows that bank’s

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. Bank have given

more advances to its customer and they have less cash in

their hand. Profitability ratio of bank is lower 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 year. 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 shows that ICICI Bank’s financial

position is good. Bank’s profitability is increasing but not at

high rate. Bank’s liquidity position is fair but not good

because bank invest more in current assets than the liquid

assets. As we all know that ICICI Bank is on the first position

among all the private sector bank of India in all areas but it

should pay attention on its profitability and liquidity. Bank’s

position is stable.

CHAPTER-5RECOMMENDATION

&SUGGESTION

Some of the recommendation and suggestion are as follows:

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

BIBLIOGRAPHY

REFERENCE BOOKSP.N. VARSHNEY “Banking Law And Practices” Sultan Chand &

Sons

SUNDRAM & VARSHNEY “Banking, Theory Law And Practices”Sultan Chand & Sons

DR. S. N. MAHESHWARI “Principles Of Accounting” Sultan Chand& Sons

WEBSITESwww.icicibank.com

www.pruicici.com

www.investopedia.com

(I) PROFIT AND LOSS A/CFor The Year Ended March 31,2007

(RS. IN ‘000S)PARTICULARS AS ON AS ON

SCHE- 31.03.2007 31.03.2006DULE

I. INCOMEInterest earned 13 229,942,916 143,061,325Other income 14 59,291,686 41,808,859

289,234,602 184,870,184TOTAL INCOME

II. EXPENDITUREInterest expended 15 163,584,984 95,974,483Operating expenses 16 66,905,564 50,011,537Provision and contingencies 17 27,641,854 13,483,417

258,132,402 159,469,437TOTAL EXPENDITURE

III. PROFIT/LOSSNet profit for the year 31,102,200 25,400,747Profit brought forward 2,934,416 1,882,221

TOTAL PROFIT/(LOSS) 34,036,616 27,282,221IV. APPROPRIATIONS/ TRANSFERS

7,800,000 6,360,000Transfer to Statutory reserveTransfer to reserve fund 1,168 222Transfer to capital reserve 1,210,000 680,000Transfer to investment fluctuation - 5,900,000reserveTransfer from investment fluctuation - (13,203,350)reserveTransfer to special reserve 4,500,000 2,750,000Transfer to revenue and other reserves - 13,203,350Proposed equity share dividend 9,011,694 7,593,326Proposed preference share dividend 35 35Corporate dividend tax 1,530,978 1,064,969Balance carried over to balance sheet 982,741 2,934,416

34,036,616 27,282,968TOTAL

18Significant policies& notes to accountsEARNING PER SHARESBasic(rs.) 34.84 32.49Diluted(rs.) 34.64 32.15Face value per share(rs.) 10.00 10.00

(II) BALANCE-SHEET

(Balance sheet of ICICI bank as on March 31,2007)(Rs. In ‘000’s)

Particulars Schedule As on As on31.03.200731.03.2006

(RS.)(RS.)

CAPITAL & LIABILITIES1 12,493,43712,398,345

CapitalReserve & Surplus 2 234,139,207213,161,571Deposits 3 2,305,101,8631,650,831,713Borrowings 4 512,560,263385,219,136Other liabilities & provisions 5 382,286,356252,278,777

3,446,581,1262,513,889,542TOTAL CAPITAL &

LIABILITIES

ASSETSCash and Balance with Reserve 6 187,068,79489,343,737Bank Of IndiaBalances with banks and money at 7 184,144145281,058,508calls and short noticeInvestment 8 912,578,418715,473,944Advances 9 1,958,655,9961,461,631,089Fixed Assets 10 39,234,23239,807,115Other Assets 11 164,889,234126,575,149

2,513,889,542TOTAL ASSETS 3.446,581,126

Contingent Liabilities 12 5,629,594,060 3,950,336,655Bills for Collection 40,465,610 43,384,648Significant accounting policies and 18notes to accounts(The Schedule refer to above form an integral part of balance sheet)