Manisha Final Financial Analysis & Cost Reduction of ICICI

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FINANCIAL ANALYSIS AND COST REDUCTION

PROGRAM IN ICICI BANK LTD.

Dissertation submitted to thePADMASHREE DR.D.Y.PATIL UNIVERSITY

In partial fulfillment of the requirements for the award of the

Degree of

MASTERS IN BUSINESS ADMINISTRATION

Submitted by

MANISHA SHELAR

Roll No .MBA-COR-0801066

Research Guide

MS. RUPALI PATIL

Department of Business Management

Padmashree Dr. D.Y. Patil University

CBD Belapur, Navi Mumbai

MARCH 2010

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FINANCIAL ANALYSIS AND COST REDUCTION

PROGRAM IN ICICI BANK LTD.

Dissertation submitted to thePADMASHREE DR.D.Y.PATIL UNIVERSITY

In partial fulfillment of the requirements for the award of

the Degree of

MASTERS IN BUSINESS ADMINISTRATION

Submitted by

MANISHA SHELAR

Roll No . MBA-COR-0801066

Rsearch Guide

MS. RUPALI PATIL

Department of Business Management


CBD Belapur, Navi Mumbai

MARCH 2010

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DECLARATION

I hereby declare that the dissertation FINANCIAL ANALYSIS

AND COST REDUCTION PROGRAM IN ICICI BANK LTD.

submitted for the MBA Degree at Padmashree Dr. D. Y. Patil

Universitys Department of Business Management is my original

work and the dissertation has not formed the basis for the

award of any degree, associate ship, fellowship or any other

similar titles.

Place: Mumbai

Date:

Signature of the

student

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CERTIFICATE

This is to certify that the dissertation entitled FINANCIAL

ANALYSIS AND COST REDUCTION PROGRAM IN ICICI BANK

LTD. is the bonafide research work carried out by Ms. Manisha

Shelar student of MBA, at Padmashree Dr. D. Y. Patil University,

Department of Business Management during the year 200810,

in partial fulfillment of the requirements for the award of the

Masters in Business Management and that the dissertation has

not formed the basis for the award previously of any degree,diploma, associate ship, fellowship or any other title.

Ms. Rupali Patil

(Project Guide)

Dr. R. Gopal

(Director)

Department of Business Mgt,


Place: Mumbai

Date:

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ACKNOWLEDGEMENT

It gives me great pleasure in submitting this final project

report on FINANCIAL ANALYSIS AND COST REDUCTION

PROGRAM IN ICICI BANK LTD. I thank Ms. Rupali Patil for

guiding me throughout this project work and also for motivating

me in different ways. She has been a tremendous helping hand

in completing this difficult task. I am grateful for having an easy

or any time access to such knowledgeable and guiding spirit.

I feel there is ample scope of improvement upon the work of this

nature and shall be thankful if any suggestion is offered for its

improvement.

I would like to extent my deep sense of gratitude to

my family, friends and all whom guided and helped

me during completion of this report.

Place: Mumbai

Date:

Signature of the student

Chapter No. Content Page

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8.3 History 728.4 Board of Directors 758.5 Why ICICI Bank Leads 76

8.6SUBSIDIARIES/JOINT VENTURE/

ASSOCIATES77

8.7 Awards in 2009 809. Data analysis and interpretation 83

9.1 Comparative Statement 849.2 Trend analysis 95

9.3 Ratio analysis 101

10. Cost Reduction Process10.1.1 Introduction 11310.1.2 Definition 11410.1.3 Cost control 11610.1.4 Technique of Cost Reduction 117

10.1.5Non-Conventional Approach for cost

reduction120

10.1.6 Cost Reduction Process 121

10.1.7Implementing Cost reduction

program121

10.1.8 Benefits of cost reduction 12310.1.9 Fish Bone Diagram for cost

reduction program124

10.1.10 Precautions in Implementations 12510.1.11 Advantages of Cost Reduction 126

10.1.12A few applications of cost reduction

strategies.127

10.2Cost Reduction Program in ICICI

Bank129

10.2.1Areas for cost reductions in ICICI

Bank Ltd.130

10.2.2 Cuts in ICICI Bank Ltd. 13110.2.3 Cost Reduction strategies of ICICI 132

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bank ltd.11. Finding 13912 Suggestion 14213 Conclusion 144

14. Annexure 14715. Bibliography 155

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A. List of Graphs

Graph No. Title Page no.

1 Trend of Profit & Loss a/c 92

2 Trend of Capital & Liability 97

3 Trend of Assets 98

4 Current Ratio 102

5 Liquid Ratio 104

6 Earning per share 106

7 Return on capital employed 108

8 Proprietary ratio 110

9 Areas of Making Cost Reduction 130

10 Cuts in ICICI Bank 131

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B. List of Chart

CHART

NO.TITLE PAGE NO.

1. Classification of Financial Analysis 262. Classification of Rato 38

3. Cost Reduction Program Structure 1224. Benefits of Cost Reduction 1235. Fish Bone Diagram 124

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C. List of Table

Table No. Title Page No.1. Background Of ICICI 742. Subsidiaries 783. Comparative Profit AND Loss a/c 844. Comparative Balance Sheet 875. Trend Analysis of Profit and Loss 906. Trend Analysis of Balance Sheet 95

7. Current Ratio 1018. Liquid Ratio 1039. Earning per share 10510. Return on capital employed 10711. Proprietary ratio 109

12.Differences between Cost Control &

Cost Reduction116

D. List of Abbreviations

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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 analysis it.

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

Indian financial institution, and was its wholly owned subsidiary.

Income statements of the ICICI motors for years 99-00 to 05-06 are

the business mirrors, which reflect the financial position and

operating strength and weakness of the concern. Income statementanalysis which is done by using ratio analysis and trend analysis give

the true picture of the company. Cost reduction is the true medicine

for the revival of the company during the decline of the company

which is studied in this project. The big positive of the cost reduction

initiative goes beyond the statistics of money saved. The crisis

unified the company. Companies have emerged from this as phoenix

In order to understand and analysis Ratio I have used profit and loss

and balance sheet of both banks. The analysis showed variousaspect of bank regarding their financial system. Observation also

indicated most widely emphasized goal of the firm is to maximize the

value of the firm to its to meet the long term and short term

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requirements. Funds are invariably required to carry on the various

activities of a business. on the basis of ratio analysis I have

suggested some issues which will helpful to bank regarding their

financial systems analysis of financial statements helped me to knowhow ration analysis helps the banker to know the financial position of

the business. Among the various tools for evaluating the financial

statements, ratio analysis is the most widely used tool, as it helps us

to measure the financial and operational performance of any

business.

In this project, the concepts of Cost reduction are used in such amanner that it can be made more effective, emphasizing more on the

role of management, explaining the factor behind success and failure

of such analysis within the organization, accentuating its application

in Banking Sector and also highlighting Cost reduction concept, cost

reduction process & strategies and so on. There is a case study on

Cost reduction programmers in ICICI Bank.

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Chapter 2

Introduction

Every financial manager is involved in financial decision making and

financial planning in order to take right decision at right time, heshould be equipped with sufficient past and present information about

the firm and its operations and how it is changing overtime. Much of

this information that is used by financial manager to take various

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decisions and to plan for the future is derived from the financial

statements. The project, is to analyze the financial statements and to

study different ratios over the period of 5 years to determine the

financial position of ICICI Bank.Financial analysis involves the use of various financial statements.

These statements do several things. First, the balance sheet

summarizes the assets, liabilities and owners equity of a business at

moment in time, usually the end of a year or a quarter. Next the

income statement summarizes the revenues and expenses of the

firm over a period of time while balance sheet represents a snapshotof the firm s financial position at a moment in time.

Financial management is planning and controlling of financial

resources of a firm with a specific objective. Since, financial

management as a separate discipline is of recent origin, it is still in a

developing stage. It is very crucial for an organization to manage its

funds effectively and efficiently. Financial management has assumed

greater importance today as the financial strategies required to

survive in the competitive environment have become very important.

In the financial markets also new instruments and concepts arecoming and one must say that a finance manager of today is

operating in a more complex environment. A study of theories and

concepts of financial management has therefore become a part of

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paramount importance for academics as well as for practitioners but

there are many concepts and theories about which controversies

exist as no unanimous opinion is reached as yet. The project, further

aims at discussing and understanding the concepts of financialmanagement of ICICI Bank; the functions expect to be performed by

the financial management as well as the objectives of financial

managements.

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Chapter 3

Objective of study

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Objective of study

To Analysis ICICI Bank Financial Statement To understand the importance of financial statement analysis,

calculate the ratios, and also analyze them. To study the ICICI Bank financial position and market standing

through the ratio Analysis and cost reduction programmes Through the net profit ratio and other profitability ratio,

understand the profitability position of ICICI bank. Evaluating companys performance relating to Financial

Statement Analysis. To know the liquidity position of the company, with the help of

Current ratio. How the Cost Reduction process works.

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Chapter 4

Research Methodology

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Research methodology

Research Methodology is a systematic method of discovering newfacts or verifying old facts, their sequence, inter-relationship, casual

explanation and the natural laws which governs them.

It covers the systematic approach concerning generalization and the

formulation of the theory. Different stages involved in research

consists of enacting the problem, formulating a hypothesis, collecting

the facts or data, analyzing the facts and reaching certain conclusioneither in the form of solution towards the concerned problem or in

generalization for some theoretical formulation.

The main objective of the study is to determine and analyze the

financial position by two ways:

1. Primary Data: Ratio Calculation Graphical Representation Interviews with finance manager.

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2. Secondary Data:

Secondary data consist of the information that already exists or

someone has collected it for specific purpose. This data was

collected by: The company profile was collected from website of

www.icicibank.com

www.icicidirect.com

Books related to Financial Management.

Reference to the various report, material, published by the

company.

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Chapter 5

Limitations of the study

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Limitations of the study

The limitations of the study can be as follows in the process of

the research. Companies are being heisted to provide to right or valid data

which is mush important for study. Consumption Time frame

Primary data can be bias depending upon the individuals view Dynamic market economy and business opportunities Position of Indian economy in coming years

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Chapter 6

Review of literature

Strategic and Financial Performance Implications of Global

Sourcing Strategy: A contingency Analysis

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Using a contingency model of global sourcing strategy, this study

investigated the moderating effects of sourcing related factors on

the relationship between sourcing strategy and a products strategicand financial performance. The results lent some support to the

contingency model of global sourcing strategy in that product

innovation, process innovation and asset specificity were significant

moderator variables for financial, but not strategic , performance.

However, the results provided no support for bargaining power of

suppliers and transaction frequency as moderator variables. In other words, in achieving high financial performance for a product, whether

a particular sourcing strategy should be used for a particular product

depended on the levels of product innovation , process innovation

and asset specificity

Several unique financial characteristics differentiate a cooperative

from an investor-oriented firm (IOF). When evaluating the

cooperatives performance, comparing a cooperatives financial

position with an IOF can be misleading for those unfamiliar with these

characteristics. This report was written to help boards and managers

assess the financial performance of their cooperatives and to

familiarize potential creditors with the unique financial characteristics

and performance of cooperatives.

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Environmental and Financial Performance Literature

We review the growing literature relating corporate environmental

performance to financial performance. We seek to identifyachievements and limitations of this literature and to highlight areas

for further research. Our primary interest is to assess the adequacy

of the literature in informing corporate managers how, when, and

where to make pro-environment investments that will pay off with

financial returns for long-term shareholders. To do so , we create a

conceptual framework that maps the influence of regulators, publichealth scientists , environmental advocates , consumers, employees,

and other interested parties upon corporate financial returns. Our

decision has relevance to all parties interested in influencing

corporate actions affect the environment .

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Financial System Analysis: A Functional View by Mariko FUJII

(Research Center for Advanced Economic Engineering,

University of Tokyo)

The Financial system plays a fundamental role in the economic

system in facilitating the transfer of resources and provision of

settlement services, liquidity and price information, among others.

Under the recent economic situations where uncertainty of future

economic variables have more widely prevailed, the function to

provide tools for trading and sifting risks has increased its

importance. Depending on how such mechanism is provided,

economic welfare of the agents may differ substantially. Functional

approach to the financial systems is quite helpful to examine the role

of specific institutions and design of the financial system and to

evaluate them in the light of current economic developments. In this

note, the functions of financial systems are reviewed from the

viewpoints described above and the modern developments of financial institutions are considered for evaluation.

Banks and financial markets are two basic structures that consist of

the financial system, and they may be distinct in the way they

perform the financial functions. In recent years, financial markets

seem to have increased their relative weight in many economies

because they can deal with a wide variety of products to trade risks,

which have been made available by virtue of the advancement of

technologies, but also can aggregate opinions through the

decentralized decision-making processes. These characteristics of

financial markets, in comparison with banks, are inherent in market

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mechanism itself, and may work well under rapidly changing and

rather uncertain economic conditions.

As a matter of course, banks and financial markets are both

essential to the economy and interacting each other. Some of relatively newly developed financing methods such as venture capital

and securitization could be regarded as resulting products of the

interactions of banks and financial markets.

It is important to understand under what conditions a particular

financial structure of institutions emerges. For this purpose, the

analysis to deal with banks and financial markets in a consolidatedframework is interesting and would be the direction of future

research.

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Chapter 7

Introduction to Financial Analysis

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7.1.1 Introduction:

A Financial Statement is a compilation of data, which is logically and

consistently organized according to accounting principles. Its purposeis to convey an understanding of some financial aspects of a

business firm. It shows a position at a movement in time, as in the

case of balance sheet, or reveals a series of activities over a given

period of time, as in the case of an income statement. Financial

statements are the major means through which firms present their

financial situation to stock holders, creditors and general public. Themajority of firms which include extensive financial statements in their

annual reports, which receive wide distribution.

Nature of financial statement Analysis:

Financial Statement Analysis consist of the application of analytical

tools and techniques to the data in financial statements in order to

derive from them measurements and relationships that are significant

and useful for decision making. The process of financial analysis can

be described in various ways, depending on the objectives to be

obtained. Financial analysis can be used as a preliminary screening

tool in the selection of stocks in the secondary market. It can be used

as a forecasting tool for future financial conditions and results. It maybe used as a process of evaluation and diagnosis of managerial,

operating or other problem areas. Above all, financial analysis

reduces reliance on intuition, guesses and thus narrows the areas of

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uncertainty that is present in all decision making processes. Financial

analysis does not lesson the need for judgment but rather establishes

a sound and systematic basis for its rational application.

Sources of Financial Information:

The financial data needed in financial analysis come from many

sources. The primary source is the data provided by the firm itself in

its annual report and required disclosures. The annual report

comprises the income statement, the balance sheet, and thestatement of cash flows, as well as footnote to these statements.

Besides this information such as the market price of securities

publicly traded corporations can be found in the financial 20 press

and the electronic media daily. The financial press also provides

information to stock price indices for industries and for market as a

whole.

7.1.2 History of financial Analysis

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Analysis of financial statements has had its greatest growth since

1990 s. A major impetus came from increasing need from increasing

need on the part of grantors of commercial credit such as bankers,financial institutions etc, to understand the condition of their

customer. At the same time businessman need to understand their

own conditions of their own enterprise in order to assure its survival

in stress of competition. Satisfaction of these needs has been

assisted by the continuous development of accounting as a science

and passing of income tax law in1993. This required preparation of balance sheets and income statements, as they are the basic

statements required for the income tax purpose. Thus a reasonably

reliable data from which typical financial ratios could be calculated

has become increasingly available. Between 1919 and 1929 four

men pioneered in development of financial ratios. These where

James bliss who published a book on this subject in 1923. Alexander

wall, head of Robert Morris associates and Raymond W Dunning,

published a work on this subject in 1928 and Roy Foulke, who made

some of the first detailed compilations and studies between 1925 and

1928.

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Users of Accounting Information

The list of categories of readers and users of accounts includes the

following people and groups of people: Investors Lenders Managers of the organization Employees Suppliers and other trade creditors Customers Governments and their agencies Public Financial analysts Environmental groups Researchers: both academic and professional

7.1.3 Advantages of Financial Statement Analysis

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There are various advantages of financial statements analysis. The

major benefit is that the investors get enough idea to decide about

the investments of their funds in the specific company. Secondly,

regulatory authorities like International Accounting Standards Boardcan ensure whether the company is following accounting standards

or not. Thirdly, financial statements analysis can help the government

agencies to analyze the taxation due to the company. Moreover,

company can analyze its own performance over the period of time

through financial statements analysis.

7.1.4 Limitations of Financial Statement Analysis:

Comparison of one company with another can provide valuable clues

about the financial health of an organization. Unfortunately,

differences in accounting methods between companies sometimes

make it difficult to compare the companies financial data. For

example if one firm values its inventories by LIFO method and

another firm by the average cost method, then direct comparison of

financial data such as inventory valuations and cost of goods sold

between the two firms may be misleading. Sometimes enough data

are presented in foot notes to the financial statements to restate data

to a comparable basis. Otherwise, the analyst should keep in mind

the lack of comparability of the data before drawing any definiteconclusion.

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7.2 The Principal Tools of Analysis:

In the analysis of financial statements, the analyst can have a variety

of tools available from which he can choose the best suited to hisspecific purpose. The following are the important tools of analysis.

The Principles Tools/Techniques of Financial Analysis:

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Figure 1 Classification of Financial Analysis

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Tools of

Financial

Analysis

Trend

Analysis

Common size

statement

Comparative

Statement

Ratio

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7.2.1 Trend Analysis

An aspect of technical analysis that tries to predict the future

movement of a stock based on past data. Trend analysis is based on

the idea that what has happened in the past gives traders an idea of

what will happen in the future.

There are three main types of trends: short-, intermediate- and long-term. Trend Analysis Analysts make a trend analysis of performance

over the past five to ten years to get an overall picture. Trend

analysis is made in respect of sales, cost of sales, gross profit, net

profit (before tax), net profit (after tax), net worth, debt, dividend

policy, bonus and Rights issues, return on net worth, earnings per

share, etc.

7.2.2 Common Size Statements

Definition and Explanation of Vertical Analysis and Common Size

Statements: Vertical analysis is the procedure of preparing and

presenting common size statements.

Common size statement is one that shows the items appearing on itin percentage form as well as in dollar form. Each item is stated as a

percentage of some total of which that item is a part. Key financial

changes and trends can be highlighted by the use of common size

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statements. Common size statements are particularly useful when

comparing data from different companies .

The information it contains in the selection, reclassification and

summarization of the data contained in profit and loss account and

balance sheet, it is no way replacement of either these statements.

To provide a comparative view of movement of funds by the

statement of changes in financial position is prepared for the period

covered by the profit and loss account as well as the correspondingprevious period.

7.2.3 Comparative Statement

Comparative statements are financial statements that cover a

different time frame, but are formatted in a manner that makes

comparing line items from one period to those of a differentperiod an easy process. This quality means that the comparative

statement is a financial statement that lends itself well to the

process of comparative analysis. Many companies make use of

standardized formats in accounting functions that make the

generation of a comparative statement quick and easy. The

benefits of a comparative statement are varied for a corporation .

Because of the uniform format of the statement , it is a simple

process to compare the gross sales of a given product or all products

of the company with the gross sales generated in a previous month,

quarter, or year. Comparing generated revenue from one period to a

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different period can add another dimension to analyzing the

effectiveness of the sales effort, as the process makes it possible to

identify trends such as a drop in revenue in spite of an increase in

units sold.

Along with being an excellent way to broaden the understanding of

the success of the sales effort, a comparative statement can also

help address changes in production costs. By comparing line items

that catalog the expense for raw materials in one quarter with another

quarter where the number of units produced is similar can make it

possible to spot trends in expense increases, and thus help isolate

the origin of those increases. This type of data can prove helpful to

allowing the company to find raw materials from another source

before the increased price for materials cuts into the overall

profitability of the company.

A comparative statement can be helpful for just about any

organization that has to deal with finances in some manner.

Even non-profit organizations can use the comparative

statement method to ascertain trends in annual fund raising

efforts. By making use of the comparative statement for the

most recent effort and comparing the figures with those of the

previous years event, it is possible to determine where

expenses increased or decreased, and provide some insight in

how to plan the following years event.

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7.2.4 Ratio Analysis:

This is the important tool available to financial analyst for their work.An accounting ratio shows the relationship in mathematical terms

between two interrelated accounting figures. Fundamental Analysis

has a very broad scope. One aspect looks at the general (qualitative)

factors of a company. The other side considers tangible and

measurable factors (quantitative). This means crunching and

analyzing numbers from the financial statements. If used in

conjunction with other methods, quantitative analysis can produce

excellent results.

Ratio analysis isn't just comparing different numbers from the

balance sheet, income statement, and cash flow statement. It's

comparing the number against previous years, other companies, the

industry, or even the economy in general. Ratios look at the

relationships between individual values and relate them to how acompany has performed in the past, and might perform in the future.

A ratio is one figure express in terms of another figure. It is a

mathematical yardstick that measures the relationship two figures,

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which are related to each other and mutually interdependent. Ratio is

express by dividing one figure by the other related figure. Thus a ratio

is an expression relating one number to another. It is simply the

quotient of two numbers.

7.2.4.1 MEANING OF RATIO ANALYSIS:

Ratio analysis is the method or process by which the relationship of

items or group of items in the financial statement are computed,determined and presented. Ratio analysis is an attempt to derive

quantitative measure or guides concerning the financial health and

profitability of business enterprises. Ratio analysis can be used both

in trend and static analysis. There are several ratios at the disposal of

an annalist but their group of ratio he would prefer depends on the

purpose and the objective of analysis.

While a detailed explanation of ratio analysis is beyond the scope of

this section, we will focus on a technique, which is easy to use. It can

provide you with a valuable investment analysis tool. This technique

is called cross-sectional analysis. Cross-sectional analysis compares

financial ratios of several companies from the same industry. Ratio

analysis can provide valuable information about a company's

financial health. A financial ratio measures a company's performancein a specific area. For example, you could use a ratio of a company's

debt to its equity to measure a company's leverage. By comparing

the leverage ratios of two companies, you can determine which

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company uses greater debt in the conduct of its business. A

company whose leverage ratio is higher than a competitor's has more

debt per equity. You can use this information to make a judgment as

to which company is a better investment risk. However, you must becareful not to place too much importance on one ratio. You obtain a

better indication of the direction in which a company is moving when

several ratios are taken as a group.

7.2.4.2 OBJECTIVE OF RATIOS

Ratio is work out to analyze the following aspects of business

organization-

1. Solvency- Long term Short term Immediate

2. Stability

3. Profitability

4. Operational E) Credit standing

5. Structural analysis

6. Effective utilization of resources

7. Leverage or external financing

8. Standardize financial information for comparisons

9. Evaluate current operations efficiency

10. Compare performance with past performance

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11. Compare performance against other firms or industry

standards.

12. Study the efficiency of operations efficiency

13. Study the risk of operations

7.2.4.3FORMS OF RATIO:

Since a ratio is a mathematical relationship between to or more

variables accounting figures, such relationship can be expressed in

different ways as follows

A] As a pure ratio:

For example the equity share capital of a company is Rs.

20,00,000 & the preference share capital is Rs. 5,00,000, the

ratio of equity share capital to preference share capital is

20,00,000: 5,00,000 or simply 4:1.

B] As a rate of times:

In the above case the equity share capital may also be

described as 4 times that of preference share capital. Similarly,

the cash sales of a firm are Rs. 12,00,000 & credit sales are

Rs. 30,00,000. so the ratio of credit sales to cash sales can be

described as 2.5 [30,00,000/12,00,000] or simply by saying thatthe credit sales are 2.5 times that of cash sales.

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C] As a percentage:

In such a case, one item may be expressed as a percentage of

some other item.

For example, net sales of the firm are Rs.50,00,000 & the

amount of the gross profit is Rs. 10,00,000, then the grossprofit may be described as 20% of sales [ 10,00,000/50,00,000]

7.2.4.4 STEPS IN RATIO ANALYSIS

The ratio analysis requires two steps as follows:

1] Calculation of ratio

2]Comparing the ratio with some predetermined standards. The

standard ratio may be the past ratio of the same firm or industrys

average ratio or a projected ratio or the ratio of the most successful

firm in the industry. In interpreting the ratio of a particular firm, the

analyst cannot reach any fruitful conclusion unless the calculated

ratio is compared with some predetermined standard. Theimportance of a correct standard is oblivious as the conclusion is

going to be based on the standard itself.

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7.2.4.5 TYPES OF COMPARISONS

The ratio can be compared in three different ways

1] Cross section analysis:

One of the way of comparing the ratio or ratios of the firm is tocompare them with the ratio or ratios of some other selected

firm in the same industry at the same point of time. So it

involves the comparison of two or more firms financial ratio at

the same point of time. The cross section analysis helps the

analyst to find out as to how a particular firm has performed in

relation to its competitors. The firms performance may be

compared with the performance of the leader in the industry in

order to uncover the major operational inefficiencies. The cross

section analysis is easy to be undertaken as most of the data

required for this may be available in financial statement of the

firm.

2] Time series analysis:

The analysis is called Time series analysis when the

performance of a firm is evaluated over a period of time. By

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comparing the present performance of a firm with the

performance of the same firm over the last few years, an

assessment can be made about the trend in progress of the

firm, about the direction of progress of the firm. Time seriesanalysis helps to the firm to assess whether the firm is

approaching the long-term goals or not.

The Time series analysis looks for (1) important trends in financial

performance (2) shift in trend over the years (3) significant deviation if

any from the other set of data.

3] Combined analysis:

If the cross section & time analysis, both are combined together

to study the behavior & pattern of ratio, then meaningful &

comprehensive evaluation of the performance of the firm can

definitely be made. A trend of ratio of a firm compared with the

trend of the ratio of the standard firm can give good results. For

example, the ratio of operating expenses to net sales for firm

may be higher than the industry average however, over the

years it has been declining for the firm, whereas the industry

average has not shown any significant changes.

The combined analysis as depicted in the above diagram, whichclearly shows that the ratio of the firm is above the industry average,

but it is decreasing over the years & is approaching the industry

average.

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7.2.4.6 PRE-REQUISITIES TO RATIO ANALYSIS

In order to use the ratio analysis as device to make purposeful

conclusions, there are certain pre-requisites, which must be taken

care of. It may be noted that these prerequisites are not conditionsfor calculations for meaningful conclusions. The accounting figures

are inactive in them & can be used for any ratio but meaningful &

correct interpretation & conclusion can be arrived at only if the

following points are well considered.

1) The dates of different financial statements from where data is

taken must be same.

2) If possible, only audited financial statements should be

considered, otherwise there must be sufficient evidence that the data

is correct.

3) Accounting policies followed by different firms must be same in

case of cross section analysis otherwise the results of the ratio

analysis would be distorted.

4) One ratio may not throw light on any performance of the firm.Therefore, a group of ratios must be preferred. This will be

conductive to counter checks.

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5) Last but not least, the analyst must find out that the two figures

being used to calculate a ratio must be related to each other,

otherwise there is no purpose of calculating a ratio

7.2.4.7 CLASSIFICATION OF RATIO

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3] Composite ratio:

These ratios indicate the relationship between two items, of which

one is found in the balance sheet & other in revenue statement.There are two types of composite ratiosa) Some composite ratios

study the relationship between the profits & the investments of the

concern. E.g. return on capital employed, return on proprietors fund,

return on equity capital etc.

Other composite ratios e.g. debtors turnover ratios, creditors turnover

ratios, dividend payout ratios, & debt service ratios

BASED ON FUNCTION:

Accounting ratios can also be classified according to their functions in

to liquidity ratios, leverage ratios, activity ratios, profitability ratios &

turnover ratios.

1] Liquidity ratios:

It shows the relationship between the current assets &

current liabilities of the concern e.g. liquid ratios & current

ratios. Liquidity refers to the ability of a firm to meet its short-term

(usually up to 1 year) obligations. The ratios, which indicate the

liquidity of a company, are Current ratio, Quick/Acid-Test ratio, andCash ratio. These ratios are discussed below

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2] Leverage ratios:

It shows the relationship between proprietors funds & debts used in

financing the assets of the concern e.g. capital gearing ratios, debtequity ratios, & Proprietory ratios.

3] Activity ratios:

It shows relationship between the sales & the assets. It is also known

as Turnover ratios & productivity ratios e.g. stock turnover ratios,debtors turnover ratios.

4] Profitability ratios:

a) It shows the relationship between profits & sales e.g. operating

ratios, gross profit ratios, operating net profit ratios, expenses ratios

b) It shows the relationship between profit & investment e.g. return on

investment, return on equity capital.

5] Coverage ratios:

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It shows the relationship between the profit on the one hand & the

claims of the outsiders to be paid out of such profit e.g. dividend

payout ratios & debt service ratios.

BASED ON USER:

1] Ratios for short-term creditors:

Current ratios liquid ratios stock working capital ratios etc.

2] Ratios for the shareholders:

Return on proprietors fund

return on equity capital etc.

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LIQUIDITY RATIO: -

Liquidity refers to the ability of a firm to meet its short-term (usually

up to 1 year) obligations. The ratios, which indicate the liquidity of a

company, are Current ratio, Quick/Acid-Test ratio, and Cash ratio.

These ratios are discussed below

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CURRENT RATIO

Meaning:

This ratio compares the current assests with the current liabilities. It

is also known as working capital ratio or solvency ratio. It is

expressed in the form of pure ratio.

E.g. 2:1

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Formula :

Current Ratio = Current Assets / Current Liabilities

Significance:

The current assests of a firm represents those assets which can be,

in the ordinary course of business, converted into cash within a short

period time, normally not exceeding one year. The current liabilities

defined as liabilities which are short term maturing obligations to bemet, as originally contemplated, with in a year. Current ratio (CR) is

the ratio of total current assets (CA) to total current liabilities (CL).

Current assets include cash and bank balances; inventory of raw

materials, semifinished and finished goods; marketable securities;

debtors (net of provision for bad and doubtful debts); bills receivable;

and prepaid expenses.

Current liabilities consist of trade creditors, bills payable, bank credit,

provision for taxation, dividends payable and outstanding expenses.

This ratio measures the liquidity of the current assets and the ability

of a company to meet its short-term debt obligation. CR measures

the ability of the company to meet its CL, i.e., CA gets converted intocash in the operating cycle of the firm and provides the funds needed

to pay for CL. The higher the current ratio, the greater the short-term

solvency. This compares assets, which will become liquid within

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approximately twelve months with liabilities, which will be due for

payment in the same period and is intended to indicate whether there

are sufficient short-term assets to meet the short- term liabilities.

Recommended current ratio is 2: 1. Any ratio below indicates that theentity may face liquidity problem but also Ratio over 2: 1 as above

indicates over trading, that is the entity is under utilizing its current

assets.

LIQUID RATIO:

Meaning:

Liquid ratio is also known as acid test ratio or quick ratio. Liquid ratio

compare the quick assets with the quick liabilities. It is expressed in

the form of pure ratio. E.g. 1:1. The term quick assets refer to current

assets, which can be converted into, cash immediately or at a short

notice without diminution of value.

Formula:

Liquid ratio = Quick Assets / Current Liabilities

Significance:

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Formula:

Earning per share = NPAT / Number of equity share

Significance:

The higher EPS will attract more investors to acquire shares in the

company as it indicates that the business is more profitable enough

to pay the dividends in time. But remember not all profit earned is

going to be distributed as dividends the company also retains someprofits for the business

DIVIDEND PAYOUT RATIO:-

Meaning:

Dividend Pay-out Ratio shows the relationship between the dividend

paid to equity shareholders out of the profit available to the equity

shareholders.

Formula:

Dividend Pay out ratio = Dividend per share / Earning per share *100

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Significance:

D/P ratio shows the percentage share of net profits after taxes and

after preference dividend has been paid to the preference equityholders.

CAPITAL GEARING RATIO:-

Meaning:

Gearing means the process of increasing the equity shareholders

return through the use of debt. Equity shareholders earn more when

the rate of the return on total capital is more than the rate of interest

on debts. This is also known as leverage or trading on equity. The

Capital-gearing ratio shows the relationship between two types of

capital viz: - equity capital & preference capital & long term

borrowings. It is expressed as a pure ratio.

Formula:

Capital gearing ratio = Preference capital+ secured loan /

Equity capital & reserve & surplus

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Significance:

Capital gearing ratio indicates the proportion of debt &

equity in the financing of assets of a concern. If the amount of fixed cost bearing capital is more than the equity share capital

including reserves an undistributed profits), it will be called high

capital gearing and if it is less, it will be called low capital gearing.

The high gearing will be beneficial to equity shareholders when the

rate of interest/dividend payable on fixed cost bearing capital is lower

than the rate of return on investment in business.Thus, the main objective of using fixed cost bearing capital is to

maximize the profits available to equity shareholders.

PROFITABILITY

These ratios help measure the profitability of a firm. A firm, which

generates a substantial amount of profits per rupee of sales, can

comfortably meet its operating expenses and provide more returns to

its shareholders. The relationship between profit and sales is

measured by profitability ratios. There are two types of profitability

ratios: Gross Profit Margin and Net Profit Margin.

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GROSS PROFIT RATIO:-

Meaning:

This ratio measures the relationship between gross profit and sales.

It is defined as the excess of the net sales over cost of goods sold or

excess of revenue over cost.

Formula:

Gross profit ratio = Gross profit / Net sales * 100

Significance:

This ratio shows the profit that remains after the

manufacturing costs have been met. It measures the

efficiency of production as well as pricing. This ratio helps to judge

how efficient the concern is I managing its production, purchase,

selling & inventory, how good its control is over the direct cost, how

productive the concern , how much amount is left to meet other

expenses & earn net profit.

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NET PROFIT RATIO:-

Meaning:

Net Profit ratio indicates the relationship between the net profit & the

sales it is usually expressed in the form of a percentage.

Formula:

Net profit ratio = NPAT / Net sales * 100

Significance:

This ratio shows the net earnings (to be distributed to both equity and

preference shareholders) as a percentage of net sales. It measures

the overall efficiency of production, administration, selling, financing,

pricing and tax management. Jointly considered, the gross and net

profit margin ratios provide an understanding of the cost and profit

structure of a firm.

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RETURN ON CAPITAL EMPLOYED:-

Meaning:

The profitability of the firm can also be analyzed from the point of

view of the total funds employed in the firm. The term fund employed

or the capital employed refers to the total long-term source of funds.

It means that the capital employed comprises of shareholder funds

plus long-term debts. Alternatively it can also be defined as fixedassets plus net working capital. Capital employed refers to the long-

term funds invested by the creditors and the owners of a firm. It is the

sum of long-term liabilities and owner's equity. ROCE indicates the

efficiency with which the long-term funds of a firm are utilized.

Formula:

Return on capital employed = NPAT / Capital employed * 100

Significance :

These ratios determine how quickly certain current assets can be

converted into cash. They are also called efficiency ratios or assetutilization ratios as they measure the efficiency of a firm in managing

assets. These ratios are based on the relationship between the level

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of activity represented by sales or cost of goods sold and levels of

investment in various assets

FINANCIAL

These ratios determine how quickly certain current assets can be

converted into cash. They are also called efficiency ratios or asset

utilization ratios as they measure the efficiency of a firm in managing

assets. These ratios are based on the relationship between the level

of activity represented by sales or cost of goods sold and levels of

investment in various assets. The important turnover ratios aredebtors turnover ratio, average collection period, inventory/stock

turnover ratio, fixed assets turnover ratio, andtotal assets turnover

ratio. These are described below:

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DEBTORS TURNOVER RATIO (DTO)

Meaning:

DTO is calculated by dividing the net credit sales by average debtors

outstanding during the year. It measures the liquidity of a firm's debts.

Net credit sales are the gross credit sales minus returns, if any, from

customers. Average debtors are the average of debtors at thebeginning and at the end of the year. This ratio shows how rapidly

debts are collected. The higher the DTO, the better it is for the

organization.

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Formula:

Debtors turnover ratio = Credit sales / Average debtors

Significance:

This ratio indicates the speed with which the amount is collected from

debtors. The higher the ratio, the better it is, since it indicates that

amount from debtors is being collected more quickly. The morequickly the debtors pay, the less the risk from bad- debts, and so the

lower the expenses of collection and increase in the liquidity of the

firm.

By comparing the debtors turnover ratio of the current year with the

previous year, it may be assessed whether the sales policy of the

management is efficient or not.

Average collection period

This ratio indicates the time with in which the amount is collected

from debtors and bills receivables.

Formula:

Average collection period = debtors + bills receivable / credit

sales per day

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Here, credit sales per day = net credit sales of the year / 365

Average collection period can also be calculated on the bases of debtors turnover ratio.

The Formula will be:

Average collection period = 12 months or 365 days / debtors

turnover ratio

Significance:

This ratio shows the time in which the customers are paying for credit

sales. A higher debt collection period is thus, an indicates of the

inefficiency and negligence on the part of management. On the other

hand, if there is decrease in debt collection period, it indicates prompt

payment by debtors which reduces the chance of bad debts.

INVENTORY OR STOCK TURNOVER RATIO (ITR)

Meaning:

ITR refers to the number of times the inventory is sold and replaced

during the accounting period.

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Formula:

Stock Turnover Ratio = COGS / Average stock

Significance:

ITR reflects the efficiency of inventory management. The higher theratio, the more efficient is the management of inventories, and vice

versa. However, a high inventory turnover may also result from a low

level of inventory, which may lead to frequent stock outs and loss of

sales and customer goodwill. For calculating ITR, the average of

inventories at the beginning and the end of the year is taken. In

general, averages may be used when a flow figure (in this case, cost

of goods sold) is related to a stock figure (inventories).

FIXED ASSETS TURNOVER (FAT)

The FAT ratio measures the net sales per rupee of investment in

fixed assets.

Formula:

Fixed assets turnover = Net sales / Net fixed assets

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Formula:

Proprietary ratio = Proprietary fund / Total fund

Significance:

This ratio should be 33% or more than that. In other words, the

proportion of shareholders funds to total funds should be 33% or

more.

A higher proprietary ratio is generally treated an indicator of soundfinancial position from long-term point of view, because it means that

the firm is less dependent on external sources of finance.

If the ratio is low it indicates that long-term loans are less secured

and they face the risk of losing their money.

STOCK WORKING CAPITAL RATIO:

Meaning:

This ratio shows the relationship between the closing stock & the

working capital. It helps to judge the quantum of inventories in

relation to the working capital of the business. The purpose of this

ratio is to show the extent to which working capital is blocked ininventories. The ratio highlights the predominance of stocks in the

current financial position of the company. It is expressed as a

percentage.

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Formula:

Stock working capital ratio = Stock / Working Capital

Significance:

Stock working capital ratio is a liquidity ratio. It indicates the

composition & quality of the working capital. This ratio also helps to

study the solvency of a concern. It is a qualitative test of solvency. It

shows the extent of funds blocked in stock. If investment in stock ishigher it means that the amount of liquid assets is lower.

DEBT EQUITY RATIO:

MEANING:

Debt equity ratio is also called as leverage ratio. Leverage means the

process of the increasing the equity shareholders return through the

use of debt. Leverage is also known as gearing or trading on

equity. Debt equity ratio shows the margin of safety for long-term

creditors & the balance between debt & equity.

Formula:

Debt equity ratio = Total long-term debt / Total shareholders

fund

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Significance:

This ratio is calculated to assess the ability of the firm to meet its long

term liabilities. Generally, debt equity ratio of is considered safe.If the debt equity ratio is more than that, it shows a rather risky

financial position from the long-term point of view, as it indicates that

more and more funds invested in the business are provided by long-

term lenders.

The lower this ratio, the better it is for long-term lenders because they

are more secure in that case. Lower than 2:1 debt equity ratioprovides sufficient protection to long-term lenders.

RETURN ON PROPRIETOR FUND:

Meaning:

Return on proprietors fund is also known as return on proprietors

equity or return on shareholders investment or investment ratio.

This ratio indicates the relationship between net profit earned & total

proprietors funds. Return on proprietors fund is a profitability ratio,

which the relationship between profit & investment by the proprietors

in the concern.

Its purpose is to measure the rate of return on the total fund made

available by the owners. This ratio helps to judge how efficient the

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concern is in managing the owners fund at disposal. This ratio is of

practical importance to prospective investors & shareholders.

Formula:Return on proprietors fund = NPAT / Proprietors fund * 100

CREDITORS TURNOVER RATIO:

It is same as debtors turnover ratio. It shows the speed at which

payments are made to the supplier for purchase made from them. Itis a relation between net credit purchase and average creditors.

Formula :

Credit turnover ratio = Net credit purchase / Average creditors

Average age of accounts payable = Months in a year / Credit

turnover ratio

Significance:

Both the ratios indicate promptness in payment of creditor purchases.

Higher creditors turnover ratio or a lower credit period enjoyed

signifies that the creditors are being paid promptly. It enhances creditworthiness of the company. A very low ratio indicates that the

company is not taking full benefit of the credit period allowed by the

creditors.

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6.2.4.8 Uses of Ratio analysis

To evaluate performance, compared to previous years and to

competitors and the industry To set benchmarks or standards for performance To highlight areas that need to be improved, or areas that offer

the most promising future potential To enable external parties, such as investors or lenders, to

assess the creditworthiness and profitability of the firm

6.2.4.9 Advantage of ratio analysis

Helpful in analysis of financial statements. Helpful in comparative study. Helpful in locating the weak spots of the business. Helpful in forecasting. Estimate about the trend of the business. Fixation of ideal standards.

Effective control. Study of financial soundness.

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6.2.4.10 Limitations of Ratio analysis

There is considerable subjectivity involved, as there is no

correct number for the various ratios. Further, it is hard to

reach a definite conclusion when some of the ratios are

favorable and some are unfavorable. Ratios may not be strictly comparable for different firms due to

a variety of factors such as different accounting practices or different fiscal year periods. Furthermore, if a firm is engaged

in diverse product lines, it may be difficult to identify the

industry category to which the firm belongs. Also, just because

a specific ratio is better than the average does not necessarily

mean that the company is doing well; it is quite possible rest of

the industry is doing very poorly. Ratios are based on financial statements that reflect the past

and not the future. Unless the ratios are stable, it may be

difficult to make reasonable projections about future trends.

Furthermore, financial statements such as the balance sheet

indicate the picture at one point in time, and thus may not be

representative of longer periods. Financial statements provide an assessment of the costs and

not value . For example, fixed assets are usually shown on the

balance sheet as the cost of the assets less their accumulated

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depreciation, which may not reflect the actual current market

value of those assets. Financial statements do not include all items. For example, it is

hard to put a value on human capital (such as managementexpertise). And recent accounting scandals have brought light

to the extent of financing that may occur off the balance sheet. Accounting standards and practices vary among countries, and

thus hamper meaningful global comparisons.

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Chapter 8

Overview

8.1 Profile82


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At April 4, 2005, ICICI Bank, with free float market capitalization of

about Rs. 308.00 billion (US$ 7.00 billion) ranked third amongst all

the companies listed on the Indian stock exchanges.

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'sacquisition 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 theNYSE.

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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 withICICI 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 Court of Gujarat at Ahmedabad in March 2002, and by

the High Court 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.

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8.2 Vision and Mission of ICICI Bank Ltd.

Vision of ICICI Bank:

Mission :

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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 inthe 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 objectivewas 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 Bankwould 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

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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 Bankshareholders 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 ICICIand 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.

As on June 30, 2008 FY08

CMP: - 955.45 Target Price: - 1,710

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90

Incorporation Year 1994Managing Director K. V. KamathRegistered Office Landmark, Race Course

Circle, Alakapuri,

Vadodra-390007,

GujratTelephone 91-265-2339923/25/27/28Fax 91-265-2339926Website www.icicibank.com

Face Value [Rs] 10BSE Code 532174BSE Group ANSE Code ICICIBANKBloomberg ICICIBC INReuters ICBK.BOISIN Demat INE090A01013

Market Lot 1Listing BSE, NSE, NYSEFinancial Year End 03Book Closure Month Jun/JulAGM Month Jul
http://www.icicibank.com/http://www.icicibank.com/


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Table :1 Background Of ICICI

8.4 BOARD MEMBERS

Mr. N. Vaghul, Chairman Mr. Uday M. Chitale Mr. Sridar Iyengar Mr. Lakshmi N. Mittal Mr. Anupam Puri Mr. Vinod Rai Mr. Somesh R. Sathe Mr. M.K. Sharma

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a widely dispersed retail credit portfolio. ICICI Bank has been able to

maintain the quality of its loan portfolio for a decent time period now.

8.6 SUBSIDIARIES/JOINT VENTURE/ ASSOCIATES

Domestic Subsidiaries

ICICI Brokerage Services Limited.

ICICI Distribution Finance Private Limited.

ICICI Home Finance Company Limited.

ICICI Investment Management Company Limited.

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ICICI Trusteeship Services Limited.

Prudential ICICI Trust Limited.

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Table 2: Subsidiaries

95

ICICI Venture Funds Management

Company Ltd.

Manages funds that provide

venture capital to start-up

companies and undertake private

equity investments.

ICICI Primary Dealership Ltd.

Engaged in equity underwriting,

brokerage and primary dealership

in government securities.

ICICI Securities Ltd.

Leading Investment Banking

Organization.

First Source Solutions Ltd.

Leading third party BPO service

provider.

ICICI Prudential Life InsuranceCompany Ltd.

Retail market share of about 28%

in new business by private sector

life insurance companies during

FY 2007.

ICICI Lombard General Insurance

Company Ltd.

Market share of about 34% in

gross written premium among the

private sector general insurance

companies during FY2007.

ICICI Prudential Asset

Management Company

Among the top two mutual funds

in India in terms of total funds

under management in the Indian

Mutual Fund Industry for FY07

with a market share of over 11%.

(Source: AMFI)


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International Subsidiaries

ICICI Bank Canada.

ICICI Bank Eurasia Limited Liability Company.

ICICI International Limited.

ICICI Securities Holding Inc*.

ICICI Securities Inc*.

ICICI Bank UK Limited.

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8.5 Awards in 2009

ICICI Bank

For the third year in a row ICICI Bank has won The Asset Triple A

Country Awards for Best Domestic Bank in India

ICICI Bank won the Most Admired Knowledge Enterprises (MAKE)India 2009 Award. ICICI Bank won the first place in "Maximizing

Enterprise Intellectual Capital" category, October 28, 2009

Ms Chanda Kochhar, MD and CEO was awarded with the Indian

Business Women Leadership Award at NDTV Profit Business

Leadership Awards , October 26, 2009.

ICICI Bank received two awards in CNBC Awaaz Consumer Awards;

one for the most preferred auto loan and the other for most preferred

credit Card, on September 30, 2009

Ms. Chanda Kochhar, Managing Director & CEO ranked in the top 20

of the World's 100 Most Powerful Women list compiled by Forbes,

August 2009

Financial Express at its FE India's Best Banks Awards, honoured Mr.

K.V. Kamath, Chairman with the Lifetime Achievement Award , July25, 2009

ICICI Bank won Asset Triple A Investment Awards for the Best

Derivative House, India. In addition ICICI Bank were Highly

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commended , Local Currency Structured product, India for 1.5 year

ADR GDR linked Range Accrual Note., July 2009

ICICI bank won in three categories at World finance Banking awards

on June 16, 2009Best NRI Services bank

Excellence in Private Banking, APAC Region

Excellence in Remittance Business, APAC Region

ICICI Bank Mobile Banking was adjudged "Best Bank Award for

Initiatives in Mobile Payments and Banking" by IDRBT, on May 18,

2009 in Hyderabad.ICICI Bank's b2 branchfree banking was adjudged "Best E-Banking

Project Implementation Award 2008" by The Asian Banker, on May

11, 2009 at th e China World Hotel in Beijing.

ICICI Bank bags the "Best bank in SME financing (Private Sector)" at

the Dun & Bradstreet Banking awards 2009.

ICICI Bank NRI services wins the "Excellence in Business Model

Innovation Award" in the eighth Asian Banker Excellence in Retail

Financial Services Awards Programme.

ICICI Bank's Rural Micro Banking and Agri-Business Group wins

WOW Event & Experiential Marketing Award in two categories -

"Rural Marketing programme of the year" and "Small Budget On

Ground Promotion of the Year". These awards were given for Cattle

Loan 'Kamdhenu Campaign' and "Talkies on the move campaign'respectively.

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Chapter 9

Data analysis and interpretation

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9.1.1 Comparative Profit AND Loss a/c

2008

Rs. cr

2009

Rs. cr

Increase

&

Decrease

%

Increase

&

DecreaseINCOMEOperating

Income39,467.92 38,250.39 (1,217.53) (3.08)

EXPENSESFinancial

Expenses23,484.24 22,725.93 (758.31) (3.23)

Personal

Expenses

2,078.90 1,971.70 (107.20) (5.16)

Selling

Expenses1,750.60 669.21 (1,081.39) (61.77)

Administrative

Expenses6,447.32 7,475.63 1,028.31 15.95

TOTAL

OPER.

EXPENSES

33,761.07 32,842.48 (918.59) (2.72)

OPERATING

PROFIT5,706.85 5,407.91 (298.94) (5.24)

Other

Recurring

Income

65.58 330.64 265.06 4.04

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ADJUSTED

PBDIT5,772.43 5,738.55 (33.88) (0.59)

Provisions -509.77 -511.17 (1.40) 0.27Depreciation 578.35 678.60 100.25 17.33ADJUSTED

PBT5,703.85 5,571.13 (132.72) (2.33)

Taxes 1,611.73 1,830.51 218.78 13.57

ADJUSTED

PAT4,092.12 3,740.62 (351.50) (8.59)

Table 3 : Comparative Profit AND Loss a/c

Interpretation :

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By analyzing the summarized profit & loss account of ICICI Bank, the

following trends are presented:

Operating profit decreased to 5.24% for 2008 to 2009

due to recession. which is less than as compared to

increased to Rs. 5,874 crore for 2007 from Rs. 3,888

crore for 2006

Profit after tax decreased to 8.59 for 2008 to 2009

Profit before tax decrease by 2.33% in 2009 from 2009.

its increased to Rs. 132.72Billion for 2008 from Rs.36.48 Billion for FY2007 which is also less than as

compared to increased to Rs. 3,648 crore for 2007 from

Rs. 3,097 crore for 2006.

Provisions and contingencies (excluding provision for

tax) increased to 0.27%.

Other Recurring Income of ICICI bank increased in 2009

by 4.04% from 2008.

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9.1.2 COMPARATIVE Balance Sheet

2008

Rs. cr

2009

Rs. cr

Increase &

Decrease

% Increase&

DecreaseCAPITAL &

LIABILITIESOwned FundsEquity Share

Capital

1,112.68 1,113.29 0.61 0.05

Preferential

Share Capital350.00 350.00 0.00 0.00

Reserves &

Surplus45,357.53 48,419.73 3,062.20 6.75

Loan FundsDeposits 244,431.05 218,347.82 (26,083.23) (10.67)

Borrowings

made by thebank

65,648.43 67,323.69 1,675.26 2.55

TOTAL 356,899.69 335,554.53 (21,345.16) (5.98)ASSETSCash &

Balances with

RBI

29,377.53 17,536.33 (11,841.20) (40.31)

Money at call

and Short

Notice

8,663.60 12,430.23 3,766.63 43.48

Investments 111,454.34 103,058.31 (8,396.03) (7.53)Advances 215,060.94 208,090.41 (6,970.53) (3.24)

Fixed Assets

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Gross Block 7,036.00 7,443.71 407.71 5.79Accumulated

Depreciation2,927.11 3,642.09 714.98 24.43

Net Block 4,108.89 3,801.62 (307.27) (7.48)Net Current

Assets31,129.77 34,384.06 3,254.29 10.45

TOTAL 356,899.69 335,554.53 (21,345.16) (5.98)

Table 4 : Comparative Balance Sheet

Interpretation :

By analyzing the balance sheet of ICICI Bank, the following

trends are presented:

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Our total assets asset increased by 10.45% billion at year-end

fiscal 2009 from year-end fiscal 2008.It show that company had

purchase current asset within 2008-09. Decrease in cash balance with bank in 2009 is less than

in the previous year 2008. But decrease in investment in 2009 is also less than the

previous year. Increase in advances in 2008 from Rs 2256.16 Billion to

Rs1958.66 Billion in 2007.

Erstwhile ICICI borrowings is increasing in years 2009 but rate

of decreasing is less in 2008 i.e. 18% but in 2007 it is 31%.

Our equity share capital and reserves at year-end fiscal

2009 increased to Rs. 0.05 billion as compared to 2008

Total deposits increased by 6.0% to Rs. 2,444.31 billion

at year-end fiscal 2008 from Rs. 2,305.10 billion at year-end

fiscal 2007.

9.2.1 Trend Analysis of Profit and Loss with base year 2005

2005

Rs. cr

2006

Rs. cr

2007

Rs. cr

2008

Rs. cr

2009

Rs. cr

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INCOMEOperating

Income100 147.98 240.39 333.40 323.11

EXPENSESFinancialExpenses

100 146.06 248.95 357.40 345.86

Personel

Expenses100 146.77 219.25 281.92 267.38

Selling

Expenses100 139.77 289.45 290.94 111.22

Administrati

veExpenses

100 218.47 396.27 516.48 598.86

TOTAL

OPER.

EXPENSES

100 155.57 269.30 368.64 358.61

OPERATIN

G PROFIT100 122.02 141.56 212.96 201.80

Other

Recurring

Income

100 103.92 68.94 14.62 73.73

ADJUSTED

PBDIT100 119.43 131.15 184.53 183.44

Provisions 100 263.72 -4898.84 -5927.56 -5943.84Depreciatio

n100 105.66 92.28 97.97 114.95

ADJUSTED

PBT100 122.15 157.33 225.51 220.26

Taxes 100 106.61 188.55 308.76 350.67ADJUSTED 100 126.19 149.21 203.86 186.35

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PAT

Table 5 : Trend Analysis of Profit and Loss with base year 2005

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Trend P/L A/c

0

50

100

150

200

250

300

350

400

2005 2006 2007 2008

year

OPERATING INCOME OPERATING PROFITADJUSTED PBDIT ADJUSTED PBTADJUSTED PAT

Figure 1 Trend of P/L

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Interpretation :

1) TOTAL INCOME:-

The total income of the company is continuously increased from

100% to 333.40% in the last three years from 2005-06 to 2007-08

because of highly increase in the service revenue. The total income

is less increased because of decrease in the other income from

309.17 to 65.58.

2) EXPENSES:-

The operating expenses of the company is in

Manisha Final Financial Analysis & Cost Reduction of ICICI

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