FORM 6-K
For the month of August 2003
ICICI
Bank Towers,
Bandra-Kurla Complex
Mumbai, India 400 051
(Address of principal executive office)
Indicate
by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X | Form 40-F __ |
Yes __ | No. X |
Not applicable.
INDEX
TO EXHIBITS
Item | |
1. | Form 6k dated August 14, 2003 along with the Notice of the Ninth Annual General Meeting, Annual Report of the Bank and the accounts of subsidiary companies for the year ended March 31, 2003. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated : August 14, 2003
For
ICICI Bank Limited |
||
By |
: |
/s/
Jyotin Mehta |
Name
|
: |
Jyotin
Mehta |
Title |
: |
General
Manager & Company Secretary |
Item 1
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Notice |
NOTICE is hereby given that the Ninth Annual General Meeting of the Members of ICICI Bank Limited will be held on Monday, August 25, 2003 at 2.00 p.m. at Professor Chandravadan Mehta Auditorium, General Education Centre, Opposite D. N. Hall Ground, The Maharaja Sayajirao University, Pratapgunj, Vadodara 390 002 to transact the following business:
ORDINARY BUSINESS
1. | To receive, consider and adopt the audited Profit and Loss Account for the financial year ended March 31, 2003 and Balance Sheet as at that date together with the Reports of Directors and Auditors. |
2. | To declare dividend on preference shares. |
3. | To declare dividend on equity shares. |
4. | To appoint a Director in place of Mr. Somesh R. Sathe, who retires by rotation and, being eligible, offers himself for re-appointment. |
5. | To appoint a Director in place of Mr. Anupam Puri, who retires by rotation and, being eligible, offers himself for re-appointment. |
6. | To appoint a Director in place of Prof. Marti G. Subrahmanyam, who retires by rotation and, being eligible, offers himself for re-appointment. |
7. | To appoint a Director in place of Ms. Kalpana Morparia, who retires by rotation and, being eligible, offers herself for re-appointment. |
8. | To consider and, if thought fit, to pass, with or without modification, the following Resolution as an Ordinary Resolution: |
RESOLVED that pursuant to the provisions of Sections 224, 225 and other applicable provisions, if any, of the Companies Act, 1956 and the Banking Regulation Act, 1949, S. R. Batliboi & Co., Chartered Accountants, be appointed statutory auditors of the Company, to hold office from the conclusion of this Meeting until the conclusion of the next Annual General Meeting of the Company, on a remuneration to be fixed by the Board of Directors of the Company, based on the recommendation of the Audit Committee, in addition to reimbursement of all out-of-pocket expenses in connection with the audit of the accounts of the Company for the year ending March 31, 2004. |
9. | To consider and, if thought fit, to pass, with or without modification, the following Resolution as an Ordinary Resolution: |
RESOLVED that pursuant to the provisions of Section 228 and other applicable provisions, if any, of the Companies Act, 1956 and the Banking Regulation Act, 1949, the Board of Directors of the Company be and is hereby authorised to appoint branch auditors, in consultation with the Statutory Auditors, as and when required, to audit the accounts in respect of the Companys branches/offices in India and abroad and to fix their remuneration, based on the recommendation of the Audit Committee, in addition to reimbursement of all out-of-pocket expenses in connection with the audit. |
SPECIAL BUSINESS
10. | To consider and, if thought fit, to pass, with or without modification, the following Resolution as an Ordinary Resolution: |
RESOLVED that Mr. P. C. Ghosh, in respect of whom the Company has received Notices in writing along with a deposit of Rs.500 for each Notice, from some of its Members proposing him as a candidate for the office of Director under the provisions of Section 257 of the Companies Act, 1956, and who is eligible for appointment to the office of the Director, be and is hereby appointed a Director of the Company. |
11. | To consider and, if thought fit, to pass, with or without modification, the following Resolution as an Ordinary Resolution: |
RESOLVED that Mr. M. K. Sharma, in respect of whom the Company has received Notices in writing along with a deposit of Rs.500 for each Notice, from some of its Members proposing him as a candidate for the office of Director under the provisions of Section 257 of the Companies Act, 1956, and who is eligible for appointment to the office of the Director, be and is hereby appointed a Director of the Company. |
12. | To consider and, if thought fit, to pass, with or without modification, the following Resolution as an Ordinary Resolution: |
RESOLVED that, in partial modification of the Resolution passed by the Members at the Eighth Annual General Meeting held on September 16, 2002, vide Item No.14 of the Notice convening that Meeting, relating to appointment of and payment of remuneration to Ms. Lalita D. Gupte as the Joint Managing Director, the salary range of Ms. Lalita D. Gupte, Joint Managing Director, be revised to Rs.200,000 - Rs.650,000 per month, subject to the approval of Reserve Bank of India, other terms and conditions remaining the same. |
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13. | To consider and, if thought fit, to pass, with or without modification, the following Resolution as a Special Resolution: |
RESOLVED that subject to the provisions of the Companies Act, 1956, Securities Contracts (Regulation) Act, 1956 and the Rules framed thereunder, the Listing Agreements, the Securities and Exchange Board of India (Delisting of Securities) Guidelines 2003, and all other applicable laws, rules, regulations and guidelines and subject to such approvals, permissions and sanctions as may be necessary and subject to such conditions and modifications as may be prescribed or imposed by the authority while granting such approvals, permissions and sanctions, which may be agreed to by the Board of Directors (hereinafter referred to as the Board, which term shall be deemed to include any Committee thereof for the time being exercising the powers conferred on the Board), the consent of the Company be and is hereby accorded to the Board to delist the equity shares of the Company from the Calcutta Stock Exchange Association Limited, Delhi Stock Exchange Association Limited and Madras Stock Exchange Limited, as also to delist the equity shares and bonds of the Company from the Vadodara Stock Exchange Limited. |
NOTES:
a. | The Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956, in respect of Item Nos. 8 to 13 set out in the Notice is annexed hereto. |
b. | A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND, ON A POLL, TO VOTE INSTEAD OF HIMSELF. SUCH A PROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXIES, IN ORDER TO BE VALID AND EFFECTIVE, MUST BE DELIVERED AT THE REGISTERED/CORPORATE OFFICE OF THE COMPANY NOT LATER THAN FORTY-EIGHT HOURS BEFORE THE COMMENCEMENT OF THE MEETING. |
c. | Members holding shares in physical form are requested to immediately notify any change in their address to the Registrar and Transfer Agents of the Company, ICICI Infotech Limited, at Maratha Mandir Annexe, Dr. A.R. Nair Road, Mumbai Central, Mumbai 400 008, quoting their Folio Number(s). Members holding shares in electronic form may update such details with their respective Depository Participants. |
d. | Members are requested to note that the Companys shares are under compulsory demat trading for all investors. Members are, therefore, requested to dematerialise their shareholding to avoid inconvenience in future. |
e. | The Register of Members and the Share Transfer Books of the Company will remain closed from Wednesday, August 6, 2003 to Monday, August 25, 2003 (both days inclusive). |
Dividend on equity shares for the year ended March 31, 2003, if declared at the Meeting, will be paid on and from Tuesday, August 26, 2003: |
(i) | to those Members whose names appear on the Register of Members of the Company, at the close of business hours on Monday, August 25, 2003, after giving effect to all valid transfers in physical form lodged with the Company and its Registrar and Transfer Agents on or before Tuesday, August 5, 2003; and |
(ii) | in respect of shares held in electronic form, on the basis of beneficial ownership as per the details furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) at the close of business hours on Tuesday, August 5, 2003. |
In terms of the Securities and Exchange Board of India directives, shares issued by companies should be pari passu in all respects, including dividend entitlement, and hence, the equity shares allotted by the Company during the period April 1, 2003 to August 5, 2003 under the Employee Stock Option Scheme of the Company, will be entitled for full dividend that may be declared for the financial year ended March 31, 2003. |
f. | In order to avoid fraudulent encashment of dividend warrants, Members are requested to send to the Registrar and Transfer Agents of the Company, ICICI Infotech Limited, at above mentioned address under the signature of the Sole/First Joint holder, the information relating to name and address of the banker, branch, pin code number and particulars of bank account, so that it can be printed on the dividend warrants. |
g. | Pursuant to the provisions of Section 205A of the Companies Act, 1956, the amount of unclaimed dividend up to the financial year ended March 31, 1995 has been transferred to the General Revenue Account of the Central Government as required by the Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules, 1978. |
Consequent upon the amendment of Section 205A of the Companies Act, 1956 and the introduction of Section 205C by the Companies (Amendment) Act, 1999, the amount of dividend remaining unclaimed for a period of seven years from the date of its transfer to the Unpaid Dividend Account of the Company is required to be transferred to the Investor Education and Protection Fund (IEPF) established by the Central Government and thereafter no payments shall be made by the Company or by the IEPF in respect of such amounts. |
Members who have not yet encashed their dividend warrant(s) for the financial year ended March 31, 1996 and subsequent years, are requested to make their claims to the Registrar and Transfer Agents of the Company, ICICI Infotech Limited, without any delay. |
h. | Members may avail the nomination facility as provided under Section 109A of the Companies Act, 1956. |
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i. | Pursuant to the requirements of the Listing Agreements of Stock Exchanges on Corporate Governance, the information about the Directors proposed to be appointed/re-appointed is given in the Annexure to the Notice. |
j. | Members desirous of getting any information about the accounts and operations of the Company are requested to write to the Company at least seven days before the date of the Meeting. |
k. | All documents referred to in the Notice and Explanatory Statement will be available for inspection by the Members at the Registered/Corporate Office of the Company between 10.30 a.m. and 12.30 p.m. on all working days from the date hereof up to the date of the Meeting. |
By Order of the Board
JYOTIN MEHTA
General
Manager &
Company Secretary
Mumbai, July 25, 2003
Registered Office: Landmark Race Course Circle Vadodara 390 007 |
Corporate Office: ICICI Bank Towers Bandra-Kurla Complex Mumbai 400 051 |
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Explanatory Statement |
Explanatory Statement under Section 173(2) of the Companies Act, 1956 |
Item No. 8
N. M. Raiji & Co., and S. R. Batliboi & Co., Chartered Accountants were appointed as statutory auditors of the Company for the year 2002-2003 at the last Annual General Meeting and their term of office ends at the conclusion of this Annual General Meeting. S. R. Batliboi & Co. were appointed statutory auditors of the Company for the first time in fiscal 2003. N. M. Raiji & Co. had been auditors of erstwhile ICICI Limited (ICICI) for several years (with gaps in some years) since 1956. They were the sole auditors of ICICI from 1992 to 1997 and, thereafter, one of the joint auditors till the merger of ICICI with the Company.
Reserve Bank of India (RBI) recommends rotation of statutory auditors for banks and does not permit appointment of the same firm as statutory auditors for a period exceeding four years in succession for a bank. In view of this, on the recommendation of the Audit Committee, the Board of Directors of the Company at its Meeting held on June 27-28, 2003 recommended the appointment of S. R. Batliboi & Co., Chartered Accountants, as the statutory auditors of the Company to hold office from the conclusion of the Annual General Meeting to be held on August 25, 2003 until the conclusion of the next Annual General Meeting, subject to the approval of RBI. As required under the provisions of Section 30 of the Banking Regulation Act, 1949, the approval of RBI has been received vide their letter dated July 4, 2003.
S. R. Batliboi & Co., have forwarded a certificate to the Company stating that their appointment, if made, will be within the limits specified in sub-section (1B) of Section 224 of the Companies Act, 1956. Further, they have confirmed that they are not disqualified to be appointed as auditors under Section 226 of the Companies Act, 1956.
The Resolution at Item No. 8 is a Special Notice as required under Sections 190 and 225 of the Companies Act, 1956 for appointment of S. R. Batliboi & Co., Chartered Accountants, as the statutory auditors of the Company. A copy of Special Notice has been sent to N. M. Raiji & Co., Chartered Accountants. The Bank has not received any representation from them till date in this regard.
The Directors recommend the appointment of S. R. Batliboi & Co., Chartered Accountants, as the statutory auditors of the Company.
No Director is in any way concerned or interested in the Resolution at Item No. 8 of the Notice.
Item No. 9
The Company has a wide network of branches in various locations in India and is also in the process of establishing its business in various countries abroad, by setting up representative offices and opening of branches. The Company may need to appoint auditors for auditing the accounts of these branches/offices. Pursuant to the provisions of Section 228 of the Companies Act, 1956, it is proposed to delegate the authority to the Board of Directors of the Company to appoint branch auditors in consultation with the statutory auditors, as and when required, to audit the accounts in respect of the Companys branches/offices in India and abroad and to fix their remuneration, based on the recommendation of the Audit Committee, in addition to reimbursement of all out-of-pocket expenses in connection with the audit.
The Directors recommend the adoption of Resolution at Item No. 9 of the Notice.
No Director is in any way concerned or interested in the Resolution at Item No. 9 of the Notice.
Item No. 10
Mr. P. C. Ghosh, who has been appointed as an additional Director under Section 260 of the Companies Act, 1956 effective January 31, 2003 holds office up to the date of the Ninth Annual General Meeting of the Company as provided under Article 135 of the Articles of Association of the Company but is eligible for appointment. In terms of Section 257 of the Companies Act, 1956, the Company has received Notices in writing along with a deposit of Rs.500 for each Notice, from some of its Members signifying their intention to propose the candidature of Mr. P. C. Ghosh for the office of the Director.
The Directors recommend the appointment of Mr. P. C. Ghosh.
Except Mr. P. C. Ghosh, no Director is in any way concerned or interested in the Resolution at Item No. 10 of the Notice.
Item No. 11
Mr. M. K. Sharma, who has been appointed as an additional Director under Section 260 of the Companies Act, 1956 effective January 31, 2003 holds office up to the date of the Ninth Annual General Meeting of the Company as provided under Article 135 of the Articles of Association of the Company but is eligible for appointment. In terms of Section 257 of the Companies Act, 1956, the Company has received Notices in writing along with a deposit of Rs.500 for each Notice, from some of its Members signifying their intention to propose the candidature of Mr. M. K. Sharma for the office of the Director.
The Directors recommend the appointment of Mr. M. K. Sharma.
Except Mr. M. K. Sharma, no Director is in any way concerned or interested in the Resolution at Item No. 11 of the Notice.
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Item No. 12
The appointment of and payment of remuneration to Ms. Lalita D. Gupte,as the Joint Managing Director of the Company, effective May 3, 2002 up to June 23, 2004, was approved by the Members at the Eighth Annual General Meeting held on September 16, 2002. The Members had approved the payment of salary to Ms. Lalita D. Gupte in the range of Rs.200,000 - Rs.400,000 per month. It is necessary to revise the salary range proposed, in order to enable annual increments in the salary with the approval of the Board. In view of this, based on the recommendation of the Board Governance & Remuneration Committee, the Board of Directors, at its Meeting held on July 25, 2003, approved revision of the salary range of Rs.200,000 - Rs.650,000 per month for Ms. Lalita D. Gupte, subject to the approval of the Members and Reserve Bank of India.
This Explanatory Statement may be treated as an abstract under Section 302 of the Companies Act, 1956.
The Directors recommend the adoption of the Resolution at Item No.12 of the Notice.
Except Ms. Lalita D. Gupte, no Director is in any way concerned or interested in the Resolution at Item No.12 of the Notice.
Item No. 13
The equity shares of the Company are listed and traded since September 1997 on six stock exchanges in India, namely, Vadodara Stock Exchange Limited (VSE) (Regional Stock Exchange), The Stock Exchange, Mumbai (BSE), National Stock Exchange of India Limited (NSE), Calcutta Stock Exchange Association Limited (CSE), Delhi Stock Exchange Association Limited (DSE) and Madras Stock Exchange Limited (MSE). ICICI Bank is one of the scrips specified by the Securities and Exchange Board of India for compulsory settlement in dematerialised form since May 31, 1999.
The bonds issued to the public from time to time by ICICI are listed on BSE and NSE. The bonds issued to the public in February and March 2002 by ICICI and the bonds issued by the Company during the fiscal 2003 are listed on BSE, NSE and VSE. There is no trading in the bonds listed on VSE.
A summary of trading volumes of equity shares of the Company on all the six stock exchanges in India during the last four years is given below:
No.
of equity shares traded during the year ended March 31, |
||||
Stock exchanges where listed | 2000 | 2001 | 2002 | 2003 |
Vadodara Stock Exchange Limited | Nil | Nil | Nil | Nil |
The Stock Exchange, Mumbai | 53,786,082 | 40,334,381 | 38,860,121 | 169,872,869 |
National Stock Exchange of India Limited | 42,389,133 | 45,362,983 | 57,740,587 | 124,087,835 |
Calcutta Stock Exchange Association Limited | 619,010 | 348,843 | 622,770 | 132,563 |
Delhi Stock Exchange Association Limited | 2,860,793 | 1,792,592 | 177,287 | Nil |
Madras Stock Exchange Limited | 56,000 | 15,210 | 23,000 | 20,000 |
Source: Stock exchanges and Bridge Telerate
As may be observed, there was no trading in the shares on VSE; low trading on CSE, DSE and MSE and active trading only on BSE and NSE. With the extensive networking of BSE/NSE, the extension of BSE/NSE terminals to other cities and online trading facility provided by broking companies, investors are able to trade in the equity shares of the Company across the country, even if these are not listed on local stock exchanges.
The Securities and Exchange Board of India (Delisting of Securities) Guidelines - 2003, allow companies to seek voluntary delisting of their securities from all stock exchanges, by giving an exit opportunity to the shareholders. When voluntary delisting is sought only from some of the exchanges, no exit opportunity is required to be given to the shareholders, so long as the securities continue to be listed on a stock exchange having nation wide trading terminals. However, the approval of the Board of Directors and the Members of the Company is required for delisting of equity shares from any stock exchange. There is no compulsion for companies to remain listed on any stock exchange merely because it is a regional stock exchange.
In view of the above, the Board of Directors of the Company has approved the proposal for delisting of the equity shares of the Company from CSE, DSE and MSE, as also to delist the equity shares and bonds of the Company from VSE, subject to the approval of the Members and such other approvals as may be required.
The proposed delisting, if and when it takes place, will not adversely affect the investors as the Companys equity shares/bonds would continue to be listed and traded on BSE and NSE. Hence, no exit opportunity is required to be given as per Delisting guidelines issued by SEBI. The delisting will take effect after all approvals, permissions and sanctions are received. The exact date on and from which the delisting will take effect would be suitably notified.
The Directors recommend the adoption of the Resolution at Item No. 13 of the Notice.
No Director is in any way concerned or interested in the Resolution at Item No. 13 of the Notice.
By Order of the Board
JYOTIN MEHTA
General
Manager &
Company Secretary
Mumbai, July 25, 2003
Registered Office: Landmark Race Course Circle Vadodara 390 007 |
Corporate Office: ICICI Bank Towers Bandra-Kurla Complex Mumbai 400 051 |
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Annexure |
PURSUANT TO CLAUSE 49 OF THE LISTING AGREEMENT WITH THE STOCK EXCHANGES, FOLLOWING INFORMATION IS FURNISHED ABOUT THE DIRECTORS PROPOSED TO BE APPOINTED/RE-APPOINTED |
1. | Mr. Somesh R. Sathe was first appointed on the Board on January 29, 1998. He holds a Bachelors degree in Science Mechanical Engineering and has specialised knowledge of small scale industries. He is a technocrat entrepreneur. |
Other Directorships | Committee Memberships | |
Name of Company | Name of Committee | |
Arbes Tools Private Limited, Managing Director | ICICI Bank Limited | |
ESSP Meditek Private Limited, Managing Director | Audit Committee | |
Sukeshan Equipment Private Limited, Managing Director | Agriculture & Small Enterprises Business Committee | |
Credit Committee | ||
Share Transfer & Shareholders/Investors Grievance Committee |
2. | Mr. Anupam Puri was first appointed on the Board effective May 3, 2002. He holds various degrees, viz., Masters in Philosophy and Masters of Arts in Economics from Oxford University and Bachelor of Arts in Economics from Delhi University. From 1970 to 2000, he worked with McKinsey & Company, a leading management consultancy firm. He worked globally with corporate clients in several industries on strategy and organisational issues, and also served several governments and multilateral institutions on public policy. |
Other Directorships | Committee Memberships | |
Name of Company | Name of Committee | |
Daksha eServices Private Limited | Dr. Reddys Laboratories Limited | |
Dr. Reddys Laboratories Limited | Nomination Committee, Chairman | |
Godrej Consumer Products Limited | Audit Committee | |
Mahindra British Telecom Limited | Godrej Consumer Products Limited | |
Mahindra & Mahindra Limited | Human Resources Committee, Chairman | |
Audit Committee | ||
Mahindra British Telecom Limited | ||
Audit Committee | ||
ICICI Bank Limited | ||
Business Strategy Committee | ||
Board Governance & Remuneration Committee |
3. | Prof. Marti G. Subrahmanyam was first appointed on the Board effective May 3, 2002. He is the Charles E. Merrill Professor of Finance and Economics in the Stern School of Business at New York University. He holds a degree in mechanical engineering from the Indian Institute of Technology, Chennai, a post-graduate diploma in business administration from the Indian Institute of Management, Ahmedabad and a doctorate in finance and economics from the Massachusetts Institute of Technology. He is an expert in the areas of corporate finance, capital markets and international finance. |
Other Directorships | Committee Memberships | |
Name of Company | Name of Committee | |
Infosys Technologies Limited | Infosys Technologies Limited | |
Mannariah & Sons Private Limited | Compensation Committee, Chairman | |
Nexgen Financial Holdings Limited | Audit Committee | |
Nexgen Re Limited | Nexgen Financial Holdings Limited | |
Nomura Asset Management (U.S.A.) Inc. | Research Committee, Chairman | |
Supply Chainge Inc. | Audit Committee | |
Usha Communications Inc. | Usha Communications Inc. | |
Audit Committee, Chairman | ||
Compensation Committee | ||
ICICI Bank Limited | ||
Risk Committee |
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4. | Ms. Kalpana Morparia was first appointed on the Board effective May 3, 2002. She holds Bachelors degrees in Science and Law. She joined erstwhile ICICI Limited (ICICI) in the Legal Department in 1975. She was actively involved with several resource mobilisation initiatives of ICICI which included international offerings of debt and equity such as the issue of a Global Medium Term Note programme, a Global Depository Receipts issue, Yankee Fixed Rate Bonds issue, Euro Convertible Bonds and the American Depositary Receipts issue. Since 1996, she was in-charge of several departments in ICICI including legal, human resources, treasury, corporate communications, planning and strategic support and special projects and was designated Senior General Manager of ICICI in 1998. She was appointed on the Board of ICICI as Executive Director in May 2001. The Board, at its Meeting held on April 26, 2002, appointed Ms. Kalpana Morparia as Executive Director of the Company effective May 3, 2002 upto April 30, 2006, which was approved by the Reserve Bank of India and the Members at their Annual General Meeting (AGM) held on September 16, 2002. Ms. Morparia is responsible for the Corporate Centre which includes the finance, risk, human resources, legal, corporate communications and strategy functions. |
In terms of resolutions passed at the AGM held on September 16, 2002, if Ms. Kalpana Morparia is re-appointed as a Director immediately on retirement by rotation, she shall continue to hold her office of Executive Director and such retirement by rotation and re-appointment as a Director shall not be deemed to constitute a break in her appointment as Executive Director. |
Other Directorships | Committee Memberships | |
Name of Company | Name of Committee | |
ICICI Investment Management Company Limited, Chairperson | ICICI Home Finance Company Limited | |
ICICI Home Finance Company Limited | Management Committee | |
ICICI Lombard General Insurance Company Limited | ICICI Lombard General Insurance Company Limited | |
ICICI Prudential Life Insurance Company Limited | Board Governance Committee | |
ICICI Securities Limited | ICICI Prudential Life Insurance Company Limited | |
(formerly ICICI Securities and Finance Company Limited) | Audit Committee | |
ICICI Venture Funds Management Company Limited | ICICI Securities Limited | |
Audit Committee | ||
ICICI Venture Funds Management Company Limited | ||
Audit Committee | ||
Remuneration Committee | ||
ICICI Bank Limited | ||
Asset Liability Management Committee | ||
Committee of Directors | ||
Share Transfer & Shareholders/Investors Grievance Committee |
5. | Mr. P. C. Ghosh was first appointed on the Board on January 31, 2003. He is the Chairman of General Insurance Corporation of India (GIC) since October 4, 2002. He holds a Bachelors degree in Science (Physics) and B.Tech. (Mechanical) from Indian Institute of Technology, Chennai. He joined the insurance industry in 1974 as Insurance Executive in United India Insurance Company Limited and worked in various functional areas such as engineering, techno-marketing, reinsurance, foreign operations and personnel. Between 1992 and 2001, he worked with National Insurance Company Limited and The Oriental Insurance Company Limited. He was the Managing Director of GIC from March 1, 2001 to October 3, 2002. He has also been a speaker in insurance and risk management conferences and seminars. |
Other Directorships | Committee Memberships | |
Name of Company | Name of Committee | |
General Insurance Corporation of India, Chairman | General Insurance Corporation of India | |
GIC Asset Management Company Limited, Chairman | Investment Committee, Chairman | |
GIC Housing Finance Limited, Chairman | Life Insurance Corporation of India | |
Loss Prevention Association of India Limited, Chairman | Investment Committee | |
India International Insurance Pte. Limited, Chairman | Executive Committee | |
Deposit Insurance and Credit Guarantee Corporation | ||
ECE Industries Limited | ||
Export Credit Guarantee Corporation of India Limited | ||
Indian Register of Shipping | ||
Kenindia Assurance Company Limited | ||
Life Insurance Corporation of India | ||
Southern Petrochemical Industries Corporation Limited |
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6. | Mr. M. K. Sharma was first appointed on the Board on January 31, 2003. He is currently the Vice-Chairman of Hindustan Lever Limited. He holds Bachelors Degree in Arts and Bachelors of Law Degree from Canning College University of Lucknow. He has also completed his Post Graduate Diploma in Personnel Management from Department of Business Management, University of Delhi and Diploma in Labour Laws in Indian Law Institute, Delhi. After a six year stint in DCM Limited, he joined Hindustan Lever Limited in 1974 as Legal Manager and worked in various areas including taxation, shares and legal. He was inducted on the Board of Hindustan Lever Limited in August 1995. |
Other Directorships | Committee Memberships | |
Name of Company | Name of Committee | |
Hindustan Lever Limited, Vice-Chairman | Hindustan Lever Limited | |
Vasishti Detergents Limited, Chairman | Investor Grievances Committee | |
Hind Lever Chemicals Limited | Vasishti Detergents Limited | |
Hind Lever Trust Limited | Investor Grievances Committee, Chairman | |
Indexport Limited | Hind Lever Chemicals Limited | |
Lever India Exports Limited | Audit Committee | |
Nepal Lever Limited | Remuneration Committee | |
TOC Disinfectants Limited | Investor Grievances Committee | |
ICICI Bank Limited | ||
Agriculture & Small Enterprises Business Committee |
By Order of the Board
JYOTIN MEHTA
General
Manager &
Company Secretary
Mumbai, July 25, 2003
Registered Office: Landmark Race Course Circle Vadodara 390 007 |
Corporate Office: ICICI Bank Towers Bandra-Kurla Complex Mumbai 400 051 |
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Our customers are our singular focus.
Our strategies are therefore built around this focus to seek new ways to make banking safer, simpler and smarter.
It is our constant effort to anticipate customer needs and offer value-added propositions to fulfil them. Our multi-channel, technology-driven distribution system enables our customers 24x7 access, country-wide. Our committed team of employees, equipped with world-class technology and financial skills, works to devise new solutions, enhance our responsiveness to customer needs and improve our services. So that we can help to make their lives easier and contribute to some of the important decisions at various stages in their lives.
Contents | ||
Message from the Chairman | 2 | |
Board of Directors | 4 | |
Board Committees | 5 | |
Senior Management | 5 | |
Letter from the Managing Director & CEO | 6 | |
Product Portfolio | 8 | |
Business Overview | 9 | |
Directors' Report | 33 | |
Managements Discussion and Analysis | 52 | |
Particulars of Employees under Section 217 (2A) of the Companies Act, 1956 | F1 | |
Financials | F2 | |
Auditors Report | F3 | |
Balance Sheet | F4 | |
Profit and Loss Account | F5 | |
Schedules & Notes | F6 | |
Cash Flow Statement | F26 | |
Statement Pursuant to Section 212 of the Companies Act, 1956 | F27 | |
Consolidated Financial Statements of ICICI Bank Limited and its Subsidiaries | F29 | |
Consolidated Financial Statements as per US GAAP | F51 |
Enclosures:
Notice
Attendance Card and Form of Proxy
1
Message from the Chairman |
The Indian banking system has seen sweeping changes over the years. During the course of my association with the sector, I have witnessed the nationalisation of the banking system and, after over two decades of virtual government monopoly, the new beginning made in the wake of liberalisation, by allowing private participation in the sector. While nationalisation was aimed at fostering developmental objectives determined by national policy, the primary aim of the liberalisation initiative was to bring in much-needed private capital and entrepreneurial spirit into the banking sector, improving its efficiency and giving an impetus to its growth on the lines seen in developed markets. In the short span of time that they have been in existence, the leading new private sector banks have truly revolutionised banking in India. Their focus on technology and customer convenience has brought about a paradigm shift in the banking business. Indeed, this has now led to a significant change in the orientation of the public sector banks as well, as they too begin to focus on shareholder value creation and customer satisfaction.
We at ICICI Bank have been at the forefront of this change down the years. Our strategic initiatives over the years have led to our position today as the second largest bank in India and a leading
2
provider of banking and other financial services to corporate and retail customers. Our pioneering new approaches to banking and our focus on extending the availability of technology-driven convenience to a large customer base have resulted in rapid business growth. We have achieved leadership positions across diverse businesses, from retail credit to life insurance. We have completed our transformational change from a single product financial services company to a true universal bank. Going forward, the key challenges for the Bank are to maintain its leadership positions in these businesses and expand and deepen its penetration in others. The Bank will also continue to focus on proactively addressing the legacy issue of distressed debt, and operationalise its strategies in this area in coordination with other participants in the financial system.
While we have today built stable businesses that we believe will deliver sustainable value to our stakeholders, there are also many exciting opportunities for further growth. The banking sector has focused primarily on the urban segment, with rural banking being viewed as a regulatory burden. We believe that rural India represents the new frontier in banking, offering a vast, untapped market for integrated technology-driven banking and financial services. These include the whole gamut of financial products ranging from agricultural credit to consumer credit, liability products and insurance. Our strategy in this segment will be built around a deep understanding of rural income and cash flows and financial needs, and use of technology to deliver a high level of service to the rural customer base without the high cost of operations associated with traditional rural banking models.
As the economy grows more resilient and legacy issues are resolved, the Indian banking sector is indeed entering a significant new phase. We believe that ICICI Bank is well-placed to capitalise on emerging opportunities, as it reaches out to new markets in India and the world. We look forward to the future with enthusiasm and hope.
N. VAGHUL
Chairman
3
Board of Directors |
N. Vaghul | Chairman |
Uday M. Chitale | |
P. C. Ghosh | |
Satish C. Jha | |
Lakshmi N. Mittal | |
Anupam Puri | |
Vinod Rai | |
Somesh R. Sathe | |
R. Seshasayee | |
M.K. Sharma | |
P. M. Sinha | |
Marti G. Subrahmanyam | |
K.V. Kamath | Managing Director & CEO |
Lalita D. Gupte | Joint Managing Director |
Kalpana Morparia | Executive Director |
S. Mukherji | Executive Director |
Chanda D. Kochhar | Executive Director |
Nachiket Mor | Executive Director |
4
Board Committees |
AUDIT COMMITTEE R. Seshasayee,
Chairman |
BUSINESS
STRATEGY N. Vaghul,
Chairman |
SHARE
TRANSFER & Uday M.
Chitale, Chairman |
||
AGRICULTURE
& SMALL N. Vaghul,
Chairman |
CREDIT COMMITTEE N. Vaghul,
Chairman |
COMMITTEE OF DIRECTORS K.V. Kamath,
Chairman
|
||
BOARD
GOVERNANCE & N. Vaghul,
Chairman |
RISK COMMITTEE N. Vaghul,
Chairman |
ASSET
LIABILITY Lalita D.
Gupte, Chairperson |
||
Senior Management | ||||
SENIOR
GENERAL MANAGERS |
||||
Achintya
Karati |
N. S. Kannan P. H. Ravikumar Sanjiv Kerkar V. Vaidyanathan |
|||
Jyotin Mehta, General Manager & Company Secretary |
5
Dear Stakeholders |
Fiscal 2003 was a historic year for us, being our first year of operations as an integrated entity following the merger of ICICI with ICICI Bank. The year commenced with certain challenges of effecting the transition quickly and efficiently; and of leveraging the new business model to achieve leadership in the focus areas that we had identified for ourselves.
It gives us considerable satisfaction that we have successfully met these challenges, and indeed, even exceeded our expectations in certain areas. We had already complied with the regulatory requirements for the merger in fiscal 2002 itself; on receiving regulatory approvals in early fiscal 2003, we were able to seamlessly combine the merging entities into one single operating structure. We had identified retail credit as a key area of opportunity, since the fundamentals of the Indian economy provide the basis for sustainable growth in this segment. In fiscal 2003, we rapidly strengthened our position in the retail credit market, with continuing innovations in product design, marketing and distribution. We expanded our presence to new locations and increased the depth of our penetration in existing markets. We swiftly moved ahead of the competition, emerging as the market leader in retail credit in India. We leveraged our technology-driven distribution network to grow our deposit base by fifty per cent, about four times the rate of growth in the banking system as a whole. This
6
enabled us to replace a large part of our legacy high cost borrowings. These achievements resulted in a fundamental and dramatic shift in the composition of our balance sheet, bringing about greater diversity and stability in both our asset mix and our funding profile.
Fiscal 2003 saw several other milestones for ICICI Bank. We continued to focus on optimal utilisation of our retail distribution and servicing capabilities to offer enhanced customer convenience and a wide range of in-house and third party products. We commenced our international foray in key target geographies. This initiative, which already contributes significantly to our deposit base, should gather momentum in the coming years as we obtain regulatory approvals and expand our operations. We centralised and re-engineered our corporate banking services, leveraging technology to create a platform capable of delivering customised, high quality solutions to our clients. Our insurance subsidiaries achieved leadership in their areas of business, with the general insurance subsidiary breaking even in its first full year of operations.
The year saw landmark legislative and regulatory initiatives to facilitate asset resolution in the Indian banking system. We were proactive in implementing strategies to benefit from these initiatives, resulting in significant progress in restructuring and recoveries. We also successfully placed a 16% stake in ICICI Bank, held by ICICI prior to the merger, with strategic and institutional investors. We became the only Indian company to have an investment grade international credit rating, one notch higher than the sovereign ceiling, when Moodys upgraded our long-term foreign currency debt rating.
We have now created a platform that gives us the capability to capitalise on opportunities in all segments of our business, both retail and wholesale. Our strategic intent is to sharpen our focus on key areas with a view to maximise value. With the continued support and participation of all our stakeholders investors, customers, employees we aim to consolidate our position as Indias leading financial services provider.
7
Product Portfolio
CORPORATE BANKING | RETAIL BANKING | |||||
Corporate Solutions | | | Home Loans | |||
Government Solutions | | | Car & Two Wheeler Loans | |||
Capital Market Services | | | Consumer/Personal Loans |
|||
Agriculture Finance | | | Savings & Term Deposits | |||
Structured Finance | | | Salary Accounts | |||
Project Finance | | | Roaming Current Accounts | |||
Infrastructure Finance | | | Investment Products | |||
Term Loans | | | Private Banking | |||
Working Capital Finance | | | NRI Services | |||
Cash Management Services | | | Demat Services | |||
Trade Finance Services | | | Credit & Debit Cards | |||
International Banking | | | Smart Cards | |||
Treasury Services | | | Bill Payment Services | |||
Corporate Internet Banking | | | E-Cheques | |||
Corporate Advisory | | | Branches | |||
Custodial Services | | | ATMs | |||
Professional Clearing Membership Services | | | Internet Banking | |||
| Phone Banking |
Business Overview |
ECONOMIC OVERVIEW
The Indian economy recorded satisfactory performance in fiscal 2003, despite negative factors such as the below-normal monsoon, subdued global economic activity and trade and uncertainties over the situation in West Asia. The overall GDP growth was estimated at 4.4% according to the Central Statistical Organisation (CSO). The low growth in agriculture consequent to the below-normal monsoon was offset by a robust performance by the industrial and services sectors, which are estimated to have grown by 6.1% and 7.1% respectively in fiscal 2003. Industrial recovery was primarily driven by the manufacturing sector, especially textiles, steel, cement, transport equipment and consumer non-durables. Domestic demand for basic goods like steel and cement was supported by highway construction activity and the housing sector. | |
The non-agricultural recovery was accompanied by continued macroeconomic stability, moderate inflation, orderly currency market conditions and comfortable foreign exchange reserves. Exports in dollar terms rose by 17.9% and exceeded US $ 50 billion. The current account recorded a surplus for the second consecutive year. The growth in exports was achieved despite the subdued global economic situation, primarily on account of prudent exchange rate management and the increasing importance of new markets. The growth in merchandise and services exports, leading to healthy current account inflows, was partially responsible for the rapid increase in the foreign exchange reserves, which at the end of fiscal 2003 stood at US $ 75.4 billion. Non-debt capital inflows also contributed significantly to the increase in foreign exchange reserves. The Indian rupee remained stable vis-à-vis the US dollar over the year. | |
The average annual rate of inflation in terms of the Wholesale Price Index (WPI) was 5.8% at the end of March 2003. Comfortable foreign exchange reserves and buffer food stocks ensured that the deficient monsoon did not adversely impact inflationary trends during the year. The interest rate regime continued to remain soft during fiscal 2003. The mid-term review of the monetary and credit policy by Reserve Bank of India (RBI) in October 2002 had announced a reduction in the bank rate by 25 basis points to 6.25%, the lowest since 1973. The Union Budget for fiscal 2004 maintained the low interest rate environment by reducing rates on small savings schemes by 100 basis points. Subsequently, RBI also reduced the savings deposit rate and repo rate by 50 basis points. RBIs monetary and credit policy in April 2003 further reduced the bank rate by 25 basis points to 6.0% and the Cash Reserve Ratio (CRR) to 4.50%. |
9
LIFE ON THE GO
I
got the easiest accessibility with the ICICI
Bank ATM network.
I can now
access my account anywhere and anytime.
This makes things so much more convenient and easy.
24x7 convenience through Indias largest network of around 1700 ATMs More than 50% of transactions through ATMs
Business Overview |
Despite the fact that it was a subdued year for equity capital markets, the National Stock Exchange (NSE) and the Stock Exchange, Mumbai (BSE) ranked third and sixth respectively in the world with respect to number of transactions. The year also witnessed important structural changes in the capital markets. The equity markets have now absorbed a new market design, with rolling settlement and equity derivatives trading. The Unit Trust of India (UTI) Act was repealed to restructure UTI into UTI-1 and UTI-2. The Union Budget for fiscal 2004 has provided a favourable tax regime for equity capital markets. The Union Budget has also proposed a separation of ownership and management of stock exchanges. In January 2003, Government bonds started trading on the exchanges. | |
The Indian economy has displayed considerable strength and resilience, and the prospects for sustained growth are favourable. | |
FINANCIAL SECTOR OVERVIEW | |
The process of financial sector reforms that began a decade ago received further momentum in fiscal 2003. The reforms were aimed at improving the asset resolution and recovery environment, strengthening the regulatory mechanism and increasing operational efficiency. The enactment of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act significantly strengthened the ability of lenders to enforce their security for recovery of dues from borrowers. The Act also created an enabling legal framework for asset reconstruction companies and for securitisation in general. ICICI Bank and other banks and institutions have taken the initiative to incorporate Asset Reconstruction Company (India) Limited (ARCIL) in order to give impetus to the resolution of distressed assets in the Indian financial system. | |
As a step towards strengthening the supervisory mechanism, RBI is undertaking risk-based supervision of banks on a pilot basis. RBI is also examining the impact of the new Basel capital accord on the Indian banking system. The Union Budget has raised the Foreign Direct Investment (FDI) limit in private sector banks to 74.0%. This would facilitate the setting up of subsidiaries by foreign banks as well as foreign investment in private sector banks. | |
In the securities market, the emphasis during the year was on strengthening the regulatory framework and undertaking structural reforms that seek to foster liquidity and market efficiency. Furthermore, with a view to investigate frauds in the stock market it was decided to set up a Securities Fraud Office (SFO) with a multidisciplinary team of experts, in the Department of Company Affairs. The year also saw the grant of approval to an |
11
LIFE AT HOME
I
got the best deal with ICICI
Bank Home Loans.
We could buy our dream
home right from where we were. With ICICI Banks doorstep service,
easy instalment options and fast execution, our dream is now a reality.
Doorstep service and innovative deals from Indias leading home loan provider for 2002-2003 More than 2.4 lacs houses financed in the year
Business Overview |
ICICI Bank-led consortium for the setting up of a multi-commodity exchange for trading in various commodities. | |
ORGANIZATION STRUCTURE | |
ICICI Banks organizational structure is designed to support its business goals, and is flexible while at the same time seeking to ensure effective control and supervision and consistency in standards across business groups. The organization structure is divided into five principal groups Retail Banking, Wholesale Banking, Project Finance & Special Assets Management, International Business and Corporate Centre. | |
The Retail Banking Group comprises ICICI Banks retail assets business including various retail credit products, retail liabilities (including our own deposit accounts and services as well as distribution of third party liability products), and credit products and banking services for the small enterprises segment. | |
The Wholesale Banking Group comprises ICICI Banks corporate banking business including credit products and banking services, with dedicated groups for corporate clients, Government sector clients, financial institutions and rural and micro-banking and agri-business. Structured finance, credit portfolio management and proprietary trading also form part of this group. | |
The Project Finance Group comprises our project finance operations for infrastructure, oil & gas and manufacturing sectors. The Special Assets Management Group is responsible for large non-performing and restructured loans. | |
The International Business Group is responsible for ICICI Banks international operations, including its entry into various geographies as well as products and services for non-resident Indians (NRIs). | |
The Corporate Centre comprises all shared services and corporate functions, including finance and balance sheet management, secretarial, investor relations, risk management, legal, human resources and corporate branding and communications. | |
BUSINESS REVIEW | |
During fiscal 2003, ICICI Bank successfully continued the process of diversifying its asset base and building a de-risked portfolio. Our ability to develop customized solutions, our speed of execution and our successful leveraging of technology have helped us develop innovative financial solutions for our customers in diverse areas such as the retail segment, agri-business and the corporate sector. |
13
LIFE ON THE FAST TRACK
I
got the best deal with ICICI
Bank Auto Loans.
Thanks to the simple documentation and formalities,
easy instalments and friendly service, I am in top gear today!
Reaching out to customers in more than 400 cities across India Largest financer of auto loans with more than 30% market share More than 1.2 lac cars financed in 2002-2003
Business Overview |
Retail Banking | |
Retail banking is a key element of our growth strategy. With upward migration of household income levels, increasing affordability of retail finance and acceptance of use of credit to finance purchases, retail credit has emerged as a rapidly growing opportunity for banks that have the necessary skills and infrastructure to succeed in this business. ICICI Bank has capitalized on the growing retail opportunity in India and has emerged as a market leader in retail credit. The key dimensions of our retail strategy are innovative products, parity pricing, customer convenience, strong processes and customer focus. Cross-selling of the entire range of credit and investment products and banking services to our customers is a critical aspect of our retail strategy. | |
ICICI Bank offers a wide range of retail credit products. We have expanded the market significantly over the last few years by taking organized retail credit to a large number of high-potential markets in India, by penetrating deeper into existing markets and by offering customized solutions to meet the varying credit needs of the Indian consumer. ICICI Bank is one of the leading providers of mortgage loans, two-wheeler loans, commercial vehicle loans and personal unsecured loans, and continues to maintain leadership in automobile finance. ICICI Banks total retail disbursements in fiscal 2003 were approximately Rs. 200 billion. Retail credit constituted 18% of ICICI Banks balance sheet at March 31, 2003, compared to only 6% at March 31, 2002. Cross-selling has emerged as one of the significant drivers of retail credit growth. In fiscal 2003, cross-selling accounted for about 20% of mortgage loans and auto loans and about 25% of credit cards issued. | |
In May 2003, ICICI Bank acquired the entire paid-up capital of Transamerica Apple Distribution Finance Private Limited (TADFL), which has now been renamed as ICICI Distribution Finance Private Limited (IDFL). IDFL is primarily engaged in providing distribution financing in the two-wheeler segment. The acquisition is expected to supplement the Banks retail franchise, especially in the two-wheeler segment. | |
During fiscal 2003, we continued our focus on retail deposits. This has reduced our funding cost and has enabled us to create a stable funding base, with over 4.7 million deposit customers. Following a life stage segmentation strategy, ICICI Bank offers differentiated liability products to various categories of customers depending on their age group (Young Star Accounts for children below the age of 18 years, Student Banking Services for students, |
15
LIFE - ANYTIME, ANYWHERE
I
got the most convenient facility with the ICICI
Bank branches and
e-lobbies.
In addition, I have access through phone and the internet also.
I can now
open an account, pay my bills, withdraw money, carry out on-line
broking, etc. from anywhere and at anytime.
Pioneering technology initiatives for customer convenience More than 3 million Internet Banking customers Among the leading Internet banks in the world
Business Overview |
Salary Accounts for salaried employees, Roaming Current Accounts for businessmen, Private Banking for high networth individuals and Senior Citizens Accounts for individuals above the age of 60 years). ICICI Bank has further microsegmented various categories of customers in order to offer products catering to specific needs of each customer segment, like Defence Banking Services for defence personnel. This strategy has contributed significantly to the rapid growth in the retail liability base. ICICI Bank is also the largest incremental issuer of cards (including both debit and credit cards) in India. At March 31, 2003, ICICI Bank had issued over 3.4 million debit cards and 1.0 million credit cards.
Our multi-channel distribution strategy provides our customers 24x7 access to banking services. This distribution strategy not only offers enhanced convenience and mobility to the customer but also supports our customer acquisition and channel migration efforts. During the year, we have further expanded our electronic channels and migrated large volumes of customer transactions to these channels. Now, about 70% of customer induced transactions take place through electronic channels. During fiscal 2003, the Bank significantly strengthened its ATM network, taking the total number of ICICI Bank ATMs to 1,675. ICICI Bank has also pioneered the concept of mobile ATMs to reach out to remote/rural areas. Other facilities offered through our multilingual screen ATMs include bill payments and prepaid mobile card recharge facility. ICICI Bank has about 3.4 million customers with Internet banking access, who can undertake all their banking transactions (other than physical cash transactions) on the Internet). ICICI Banks Internet banking customers can also pay their bills for more than 45 billers and shop on 85 online shopping portals. ICICI Bank considers phonebanking to be a key channel of service delivery and cross-sell. ICICI Banks 1,750-seat call centre, the largest domestic call centre in India, can now be accessed by customers in over 355 cities across the country. The call centre handles more than 2.5 million customer contacts per month. The call centre services all retail customers across the ICICI group. The call centre uses state-of-the-art voice-over-Internet-protocol technology and cutting-edge desktop applications to provide a single view of the customers relationship with us. ICICI Banks mobile banking services provide the latest information on account balances, previous transactions, credit card outstanding and payment status and allow customers to request a cheque book or account statement. ICICI Bank has now extended its mobile banking services to all cellular service providers across the country and NRI customers in the United States, United Kingdom, Middle-East and Singapore.
With the foundation of a strong multi-channel distribution network, we have successfully developed a robust model for distribution of third party products like mutual funds,
17
LIFE AT WORK
My
company found the most convenient solution in
ICICI
Bank Cash Management Services.
Right from
all India collections and multi-city payments to customized MIS and
ERP
integration, the Bank takes care of everything.
Services availed by over 500 top corporates of India Coverage of over 3,800 locations Turnover of more than Rs. 1.7 trillion in 2002-2003
Business Overview |
Reserve Bank of India (RBI) relief bonds, and insurance products, with market leadership in these areas. This model also allows us to meet all customer needs by offering the customer the complete basket of financial products, while leveraging our distribution capability to earn fee income from third parties. ICICIdirect (www.icicidirect.com) is the market leader in Internet-based share trading, with complete end-to-end integration for seamless electronic trading on stock exchanges. ICICIdirect has a rating of TxA1 from CRISIL, indicating highest ability to service broking transactions. During the year, ICICIdirect launched online trading in the derivatives segment of the NSE. | |
Corporate Banking | |
ICICI Bank seeks to provide innovative financial solutions to its corporate clients, tailored to meet their requirements, while diversifying its revenue streams and generating adequate return on risk capital through risk-based pricing models and proactive portfolio management. | |
Our focus in fiscal 2003 was on technology-driven enhancement of delivery capabilities to offer improved service levels to clients. We set up centralized processing facilities for back-office operations where technology is leveraged to benefit from economies of scale arising out of large transaction volumes. During the year we continued to expand the scope of our web-based services. ICICI Bank provides corporate Internet banking services through ICICIebusiness.com, a single point web-based interface for all our corporate products. The portal enables clients to conduct their banking business with ICICI Bank through the Internet in a secure environment. ICICI Bank offers online foreign exchange and debt securities trading services. A dedicated Product & Technology Group develops and manages back-office processing and delivery systems. | |
Dedicated relationship groups for corporate clients and the Government sector focused on expanding the range and depth of our relationships in these sectors. In the corporate segment, we focused on leveraging our relationships to expand the range of products and services to channel finance, transaction banking and non-fund based products. ICICI Bank has strong relationships with several large public sector companies and state governments and we are leveraging these relationships to expand the range of transaction banking services. ICICI Bank has already been empanelled for collection of sales tax in eight states. | |
We continued to focus on corporate lending transactions including working capital finance to highly rated corporates, structured transactions and channel financing. We also focused on leveraging our skills in originating and structuring transactions as well as on our ability to |
19
LIFE IN THE MARKETS
My
company was able to effectively achieve its risk management objectives,
thanks to ICICI Banks Treasury services. Their
team of skilled treasury
professionals offered us comprehensive, customized treasury solutions
at the finest prices.
Research backed advisory support Flawless execution Continuous market making
Business Overview |
take large exposures to adopt an originate-and-sell-down strategy. This not only increased the risk-adjusted return on the capital employed but also enabled us to offer a comprehensive solution to our corporate clients. ICICI Banks dedicated Structured Finance, Credit & Markets Group, with expertise in financial structuring and related legal, accounting and tax issues, actively supports the business groups in designing financial products and solutions. This Group is also responsible for managing the asset portfolio by structuring portfolio buyouts and sell-downs with a view to increase the risk-adjusted return on the capital.
During fiscal 2003, ICICI Bank focused on the agri-financing segment and developed several innovative structures for agri-business, including dairy farming, farmer financing and warehouse-receipt-based financing. We achieved robust growth in this segment and are working with state governments and agri-based corporates to evolve viable and sustainable systems for financing agriculture. We have also integrated our rural banking, micro-finance and agri-financing activity to offer integrated banking services in rural areas.
Treasury
The principal responsibilities of the Treasury included management of liquidity and exposure to market risks, mobilization of resources from domestic institutions and banks and international multilateral and bilateral institutions and banks, and proprietary trading. Further, the Treasury leveraged its strong relationships with financial sector players to provide a wide range of banking services in addition to its liability products.
In fiscal 2003, the balance sheet management function within Treasury managed interest-rate sensitivity by actively using rupee-interest-rate swaps as well as by adjusting the duration of the Government securities portfolio held for compliance with Statutory Liquidity Reserve (SLR) norms. Further, efforts were undertaken to make the banking-book-interest-rate positions more liquid by selling illiquid loans and substituting them with marketable securities.
The focus of trading operations was active, broad-based market-making in key markets including corporate bonds, Government securities, interest-rate swap and foreign exchange markets. A focus area in fiscal 2003 was the delivery of market solutions to corporate clients in various areas such as foreign exchange, fixed income and swaps. There was a significant increase in both the volumes and profits from foreign exchange transactions, swaps and loan syndication. As one of the largest players in the corporate debt market, we offered two-way quotes for many corporate debt papers, thereby increasing the liquidity and depth of the market.
21
LIFE IN THE VILLAGES
I
got the most effective support system from
ICICI
Bank Agri Services.
The Bank not only offers loans but also helps me
get the right inputs and finds me buyers for my produce.
More than Rs. 2000 crores of loans to the agri-sector Loan assistance to more than 50,000 farmers in 2002-2003 Transforming the face & dynamics of agri-business finance in India
Business Overview |
Effective fiscal 2004, we have restructured our treasury operations to separate the balance sheet management function (which now forms part of the Finance Group), the corporate markets business (which has been integrated into the Structured Finance, Credit & Markets Group) and the proprietary trading activity (which is now housed in a separate Proprietary Trading Group).
Project Finance and Special Assets
Our project finance activities include financing new projects as well as capacity additions in the manufacturing sector and structured finance to the infrastructure sector and oil, gas and petrochemical sectors. Our project finance business is focused on structuring and syndication of financing for large projects by leveraging our expertise in project financing, and churning our project finance portfolio to prevent portfolio concentration and to manage portfolio risk. We view our role not only as providers of project finance but also as arrangers and facilitators, creating appropriate financing structures that may serve as financing and investment vehicles for a wider range of market participants.
Infrastructure Sector
In the infrastructure sector, growth is largely determined by the policy guidelines, regulatory framework, long-term sectoral viability and the reforms agenda. The telecommunications industry has been witnessing rapid growth over the last couple of years, driven primarily by the mobile telephony segment. The road sector has also witnessed significant activity, particularly on account of the highway projects of National Highway Authority of India (NHAI) which, along with large state-level projects, are expected to drive growth in the coming years as well. Going forward, we expect the airports, ports and urban infrastructure sectors, to provide significant business opportunities. In the airport sector, there are currently two green-field international airports proposed in Hyderabad and Bangalore, and ICICI Bank is playing a key role in both projects. With the corporatization of major ports, emergence of active minor ports and increasing containerization of cargo, there are promising business prospects in the port sector, especially in the area of private terminal infrastructure. We also expect investment activity in urban infrastructure in the medium term, as much-needed reforms are being initiated by the Central and various state Governments. The power sector is expected to benefit from the implementation of comprehensive reforms, driven by the recent enactment of the Electricity Act, leading to business opportunities in distribution and in select generation projects, especially hydro-based projects. ICICI Bank will focus on leveraging its origination capabilities to structure and syndicate project financing.
23
Manufacturing Sector
Fiscal 2003 saw the overall investment climate in the country turning positive, with the Index of Industrial Production (IIP) recording a turnaround from the decline witnessed in the preceding two years. The manufacturing sector, accounting for a significant proportion of the IIP, recorded an improved performance in fiscal 2003, with growth in both capital goods production and consumer goods production. The buoyancy in the economy observed during fiscal 2003 resulted in a number of projects taking off in the manufacturing and core sector, particularly in the metals, transport equipment and food products segments.
Our focus in the manufacturing sector is on projects sponsored by entities that have proven ability to commit the required financial resources and implement projects successfully within planned time-frames. We also continue to implement tighter security measures, such as security interests in project contracts and escrow accounts to capture cash flows. We believe that there is significant scope for consolidation in several segments in the manufacturing sector, which presents opportunities for structuring and syndicating acquisition financing.
Special Assets Management
The Special Asset Management Group (SAMG) was formed in fiscal 1998 to build in-house specialised skills in restructuring/recovery activities, restructuring viable projects and seeking early exits from unviable projects. During fiscal 2003, the operationalization of RBIs Corporate Debt Restructuring (CDR) forum, the enactment of the SARFAESI Act and the improvement in performance of key industrial sectors created a positive environment for asset resolution.
International Business
International business has been identified as a key growth driver for ICICI Bank. We believe that the development of a strong international presence would enable us to diversify risks across geographies, support the cross-border needs of our customers, accelerate growth and profitability and build domestic capabilities to match international standards. The initial international strategy is based on leveraging our India linkages be it catering to the varied financial requirements of Non-resident Indians (NRIs), cross-border financing and trade requirements of Indian corporates or India-related business requirements of multinational corporations and banks.
24
Business Overview |
The focus of our international operations in fiscal 2003 was on capturing a significant share of NRI business and India-related trade finance volumes, developing strong correspondent banking relationships with international banks and setting up overseas operations in identified countries. The past year witnessed significant initiatives and successes in NRI services led by a strategy of innovative products, technology-enabled delivery and superior customer service. These initiatives resulted in a significant increase in NRI deposits in fiscal 2003.
Remittances recorded significant growth in fiscal 2003, driven mainly by online remittances from the US, UK, Europe, Canada and Singapore. The growth was further enabled by an expansion and deepening of correspondent relationships across the globe. During the year, ICICI Bank launched e-transfer, an online remittance product targeted at NRIs in the US. Customer service was further improved by offering multiple service channels to customers such as international toll-free service lines (in Canada, USA and UK), chat servicing and a dedicated NRI e-mail handling centre.
We have also made considerable progress during fiscal 2003 in establishing our overseas operations. ICICI Bank currently has representative offices in London and New York. The Bank has obtained regulatory approvals from RBI to upgrade its representative office in London to a subsidiary and to establish a presence in Canada, China, Singapore and the United Arab Emirates. Local country regulatory approvals have also been received for a branch in Singapore, a representative office in China and a subsidiary in the United Kingdom. Approvals from other local country regulators are awaited.
CREDIT RATING
During the year, Moodys Investor Service upgraded ICICI Banks senior and subordinated long-term foreign currency debt rating to Baa3 from Ba1, making ICICI Bank the only Indian company with an investment-grade international credit rating. This is also one notch higher than the sovereign rating for India. ICICI Banks credit ratings as per various credit rating agencies are given below:
Agency | Rating |
Moodys Investor Service (Moodys) | Baa3 |
Standard & Poors (S&P) | BB |
Credit Analysis & Research Limited (CARE) | CARE AAA |
Investment Information and Credit Rating Agency (ICRA) | LAAA |
25
RISK MANAGEMENT
Risk is an integral part of the banking business and ICICI Bank aims at the delivery of superior shareholder value by achieving an appropriate trade-off between risk and returns. ICICI Bank is exposed to various risks, including credit risk, market risk and operational risk. Our 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. The risk management function at ICICI Bank is supported by a comprehensive range of quantitative and modelling tools developed by a dedicated risk analytics team.
The Risk, Compliance & Audit Group (RCAG) is responsible for assessment, management and mitigation of risk in ICICI Bank. This group, forming a part of the Corporate Centre, is completely independent of all business operations and is accountable to the Risk and Audit Committees of the Board of Directors. RCAG is organized into six sub-groups: Credit Risk Management Group, Market Risk Group, Credit Policies Group, Internal Audit Group, Retail Risk Group and Risk Analytics Group.
Credit Risk
Credit risk is the risk that a borrower is unable to meet its financial obligations to the lender. ICICI Bank measures, monitors and manages credit risk for each borrower and also at the portfolio level. ICICI Bank has a standardized credit approval process, which includes a well-established procedure of comprehensive credit appraisal and rating. ICICI Bank has developed internal credit rating methodologies for rating obligors as well as for products/ facilities. The rating factors in quantitative and qualitative issues and credit enhancement features specific to the transaction. The rating serves as a key input in the sanction as well as post-sanction credit processes. Credit rating, as a concept, has been well internalised within the Bank. The rating for every borrower is reviewed at least annually and for higher risk credits and large exposures at shorter intervals. Sector knowledge has been institutionalized across ICICI Bank through the availability of sector-specific information on the Intranet. Industry knowledge is constantly updated through field visits, interactions with clients, regulatory bodies and industry experts. In respect of the retail credit business, ICICI Bank has a system of centralized approval of all products and policies and monitoring of the retail portfolio. We continuously refine our retail credit parameters based on portfolio analytics.
26
Business Overview |
Market Risk
Market risk is the risk of loss resulting from changes in interest rates, foreign currency exchange rates, equity prices and commodity prices. ICICI Banks exposure to market risk is a function of its trading and asset and liability management activities and its role as a financial intermediary in customer-related transactions. The objective of market risk management is to minimize the impact of losses due to market risks on earnings and equity capital.
Market risk policies include Asset-Liability Management (ALM) policies and policies for the trading portfolio. ALM policies are approved by the Asset-Liability Management Committee (ALCO) of the Board of Directors. ALCOs role encompasses stipulating liquidity and interest-rate risk limits, monitoring risk levels by adherence to set limits, articulating the organizations interest rate view and determining business strategy in the light of the current and expected business environment. These sets of policies and processes are articulated in the ALM policy. A separate set of policies for the trading portfolio address issues related to investments in various trading products and are approved by the Committee of Directors (COD) of the Board. RCAG exercises independent control over the process of market-risk management and recommends changes in processes and methodologies for measuring market risk.
Middle Office Group
ICICI Bank has a separate Middle Office Group to monitor both credit and treasury-related compliance. The Credit Middle Office Group monitors compliance with policies and terms of sanction of credit proposals.
The Treasury Middle Office Group monitors the asset-liability position under the supervision of the ALCO. It also monitors treasury activities, including determining compliance with various exposure and dealing limits, verifying the appropriateness and accuracy of various transactions, processing these transactions, tracking the daily funds position and all treasury-related management and regulatory reporting.
Interest-rate risk is measured through the use of re-pricing gap analysis and duration analysis. Liquidity risk is measured through gap analysis. ICICI Bank ensures adequate liquidity at all times through systematic funds planning and maintenance of liquid investments as well as by focusing on more stable funding sources such as retail deposits. ICICI Bank mitigates its exposure to exchange-rate risk by stipulating daily stop-loss limits and position limits.
27
Operational Risk
Operational risk 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 and software or equipment, fraud, inadequate training and employee errors. We attempt 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. The Middle Office Group monitors adherence to credit procedures. The Internal Audit Group undertakes a comprehensive audit of all business groups and other functions, in accordance with a risk-based audit plan. This plan allocates audit resources based on an assessment of the operational risks in the various businesses. ICICI Bank has been a pioneer in the implementation of a risk-based audit methodology in the Indian banking sector. The Internal Audit Group conceptualizes and implements improved systems of internal controls to minimize operational risk.
INFORMATION TECHNOLOGY
The rapidly evolving banking needs of customers in India have led to an increased focus on information-technology-dependent products and solutions with a view to better serve the consumer. ICICI Bank has identified technology as a key driver of its growth strategy and continues to leverage information technology as a strategic tool for its business operations to gain competitive advantage by offering customer convenience and improved service as well as improving productivity and efficiency.
ICICI Banks technology strategy emphasises enhanced levels of customer services through 24x7 availability, multi-channel banking, straight-through processing, cost efficiency through optimal use of technology-driven channels, wider and focused market reach and opportunities for cross-selling. ICICI Bank also uses technology as a tool to help it understand the customer better, so that it can customize products and services to suit customer needs. The Technology Management Group (TMG) is the focal point for ICICI Banks technology strategy and group-wide technology initiatives. This group reports directly to the Managing Director & CEO.
ICICI Bank is focusing on the integration of its various product and channel systems by effective use of technology. The Bank has implemented an Enterprise Application Integration (EAI)
28
Business Overview |
initiative across its retail and wholesale banking business units, linking various product and delivery systems across the two groups. This initiative underpins ICICI Banks multi-channel customer service strategy and seeks to deliver customer-related information consistently across various access points.
In line with our commitment to offer its customers a seamless banking experience, we installed our Customer Relationship Management (CRM) software at various customer access points in fiscal 2003. The CRM software solution allows various channels to service customer needs at all touch points, and across all products. The solution has been deployed across the phone banking channel as well as a large number of branches. The solution gives a comprehensive view of the customer at the access point, enhancing understanding of customers and their needs. It optimizes processes and functions related to the customer, to enhance the efficiency and effectiveness of customer servicing. The solution also ensures that every customer request or complaint is tracked till its completion and escalated if standard turnaround times are exceeded.
HUMAN RESOURCES
In fiscal 2003, ICICI Bank continued its commitment to acquiring, developing and enhancing its human resource potential. ICICI Bank views its human capital as a key source of competitive advantage. Consequently, the development and management of human capital is an essential element of our strategy and a key management activity.
Human resources management in fiscal 2003 focused on the continuous improvement of recruitment, training and performance management processes. While ICICI Bank is Indias second-largest bank, it had just over 10,600 employees at March 31, 2003, demonstrating our unique technology-driven, productivity-focused business model.
ICICI Bank continues to be a preferred employer at leading business schools and higher education institutions across the country, offering a wide range of career opportunities across the entire spectrum of financial services. Robust ability-testing and competency-profiling tools are being used to strengthen the campus recruitment process and match the profiles of employees to the needs of the organization. In addition to campus recruitment, ICICI Bank also undertakes lateral recruitment to bring new skills, competencies and experience into the organization and meet the requirements of rapidly growing businesses. ICICI Bank also encourages cross-functional movement, enriching employees knowledge
29
and experience and giving them a holistic view of the organization while ensuring that the bank leverages its human capital optimally. During fiscal 2003, ICICI Bank recruited over 4,000 employees. ICICI Bank also leveraged icicibankcareers.com, its career website, with a view to build a strong alternative recruitment channel to the traditional channels.
Continuous enhancement of knowledge and skill sets is vital, given the rapidly changing business environment and the constant challenges it poses to organizations. ICICI Bank believes that building a learning organization is critical for being competitive in products and services and meeting customer expectations. ICICI Bank has built strong capabilities in training and development to build competencies. Training on products and operations is imparted through web-based training modules. ICICI Bank achieved approximately 1.5 web-based learning mandays per employee in fiscal 2003. Special programmes on functional training and leadership development to build knowledge as well as management capability are conducted at a dedicated training facility. ICICI Bank also draws from the best available training programmes and faculty, both international and domestic, to meet its training and development needs and build globally benchmarked skills and capabilities.
The performance management system at ICICI Bank is based on clearly defined performance parameters and employee empowerment for achievement of goals, reinforcing the Banks achievement-oriented culture. ICICI Bank also has a structured process of identifying and developing leadership potential.
ICICI Banks constant endeavour to implement innovative human resource practices has resulted in the creation of an exceptional pool of talent and a performance-oriented organizational culture and has imparted agility and flexibility to the organization.
ORGANIZATIONAL EXCELLENCE
ICICI Bank recognizes the importance of excellence in its business. Developing and deploying world-class skills in a variety of areas such as technology, financial engineering, transaction processing and portfolio management, credit evaluation, customer segmentation and product design, and building and maintaining deep and enduring relationships of trust with our retail and wholesale customers are two essential elements of our strategy.
In recognition of the critical importance of excellence in internal processes and delivery to customers, the Organizational Excellence Group was set up in fiscal 2002 to focus on quality
30
Business Overview |
initiatives in the Bank. A Senior General Manager, who reports to the Managing Director & CEO, heads the Group. The Group is supported by a team of professionals with experience in the field of quality. The Organisational Excellence Group is engaged in institutionalizing quality in the Bank by building skills in various quality frameworks, tracking projects, reporting progress and replicating successes across the Bank. The Group has been partnering with business units in undertaking quality projects, which leverage quality for strategic change and lead to business improvement.
COMMUNITY DEVELOPMENT
At ICICI Bank, we believe that, as one of the largest participants in the financial system of the country, we need to contribute to the overall economic and social development of India. A dedicated not-for-profit group, the Social Initiatives Group (SIG) works to catalyze this effort, with the mission to identify and support initiatives designed to improve the capacities of the poorest of the poor to participate in the larger economy. ICICI Bank believes that ensuring health, education and access to financial services is critical for facilitating this participation. Within these, the specific areas identified for focused attention are infant health at birth, elementary education and micro-financial services. To fulfil its mission, ICICI Bank seeks to address key knowledge and practice gaps that currently impede the achievement of national goals in these sectors. It, therefore, supports projects that are cost-effective, measurable and capable of large-scale replication, and have the potential for both near and long-term impact.
Infant Health at Birth
In this area, important initiatives in fiscal 2003 included support to the introduction of additional health workers in rural areas for improving the quality and accessibility of existing publicly provided health and nutrition services. ICICI Bank has formed a partnership with the Government of Jharkhand and NGOs such as Krishi Gram Vikas Kendra (KGVK), CARE and the Child In Need Institute (CINI) to pilot the additional health worker strategy in two blocks of the Ranchi district in Jharkhand.
Elementary Education
Our initiatives in elementary education seek to work towards maximising the number of 14-year-olds who have a basic level of education. While continuing our support to organizations
31
such as Pratham, we initiated a number of new relationships in fiscal 2003. We funded the Centre for Learning Resources, Pune to undertake a radio programme in every upper-primary municipal school in Mumbai and Delhi. The objective of this programme is to strengthen language skills of students. We also formulated a work plan with the Bhopal-based NGO, Eklavya, that specialises in teacher training and curriculum design.
Micro-Financial Services
Our micro-financial services initiative aims at maximizing access of the poor to banking, credit and insurance. A key element of our strategy is to create better interfaces between institutional financial services providers and community based organizations. In fiscal 2003, we launched an initiative with the DHAN Foundation, Madurai to develop a scalable strategy for bank linkage of self-help groups. A study for the development of a comprehensive insurance plan with the Society for Elimination of Rural Poverty (SERP) in Andhra Pradesh is currently underway.
PUBLIC RECOGNITION
During fiscal 2003, we received several prestigious awards in recognition of our business strategies, customer service levels, technology focus and human resource practices, including:
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Directors Report |
To the members,
Your Directors have pleasure in presenting the Ninth Annual Report of ICICI Bank Limited with the audited statement of accounts for the year ended March 31, 2003.
FINANCIAL HIGHLIGHTS
As the Appointed Date of the merger of erstwhile ICICI Limited (ICICI), ICICI Personal Financial Services Limited (ICICI PFS) and ICICI Capital Services Limited (ICICI Capital) with the Bank was March 30, 2002, the profit & loss account for fiscal 2002 included the results of the operations of ICICI, ICICI PFS and ICICI Capital for March 30 and 31, 2002 i.e. two days only. The results for fiscal 2003 are, therefore, not comparable with the results for fiscal 2002. The financial performance for fiscal 2003 is summarised below:
Rs. billion |
Fiscal 2003 | Fiscal 2002 | |||
Net interest income and other income, | ||||
excluding extraordinary items | 33.91 | 11.67 | ||
Operating profit | 13.80 | 5.45 | ||
Provisions & contingencies | 17.91 | 2.87 | ||
Profit on sale of ICICI Bank shares | 11.91 | | ||
Profit after tax | 12.06 | 2.58 | ||
Consolidated profit after tax | 11.52 | 2.58 |
APPROPRIATIONS
The profit & loss account shows a profit after taxation of Rs. 12.06 billion after write-offs and provisions of Rs. 17.91 billion and after taking into account all expenses. The disposable profit is Rs. 12.25 billion, taking into account the balance of Rs. 0.19 billion brought forward from the previous year. Your Directors have recommended a dividend rate of 75% (Rs. 7.50 per equity share of Rs. 10) for the year and have appropriated the disposable profit as follows:
Rs. billion |
Fiscal 2003 | Fiscal 2002 | |||
To Statutory Reserve, making in all Rs. 5.51 billion | 3.02 | 0.65 | ||
To Investment Fluctuation Reserve, | ||||
making in all Rs. 1.27 billion | 1.00 | 0.16 | ||
To Special Reserve created and maintained in terms | ||||
of Section 36(1)(viii) of the Income-tax Act, 1961, | ||||
making in all Rs. 11.44 billion | 0.50 | 0.14 | ||
To Revenue and other Reserves making in all | ||||
Rs. 36.91 billion1 | 2.50 | 0.96 |
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Directors Report |
Rs. billion |
Fiscal 2003 | Fiscal 2002 | |||
Dividend for the year (proposed) | ||||
On equity shares @ 75% | 4.60 | 0.44 | ||
On preference shares (Rs.) | 35,000 | | ||
Corporate dividend tax | 0.59 | 0.05 | ||
Leaving balance to be carried forward to the next year | 0.04 | 0.19 |
1 In addition to appropriation of disposable profits, the balance in the Debenture Redemption Reserve of Rs. 0.10 billion was transferred to Revenue and other Reserves in fiscal 2003.
SUBSIDIARY COMPANIES
At March 31, 2003, ICICI Bank had twelve subsidiaries:
Domestic Subsidiaries | International Subsidiaries |
ICICI Securities Limited | ICICI Bank UK Limited1 |
ICICI Venture Funds Management Company Limited | ICICI Securities Holdings Inc.2 |
ICICI Prudential Life Insurance Company Limited | ICICI Securities Inc.3 |
ICICI Lombard General Insurance Company Limited | ICICI International Limited |
ICICI Home Finance Company Limited | |
ICICI Investment Management Company Limited | |
ICICI Trusteeship Services Limited | |
ICICI Brokerage Services Limited2 |
1 Awaiting UK regulatory approval for commencement of business
2 Subsidiary of ICICI Securities Limited
3 Subsidiary of ICICI Securities Holdings Inc.
In terms of the approval granted by the Central Government vide letter dated June 11, 2003 under Section 212(8) of the Companies Act, 1956, a copy of the balance sheet, profit & loss account, report of the Board of Directors and report of the Auditors of the subsidiary companies has not been attached to the accounts of the Bank for the year ended March 31, 2003. The Bank will make available these documents/details upon request by any member of the Bank. These documents/details will also be available on the Banks website. As required by Accounting Standard 21 (AS-21) issued by the Institute of Chartered Accountants of India, the Banks consolidated financial statements incorporate the accounts of its subsidiaries, except those of ICICI Bank UK Limited. ICICI Bank UK Limited was incorporated on February 11, 2003 and is yet to commence operations and hence, its accounts have not been drawn up.
In May 2003, the Bank acquired the entire paid-up equity share capital of Transamerica Apple Distribution Finance Private Limited. The Company is now a wholly-owned subsidiary of ICICI Bank and has been renamed as ICICI Distribution Finance Private Limited.
34
Directors Report |
DIRECTORS
P. C. Ghosh, Chairman, General Insurance Corporation of India (GIC), which together with other Government-owned general insurance companies is among ICICI Banks largest domestic institutional shareholders, was appointed as an additional Director effective January 31, 2003.
M. K. Sharma was appointed as an additional Director effective January 31, 2003. He is the Vice-Chairman of Hindustan Lever Limited. He joined Hindustan Lever Limited in 1974, worked in various areas including taxation and legal and was inducted on its Board in August 1995.
P. C. Ghosh and M. K. Sharma hold office up to the date of the forthcoming Annual General Meeting as provided under Article 135 of the Articles of Association of the Bank, but are eligible for appointment.
H. N. Sinor completed his term as Joint Managing Director on May 31, 2003 and retired with effect from June 1, 2003. During his tenure, the Bank achieved several milestones, including its listing on the New York Stock Exchange (NYSE), the acquisition of Bank of Madura and the merger of ICICI with the Bank, emerging as Indias largest private sector bank and the second-largest bank in the country. The Bank pioneered technology-based banking in India under his leadership. The Board places on record its appreciation of the services rendered by him.
The Government of India had, vide its letter dated May 6, 2002, nominated S. K. Purkayastha, Additional Secretary (Financial Sector), Ministry of Finance on the Board. The Government of India had subsequently nominated D. C. Gupta, Secretary (Banking & Insurance), Ministry of Finance & Company Affairs on the Board in place of S. K. Purkayastha, effective July 19, 2002. Subsequently, Vineeta Rai, Secretary (Banking & Insurance), Ministry of Finance & Company Affairs was nominated by the Government of India effective October 31, 2002 in place of D. C. Gupta. The Government of India withdrew the nomination of Vineeta Rai and nominated Vinod Rai, Joint Secretary (IF), Banking Division in her place effective January 3, 2003. In terms of Article 128A of the Articles of Association, Vinod Rai is not liable to retire by rotation.
In terms of the provisions of the Articles of Association, Somesh R. Sathe, Anupam Puri, Marti G. Subrahmanyam and Kalpana Morparia would retire by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-appointment. If Kalpana Morparia is re-appointed as Director immediately on retirement by rotation, she will continue to hold her office of Executive Director and the retirement by rotation and re-appointment shall not be deemed to constitute a break in her appointment.
AUDITORS
The Auditors, N. M. Raiji & Co. and S. R. Batliboi & Co., Chartered Accountants, will retire at the ensuing Annual General Meeting. The Board at its Meeting held on June 27-28, 2003 has proposed the appointment of S. R. Batliboi & Co., Chartered Accountants as Auditors to audit the accounts of ICICI Bank for fiscal 2004 and the approval of Reserve Bank of India (RBI) has been received vide letter dated July 4, 2003. You are requested to consider their appointment.
35
Directors Report |
PERSONNEL
As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the Annexure to the Directors Report.
APPOINTMENT OF NOMINEE DIRECTORS ON THE BOARD OF ASSISTED COMPANIES
ICICI had a policy of appointing nominee Directors on the Boards of certain borrower companies based on loan covenants, with a view to enable monitoring of the operations of those companies. Subsequent to the merger, ICICI Bank continues to nominate Directors on the Boards of assisted companies. Apart from the Banks employees, experienced professionals from the banking, government and other sectors are appointed as nominee Directors. ICICI Bank has 144 nominee Directors on the boards of 280 companies, of whom 83 are employees of the Bank. The Bank has a Nominee Director Cell for maintaining records of nominee directorships.
CORPORATE GOVERNANCE
ICICI Bank has established a tradition of best practices in corporate governance. The corporate governance framework in ICICI Bank is based on an effective independent Board, the separation of the Boards supervisory role from the executive management and the constitution of Board Committees generally comprising a majority of independent Directors and chaired by an independent Director to oversee critical areas.
I. | Philosophy of Corporate Governance |
ICICI Banks corporate governance philosophy encompasses not only regulatory and legal requirements, such as the terms of listing agreements with stock exchanges, but also several voluntary practices aimed at a high level of business ethics, effective supervision and enhancement of value for all stakeholders. | |
II. | Board of Directors |
ICICI Bank has a broad-based Board of Directors, constituted in compliance with the Banking Regulation Act, 1949, Companies Act, 1956 and listing agreement with stock exchanges and in accordance with best practices in corporate governance. The Board functions either as a full Board or through various committees constituted to oversee specific operational areas. The Board has constituted nine committees, viz. Audit Committee, Agriculture & Small Enterprises Business Committee, Board Governance & Remuneration Committee, Business Strategy Committee, Credit Committee, Risk Committee, Share Transfer & Shareholders/Investors Grievance Committee, Committee of Directors and Asset Liability Management Committee. A majority of these Board Committees are chaired by independent professional Directors, and mainly consist of independent Directors. The constitution of these Committees is given hereafter. | |
At March 31, 2003, the Board of Directors consisted of 19 members. There were nine meetings of the Board during fiscal 2003 on April 12, April 24 & 26, May 3, June 21-22, July 31, September 16 and October 31 in 2002 and January 31 and March 28 in 2003. The names of Board members, their attendance at Board meetings and the number of other directorships and Board Committee memberships held by them at March 31, 2003 are given overleaf. |
36
Directors Report |
Name of Member | Board | Attendance | Number of other | Number of | ||||||
Meetings | at last AGM | Directorships | other | |||||||
attended | (September | Of Indian | Of Other | Committee3 | ||||||
during | 16, 2002) | Companies1 | Companies2 | Memberships | ||||||
the year | ||||||||||
Independent non-executive Directors | ||||||||||
Current members | ||||||||||
N. Vaghul | 9 | Present | 8 | 10 | 6(4) | |||||
Uday M. Chitale | 8 | Present | 1 | 4 | 1(1) | |||||
P. C. Ghosh (w.e.f. January 31, 2003) | 2 | N.A. | 8 | 3 | | |||||
Satish C. Jha | 7 | Present | 3 | | 2 | |||||
Lakshmi N. Mittal (w.e.f. May 3, 2002) | 4 | Present | | 50 | | |||||
Anupam Puri (w.e.f. May 3, 2002) | 2 | Absent | 5 | 1 | 6(2) | |||||
Vinod Rai (w.e.f. January 3, 2003)* | 2 | N.A. | 4 | | 1 | |||||
Somesh R. Sathe | 8 | Present | | 3 | | |||||
R. Seshasayee (w.e.f. May 3, 2002) | 7 | Present | 7 | 1 | 6(1) | |||||
M. K. Sharma (w.e.f. January 31, 2003) | 2 | N.A. | 7 | 1 | 5(1) | |||||
P. M. Sinha | 7 | Present | 3 | 2 | 2 | |||||
Marti G. Subrahmanyam (w.e.f. | ||||||||||
May 3, 2002)** | 2 | Absent | 1 | 6 | 2(1) | |||||
Members who ceased to be | ||||||||||
Directors during the year | ||||||||||
B. V. Bhargava (up to April 26, 2002) | 2 | N.A. | N.A. | N.A. | N.A. | |||||
R. Rajamani (up to April 26, 2002) | 1 | N.A. | N.A. | N.A. | N.A. | |||||
D. Sengupta (up to June 30, 2002) | | N.A. | N.A. | N.A. | N.A. | |||||
S. K. Purkayastha (up to July 18, 2002)* | | N.A. | N.A. | N.A. | N.A. | |||||
D. C. Gupta (July 19, 2002 up to | ||||||||||
October 30, 2002)* | Absent | N.A. | N.A. | N.A. | ||||||
Vineeta Rai (October 31, 2002 up to | ||||||||||
January 2, 2003)* | | N.A. | N.A. | N.A. | N.A. | |||||
Wholetime Directors | ||||||||||
K. V. Kamath*** | 9 | Present | 4 | 5 | | |||||
H. N. Sinor | 9 | Present | 2 | | | |||||
Lalita D. Gupte*** | 9 | Present | 4 | | 2 | |||||
Kalpana Morparia (w.e.f. May 3, 2002) | 7 | Present | 6 | | 5 | |||||
S. Mukherji (w.e.f. May 3, 2002) | 7 | Present | 2 | | 2(1) | |||||
Chanda Kochhar | 9 | Present | 2 | | 1(1) | |||||
Nachiket Mor | 8 | Present | 2 | 2 | |
1 | Includes companies as per the provisions of Section 278 of the Companies Act, 1956. |
2 | Includes foreign companies and other companies that are excluded as per the provisions of Section 278 of the Companies Act, 1956. |
3 | Includes the Audit Committee, the Share Transfer & Shareholders/Investors Grievance Committee and the Board Governance & Remuneration Committee. Bracketed figures indicate Committee Chairmanships. |
* | Nominee of Government of India. |
** | Participated in three meetings through tele-conference. |
*** | As wholetime Director effective May 3, 2002. |
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Directors Report |
III. | Audit Committee |
Terms of Reference | |
The Audit Committee provides direction to the audit and risk management function and monitors the quality of internal and statutory audit. The responsibilities of the Audit Committee include the overseeing of the financial reporting process to ensure fairness, sufficiency and credibility of financial statements, recommendation of appointment and removal of central and branch statutory auditors and fixation of their remuneration, review of the annual financial statements before submission to the Board, review of the adequacy of internal control systems and the internal audit function, review of compliance with the inspection and audit reports of RBI and reports of statutory auditors, review of the findings of internal investigations, discussion on the scope of audit with external auditors and examination of reasons for substantial defaults, if any, in payment to stakeholders. | |
Composition | |
The Audit Committee comprises three independent Directors and is chaired by R. Seshasayee. RBI guidelines stipulate that this Committee must meet at least six times in a financial year. There were six meetings of the Committee during the year. The details of composition of the Committee and attendance at its meetings are given below: |
Name of Member | Number of Meetings attended | ||
R. Seshasayee, Chairman | 6 | ||
Uday M. Chitale | 5 | ||
Somesh R. Sathe | 5 | ||
IV. | Agriculture & Small Enterprises Business Committee |
Terms of Reference | |
The functions of the Committee include review of the business strategy of the Bank in the agri-business and small enterprises segments and review of the quality of the agricultural lending and small enterprises finance credit portfolio. | |
Composition | |
The Agriculture & Small Enterprises Business Committee was constitued by the Board effective July 1, 2003. The Committee comprises five independent Directors, viz. N. Vaghul, Satish C. Jha, Somesh R. Sathe, P. M. Sinha and M. K. Sharma. N. Vaghul is the Chairman of the Committee. | |
V. | Board Governance & Remuneration Committee |
Terms of Reference | |
The functions of the Board Governance & Remuneration Committee include recommendation of appointments to the Board, evaluation of the performance of the Managing Director & CEO, the Board and individual members on pre-determined parameters, recommendation to the Board of the remuneration |
38
Directors Report |
(including performance bonus and perquisites) to wholetime Directors, approval of the policy for and quantum of bonus payable to the members of the staff, the framing of guidelines for the Employees Stock Option Scheme, recommendation of grant of stock options to the staff and wholetime Directors of ICICI Bank and its subsidiary companies and formulation of a code of ethics and governance. | |
Remuneration Policy | |
The Board Governance & Remuneration Committee has the power to determine and recommend to the Board the amount of remuneration, including performance/achievement bonus and perquisites, payable to the wholetime Directors. The recommendations of the Committee were based on evaluation of the wholetime Directors on certain parameters, as laid down by the Board as part of the self-evaluation process. | |
The following are the details of remuneration (including perquisites, bonus and retiral benefits) paid and stock options granted to wholetime Directors in fiscal 2003: |
K.V. | H.N. | Lalita | Kalpana | S. | Chanda | Nachiket | ||||||||
Kamath | Sinor | Gupte | Morparia | Mukherji | Kochhar | Mor | ||||||||
Break-up of Remuneration | ||||||||||||||
(Rupees) | ||||||||||||||
Basic | 4,800,000 | 3,000,000 | 3,600,000 | 2,520,000 | 2,520,000 | 2,100,000 | 2,100,000 | |||||||
Performance bonus for | ||||||||||||||
fiscal 2003# | 4,800,000 | 3,000,000 | 3,600,000 | 2,520,000 | 2,520,000 | 2,100,000 | 2,100,000 | |||||||
Allowances and perquisites .. | 843,387 | 680,400 | 2,519,789 | 3,912,252@ | 2,061,868 | 1,004,810 | 2,019,641 | |||||||
Provident fund | 576,000 | 360,000 | 432,000 | 302,400 | 302,400 | 252,000 | 252,000 | |||||||
Gratuity | 399,840 | 249,900 | 299,880 | 209,916 | 209,916 | 174,930 | 174,930 | |||||||
Superannuation | 720,000 | 450,000 | 540,000 | 378,000 | 378,000 | 315,000 | 315,000 | |||||||
Stock Options | ||||||||||||||
Fiscal 2003 | 120,000 | 100,000 | 110,000 | 100,000 | 100,000 | 80,000 | 80,000 | |||||||
Fiscal 2002 | 120,000* | 100,000 | 110,000* | 100,000* | 100,000* | 80,000 | 80,000 | |||||||
Fiscal 2001 | 60,000* | 56,250 | 55,000* | 30,000* | 30,000* | 30,000* | 30,000* | |||||||
# Approved by the Board and to be paid on appoval by RBI. | |
@ Includes leave and leave-travel-allowance encashment of Rs. 3,129,000. | |
* Options awarded by ICICI and converted into ICICI Bank options as per the Scheme of Amalgamation. | |
Perquisites (evaluated as per Income-tax Rules wherever applicable and at actual cost to the Company otherwise) such as the benefit of the Banks furnished accommodation, gas, electricity, water and furnishings, club fees, personal insurance, use of car and telephone at residence or reimbursement of expenses in lieu thereof; medical reimbursement, leave and leave-travel concession, education benefits, provident fund, superannuation fund and gratuity, were provided in accordance with the scheme(s) and rule(s) applicable from time to time. If accommodation owned by the Bank was not provided, the wholetime Director concerned was eligible for house rent allowance of Rs. 50,000 per month and maintenance of accommodation including furniture, fixtures and furnishings, as may have been provided by the Bank. | |
The non-executive Directors, except the nominee Directors of Government of India were paid sitting fees of Rs. 5,000 per meeting of the Board or Committee attended by them. |
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Directors Report |
Composition | |
The Board Governance & Remuneration Committee comprises four independent Directors and is chaired by N. Vaghul. There were two meetings of the Committee during the year. The details of composition of the Committee and attendance at its meetings are given below: |
Name of Member | Number of Meetings attended | |
N. Vaghul, Chairman | 2 | |
R. Seshasayee (w.e.f. June 30, 2002) | 2 | |
P. M. Sinha | 1 | |
D. Sengupta (up to June 30, 2002) | Not Applicable | |
Anupam Puri (w.e.f. March 28, 2003) | Not Applicable | |
VI. | Business Strategy Committee |
Terms of Reference | |
The function of the Committee is to approve the annual income and expenditure and capital expenditure budgets for presentation to the Board for final approval and to review and recommend to the Board the business strategy of ICICI Bank. | |
Composition | |
The Business Strategy Committee comprises five Directors. It is chaired by N. Vaghul and a majority of its members are independent Directors. There was one meeting of the Committee during the year. The details of composition of the Committee and attendance at the meeting are given below: |
Name of Member | Number of Meetings attended | |
N. Vaghul, Chairman | 1 | |
Anupam Puri | | |
R. Seshasayee | 1 | |
P. M. Sinha | | |
K. V. Kamath | 1 | |
VII. | Credit Committee |
Terms of Reference | |
The functions of the Committee include review of developments in key industrial sectors and approval of credit proposals as per authorisation approved by the Board. | |
Composition | |
The Credit Committee comprises four Directors. It is chaired by N. Vaghul and a majority of its members are independent Directors. There were six meetings of the Committee during the year. |
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Directors Report |
The details of composition of the Committee and attendance at its meetings are given below: | |
Name of Member | Number of Meetings attended | |
N. Vaghul, Chairman | 6 | |
Satish C. Jha | 4 | |
Somesh R. Sathe | 5 | |
K. V. Kamath | 6 | |
VIII. | Risk Committee |
Terms of Reference | |
The Committee reviews ICICI Banks risk management policies in relation to various risks (portfolio, liquidity, interest-rate, off-balance sheet and operational risks), investment policies and strategy, and regulatory and compliance issues in relation thereto. | |
Composition | |
The Risk Committee comprises four Directors. It is chaired by N. Vaghul and a majority of its members are independent Directors. There were four meetings of the Committee during the year. The details of composition of the Committee and attendance at its meetings are given below: | |
Name of Member | Number of Meetings attended | |
N. Vaghul, Chairman | 4 | |
Uday M. Chitale | 3 | |
Marti G. Subrahmanyam | 4 | |
K. V. Kamath | 2 | |
IX. | Share Transfer & Shareholders/Investors Grievance Committee |
Terms of Reference | |
The functions and powers of the Committee include approval and rejection of transfer or transmission of equity and preference shares, bonds, debentures and securities, issue of duplicate certificates, allotment of shares and securities issued from time to time, including those under stock options, review and redressal of shareholders and investors complaints, the opening and operation of bank accounts for payment of interest and dividend and the listing of securities on stock exchanges. | |
Composition | |
The Share Transfer & Shareholders/Investors Grievance Committee comprises four Directors and is chaired by Uday Chitale, an independent Director. There were 13 meetings of the Committee during the year. |
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Directors Report |
The details of composition of the Committee and attendance at its meetings are given below: | ||
Name of Member | Number of Meetings attended | |
Uday M. Chitale, Chairman | 12 | |
Somesh R. Sathe | 11 | |
H. N. Sinor | 12 | |
Kalpana Morparia | 9 | |
Chanda D. Kochhar has been appointed as a Member of the Committee effective June 1, 2003 in place of H. N. Sinor. | |
Jyotin Mehta, General Manager & Company Secretary, is the Compliance Officer. Of the total of 3,468 shareholders complaints received in fiscal 2003, 3,452Lcomplaints were processed to the satisfaction of shareholders. At March 31, 2003, 16Lcomplaints were pending. No applications were pending for transfer of shares as on March 31, 2003. | |
Prior to its dissolution on May 3, 2002, the Share Transfer Committee of ICICI Bank prior to the merger had met five times. The details of composition of the Committee and attendance at its meetings are given below: | |
Name of Member | Number of Meetings attended | |
H. N. Sinor | 5 | |
Lalita D. Gupte | 3 | |
Chanda D. Kochhar | 5 | |
Nachiket Mor | 3 | |
X. | Committee of Directors |
Terms of Reference | |
The powers of the Committee include review of performance against targets for various business segments and credit approvals as per authorisation approved by the Board, borrowing and treasury operations and premises and property related matters. | |
Composition | |
The Committee of Directors consists of all the wholetime Directors and is chaired by K. V. Kamath, Managing Director & CEO. | |
XI. | Asset Liability Management Committee |
Terms of Reference | |
The functions of the Committee include management of the balance sheet of the Bank, review of the asset-liability profile of the Bank with a view to manage the market risk exposure assumed by the Bank and deciding the deposit rates and Prime Lending Rates (PLR) of the Bank. |
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Directors Report |
Composition | |
The Asset Liability Management Committee consists of five wholetime Directors and is chaired by Lalita D. Gupte, Joint Managing Director. | |
XII. | General Body Meetings |
The details of General Body Meetings held in the last three years are given below: | |
General Body Meeting | Day & Date | Time | Venue | |
Fourth Extraordinary | Monday, | 3.00 p.m. | Professor Chandravadan Mehta | |
General Meeting | February 21, 2000 | Auditorium, General Education | ||
Centre, Opposite D. N. Hall | ||||
Sixth Annual | Monday, | 3.00 p.m. | Ground, The Maharaja Sayajirao | |
General Meeting | May 29, 2000 | University, Pratapgunj, Vadodara | ||
390 002 | ||||
Fifth Extraordinary | Friday, | 12.30 p.m. | Central Gujarat Chamber of | |
General Meeting | January 19, 2001 | Commerce Auditorium, Second | ||
Floor, Vanijya Bhavan, Race | ||||
Seventh Annual | Monday, | 3.00 p.m. | Course Circle, Vadodara 390 007 | |
General Meeting | June 11, 2001 | |||
Sixth Extraordinary | Friday, | 3.00 p.m. | ||
General Meeting | January 25, 2002 | |||
Eighth Annual | Monday, | 2.00 p.m. | Professor Chandravadan Mehta | |
General Meeting | September 16, 2002 | Auditorium, General Education | ||
Centre, Opposite D. N. Hall Ground, | ||||
The Maharaja Sayajirao University, | ||||
Pratapgunj, Vadodara 390 002 | ||||
The procedure of postal ballot was carried out for the Special Resolution relating to amendment to the Object Clause of the Memorandum of Association. Jayesh Gandhi, Partner of N. M. Raiji & Co., Chartered Accountants, was appointed Scrutinizer for conducting the postal ballot process. Notice was sent to 6,06,400 shareholders with the last date for receiving the postal ballot forms by the Scrutinizer as September 11, 2002 and, till that date, 45,572 forms were received. According to the Scrutinizers Report, 42,843 equity shareholders (excluding 2,729 invalid forms), representing 26,85,94,550 equity shares had cast their votes. 41,052 equity shareholders holding 26,84,27,807 equity shares had voted in favour of the Resolution and 1,791 equity shareholders holding 1,66,743 equity shares had voted against the Resolution. The results of the postal ballot were announced at the Eighth Annual General Meeting of the Bank held on September 16, 2002. | |
No Resolutions are proposed to be voted on through postal ballot this year. |
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Directors Report |
XIII. | Disclosures |
1. | There were no materially significant transactions with related parties i.e. promoters, Directors or the Management, their subsidiaries or relatives, conflicting with the Banks interests. | |
2. | There were no instances of non-compliance in respect of any matter related to the capital markets, during the last three years. | |
XIV. | Means of Communication |
It is ICICI Banks belief that all stakeholders should have access to complete information regarding its position to enable them to accurately assess its future potential. ICICI Bank disseminates information on its operations and initiatives on a regular basis. The ICICI Bank website (www.icicibank.com) serves as a key awareness facility for all its stakeholders, allowing them to access information at their convenience. It provides comprehensive information on ICICI Banks strategy, business segments, financial performance, operational performance, share-price movements and displays the latest press releases. ICICI Banks dedicated investor relations personnel respond to specific queries and play a proactive role in disseminating information to both analysts and investors. In accordance with Securities and Exchange Board of India (SEBI) and Securities Exchange Commission (SEC) guidelines, all information which could have a material bearing on ICICI Banks share price is released at the earliest through leading domestic and global wire agencies. ICICI Bank also circulates its half-yearly results to all its shareholders. As required by SEBI and the listing agreements, ICICI Bank has been filing its financial and other information on the Electronic Data Information Filing and Retrieval (EDIFAR) website maintained by National Informatics Centre (NIC) from July 2002. | |
ICICI Banks quarterly financial results are published in the Financial Express (Ahmedabad, Bangalore, Chandigarh, Chennai, Delhi, Kochi, Kolkata and Mumbai editions) and in Sandesh/Vadodara Samachar (Vadodara). The financial results, official news releases and presentations are also displayed on the website. | |
The Managements Discussion & Analysis forms part of the Annual Report. | |
XV. | General Shareholder Information |
Ninth Annual General Meeting | |
Date | Time | Venue | ||
Monday, August 25, 2003 | 2.00 p.m. | Professor Chandravadan Mehta Auditorium, General | ||
Education Centre, Opposite D. N. Hall Ground, The Maharaja | ||||
Sayajirao University, Pratapgunj, Vadodara 390 002 | ||||
Financial Calendar | : | April 1 to March 31 | ||
Book Closure | : | August 6, 2003 to August 25, 2003 | ||
Dividend Payment Date | : | On and from August 26, 2003 |
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Directors Report |
Listing on Stock Exchanges (with stock code) | ||
Stock Exchange | Code for ICICI Bank | |
Vadodara Stock Exchange Limited (Regional)1 | 32174 | |
Fortune Towers, Sayajigunj, Post Box No. 2547, Vadodara 390 005 | ||
The Stock Exchange, Mumbai | 32174 | |
Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 001 | ||
National Stock Exchange of India Limited | EQ | |
Exchange Plaza, Bandra-Kurla Complex Bandra (East), Mumbai 400 051 | ||
The Calcutta Stock Exchange Association Limited1 | 19268 | |
7, Lyons Range, Kolkata 700 001 | ||
The Delhi Stock Exchange Association Limited1 | 009187 | |
DSE House, 3/1 Asaf Ali Road, New Delhi 110 002 | ||
Madras Stock Exchange Limited1 | IBCL | |
Exchange Building, Post Box No. 183, 11, Second Line Beach, Chennai 600 001 | ||
New York Stock Exchange (American Depositary Receipts)2 | IBN | |
11, Wall Street, New York, NY 10005, United States of America | ||
1 Proposed to be delisted. | |
2 Each American Depositary Receipt (ADR) of ICICI Bank represents two underlying equity shares. | |
ICICI Bank has paid annual listing fees for fiscal 2004 on its capital to all the stock exchanges where its securities are listed. | |
Market Price Information | |
The reported high and low closing prices and volume of equity shares of ICICI Bank traded during fiscal 2003 on the Stock Exchange, Mumbai (BSE) and National Stock Exchange (NSE) are given in the following table : |
Month | BSE | NSE | Total | |||||||||||
|
|
volume on | ||||||||||||
High | Low | Volume | High | Low | Volume | BSE and | ||||||||
(Rs.) | (Rs.) | (Rs.) | (Rs.) | NSE | ||||||||||
April 2002 | 131.40 | 111.05 | 1,319,327 | 131.50 | 111.00 | 2,509,386 | 3,828,713 | |||||||
May 2002 | 152.00 | 111.60 | 4,302,055 | 154.95 | 111.50 | 7,807,728 | 12,109,783 | |||||||
June 2002 | 164.50 | 133.50 | 4,455,797 | 164.40 | 133.15 | 8,430,066 | 12,885,863 | |||||||
July 2002 | 157.25 | 135.10 | 4,025,396 | 158.40 | 134.30 | 9,599,213 | 13,624,609 | |||||||
August 2002 | 145.50 | 131.10 | 2,116,953 | 145.85 | 130.10 | 4,426,936 | 6,543,889 | |||||||
September 2002 | 147.80 | 130.00 | 109,731,418 | 147.50 | 131.50 | 7,695,637 | 117,427,055 | |||||||
October 2002 | 145.75 | 122.25 | 4,004,941 | 145.60 | 122.70 | 7,195,466 | 11,200,407 | |||||||
November 2002 | 140.00 | 109.25 | 9,189,715 | 141.10 | 109.40 | 16,611,040 | 25,800,755 | |||||||
December 2002 | 153.20 | 130.20 | 6,361,098 | 153.45 | 130.00 | 14,996,542 | 21,357,640 | |||||||
January 2003 | 155.65 | 131.55 | 10,669,806 | 155.95 | 131.65 | 19,187,571 | 29,857,377 | |||||||
February 2003 | 152.80 | 139.50 | 5,330,486 | 153.00 | 135.00 | 12,455,504 | 17,785,990 | |||||||
March 2003 | 152.40 | 132.00 | 8,365,877 | 152.10 | 132.00 | 13,172,746 | 21,538,623 | |||||||
Fiscal 2003 | 164.50 | 109.25 | 169,872,869 | 164.40 | 109.40 | 124,087,835 | 293,960,704 | |||||||
Source: BSE and NSE |
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Directors Report |
The reported high and low closing prices and volume of ADRs of ICICI Bank traded during fiscal 2003 on the New York Stock Exchange (NYSE) are given below: | |
Month | High (US$) | Low (US$) | Number of ADRs traded | |||
April 2002 | 6.60 | 4.92 | 46,922 | |||
May 2002 | 8.06 | 4.89 | 129,177 | |||
June 2002 | 8.31 | 6.28 | 118,320 | |||
July 2002 | 7.54 | 5.74 | 94,931 | |||
August 2002 | 6.80 | 5.40 | 134,327 | |||
September 2002 | 6.56 | 5.52 | 100,905 | |||
October 2002 | 6.28 | 5.60 | 102,108 | |||
November 2002 | 6.15 | 4.70 | 269,280 | |||
December 2002 | 7.00 | 5.60 | 147,219 | |||
January 2003 | 7.15 | 6.06 | 121,766 | |||
February 2003 | 7.15 | 6.63 | 121,026 | |||
March 2003 | 7.17 | 6.20 | 113,485 | |||
Fiscal 2003 | 8.31 | 4.70 | 1,499,466 | |||
Source: Yahoo Finance | ||||||
The performance of the ICICI Bank equity share relative to the BSE Sensitive Index (Sensex) is given in the following chart: | ||||||
Share Transfer System | ||||||
ICICI Banks investor services are handled by ICICI Infotech Limited (ICICI Infotech). ICICI Infotech operates in the following main areas of business: software consultancy and development, IT-enabled services, IT infrastructure and network and facilities management services. ICICI Infotech has received the ISO 9001 certification for its transaction processing activities. |
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Directors Report |
As per SEBI guidelines, ICICI Bank shares are being traded only in dematerialised form. During the year, 3,682,781 shares of ICICI Bank were transferred into electronic mode, involvingL30,340 certificates. At March 31, 2003 about 96.11% of ICICI Banks paid-up equity (including equity shares represented by ADRs constituting 26.10% of the paid-upLequity share capital) comprisingL589,219,692 shares had been dematerialised. | |
Physical share transfers are registered and returned typically, within a period of, seven days from the date of receipt, if the documents are correct and valid in all respects. A letter is sent to the shareholder giving an option to receive shares in physical or dematerialised mode. A period of 30 days is given to the shareholder for sending his intimation. The shareholder then receives the shares in the form he exercises his option for. No applications for transfer of equity shares were pending as on March 31, 2003. | |
The number of shares of ICICI Bank transferred during the last three years is given below: | |
Fiscal 2001 | Fiscal 2002 | Fiscal 2003 | |||||
Number of transfer deeds | 7,703 | 2,114 | 8,140 | ||||
Number of shares transferred | 811,600 | 315,038 | 1,126,355 | ||||
As required under Clause 47(c) of the listing agreements entered into by ICICI Bank with stock exchanges, a half-yearly certificate is being obtained from a firm of practising Company Secretaries, in regard to, inter alia, effecting transfer, transmission, sub-division, consolidation, renewal and exchange of equity shares and bonds in the nature of debentures within one month of their lodgement. The certificates are forwarded to stock exchanges where the equity shares are listed within 24 hours of issuance and also placed before the Board. | |||||||
In terms of SEBIs circular no. D&CC/FITTC/CIR-16 dated December 31, 2002, a Secretarial Audit is being conducted on a quarterly basis by a firm of Chartered Accountants, for the purpose of, inter alia, reconciliation of the total admitted equity share capital with the depositories and in the physical form with the total issued/paid-up equity capital of ICICI Bank. Certificates issued in this regard are placed before the Share Transfer & Shareholders/Investors Grievance Committee and forwarded to stock exchanges where the equity shares of ICICI Bank are listed. | |||||||
For any share-related queries, please call ICICI Infotech at +91-22-5592 8000, fax your query +91-22-5591 2480/81 or email to investor@icicibank.com. | |||||||
Registrar and Transfer Agents | |||||||
The Registrar and Transfer Agents of ICICI Bank is ICICI Infotech Limited. Investor services related queries may be directed to T. V. Rangaswami at either of the addresses below: | |||||||
ICICI Infotech Limited | ICICI Infotech Limited | |
International Infotech Park | Maratha Mandir Annexe, Maratha Mandir | |
Tower 5, 4th Floor | Dr. A. R. Nair Road | |
Navi Mumbai 400 705, Maharashtra | Near Mumbai Central Station | |
Tel.: +91-22-5592 8000 | Mumbai 400 008 | |
Fax: +91-22-5591 2480/81 |
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Directors Report |
Queries relating to the operational and financial performance of ICICI Bank may be addressed to: | |
Rakesh
Jha / Anindya Banerjee |
|
Information on Shareholding | |
Shareholding pattern of ICICI Bank at March 31, 2003 | |
Shareholder Category | Shares | % holding | |||
Deutsche Bank Trust Company Americas | |||||
(as Depositary for ADR holders) | 160,022,118 | 26.10 | |||
FIIs and NRIs | 236,644,243 | 38.60 | |||
Insurance Companies | 94,714,564 | 15.45 | |||
Bodies Corporate | 30,258,750 | 4.94 | |||
Unit Trust of India I & II | 20,341,225 | 3.32 | |||
Banks and Financial Institutions | 6,579,125 | 1.07 | |||
Mutual Funds | 8,720,080 | 1.42 | |||
Individuals | 55,754,299 | 9.10 | |||
Total | 613,034,404 | 100.00 | |||
Shareholders of ICICI Bank with more than one per cent holding at March 31, 2003 | |||||
Name of the Shareholder | Number of | % to Total | |||
Shares | Number of Shares | ||||
Deutsche Bank Trust Company Americas | |||||
(as Depositary for ADR holders) | 160,022,118 | 26.10 | |||
Life Insurance Corporation of India | 50,948,413 | 8.31 | |||
Orcasia Limited | 46,231,626 | 7.54 | |||
Government of Singapore* | 42,478,330 | 6.93 | |||
Bajaj Auto Limited | 21,519,880 | 3.51 | |||
Unit Trust of India I & II | 20,341,225 | 3.32 | |||
M and G Investment Management Limited | 18,980,477 | 3.10 | |||
The New India Assurance Company Limited | 17,276,695 | 2.82 | |||
Emerging Markets Growth Fund Inc. | 13,193,690 | 2.15 | |||
General Insurance Corporation of India | 9,881,295 | 1.61 | |||
National Insurance Company Limited | 8,425,659 | 1.37 | |||
Templeton Inv. Counsel LLC A/c Templeton foreign equity series | 6,433,958 | 1.05 | |||
Emerging markets management LLC A/c EMSAF Mauritius | 6,181,821 | 1.01 | |||
* Government of Singapore comprises: | |||||
Government of Singapore | 26,373,458 | 4.30 | |||
Monetary Authority of Singapore-J | 7,417,350 | 1.21 | |||
Monetary Authority of Singapore | 4,790,568 | 0.78 | |||
Monetary Authority of Singapore-B | 3,057,566 | 0.50 | |||
Government of Singapore Investment Corporation A/c | |||||
Government of Singapore-E | 839,388 | 0.14 |
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Directors Report |
Distribution of shareholding of ICICI Bank at March 31, 2003 | |
Range | Number of Folios | % of total | Number of shares | % of total | ||||||
Up to 1,000 | 564,492 | 99.14 | 45,992,798 | 7.50 | ||||||
1,001-5,000 | 4,066 | 0.72 | 7,870,906 | 1.28 | ||||||
5,001-10,000 | 341 | 0.06 | 2,399,332 | 0.39 | ||||||
10,001-50,000 | 253 | 0.04 | 5,272,716 | 0.86 | ||||||
50,001 & above | 250 | 0.04 | 551,498,652 | 89.97 | ||||||
Total | 569,402 | 100.00 | 613,034,404 | 100.00 | ||||||
Outstanding GDRs/ADRs/Warrants or any Convertible Debentures, conversion date and likely impact on equity | |
ICICI Bank has about 80 million ADRs (equivalent to about 160 million equity shares) outstanding, which constitute 26.10% of ICICI Banks total equity capital. Currently, there are no convertible debentures outstanding except Euro Convertible Bonds (ECB) issued by ICICI amounting to USD 0.40 million outstanding as on March 31, 2003. As per the terms of the ECB agreement, the bondholder has a right to convert the bond into fully-paid non-assessable shares at any time during the conversion period which began on January 2, 1994 and would end at the close of business on March 1, 2004. The last date of redemption of the outstanding ECBs is April 1, 2004. The impact of conversion of ECBs on equity will be insignificant. | |
Plant Locations Not applicable | |
Address for Correspondence | |
Jyotin
Mehta |
|
A majority of the non-mandatory requirements with respect to corporate governance have also been complied with. |
COMPLIANCE CERTIFICATE OF THE AUDITORS
ICICI Bank has annexed to this report a certificate obtained from the statutory auditors, viz. N. M. Raiji & Co. and S. R. Batliboi & Co., Chartered Accountants, regarding compliance of conditions of corporate governance as stipulated in clause 49 of the listing agreement.
EMPLOYEE STOCK OPTION SCHEME
Since fiscal 2000, ICICI Bank has instituted an Employee Stock Option Scheme (ESOS) to enable its employees, including wholetime Directors, to participate in the future growth and financial success of the Bank. As per
49
Directors Report |
the ESOS as amended by the Scheme of Amalgamation of ICICI, ICICI PFS and ICICI Capital with ICICI Bank, the maximum number of options granted to any employee is limited to 0.05% of ICICI Banks issued equity shares at the time of the grant, and the aggregate of all such options is limited to 5% of ICICI Banks issued equity shares after the merger of ICICI with ICICI Bank. The options vest in a graded manner over a three-year period, with 20%, 30% and 50% of the grants vesting in each year, commencing not earlier than 12 months from the date of grant. The options can be exercised within ten years from the date of grant or five years from the date of vesting, whichever is later. The exercise price of the options is the closing market price on the stock exchange which records the highest trading volume on the date of grant.
On the basis of the recommendation of the Board Governance & Remuneration Committee, the Board at its meeting on April 25, 2003 approved a grant of 7.3 million options for fiscal 2003 to eligible employees (including wholetime Directors). Each option confers on the employee a right to apply for one equity share of Rs. 10 of ICICI Bank at Rs. 132.05, the closing market price on the date of the grant on the National Stock Exchange, which recorded the highest trading volume on that date.
The total number of shares of ICICI Bank covered by the ESOS as approved by the shareholders is 30,651,720. The particulars of options granted by ICICI Bank as at June 27, 2003 are given below:
Options granted | 21,248,975 |
Options vested | 6,260,605 |
Options exercised | 22,970 |
Options forfeited/lapsed | 1,289,350 |
Extinguishment or modification of options | |
Amount realised by sale of options | 3,578,812 |
Total number of options in force | 19,936,655 |
Options granted by ICICI Bank to senior managerial personnel for fiscal 2003 are as follows: K. V. Kamath 1,20,000, H. N. Sinor 100,000, Lalita Gupte 110,000, Kalpana Morparia 100,000, S. Mukherji 100,000, Chanda Kochhar 80,000, Nachiket Mor 80,000, Ramni Nirula 75,000, Balaji Swaminathan 75,000 and P. H. Ravikumar 44,000. No employee has a grant, in any one year, of options amounting to 5% or more of total options granted during that year. No employee was granted options during any one year equal to or exceeding 0.05% of the issued capital of ICICI Bank at the time of the grant.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors confirm:
1. | that in the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures; |
2. | that they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank for that period; |
50
Directors Report |
3. | that they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Banking Regulation Act, 1949 and the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and |
4. | that they have prepared the annual accounts on a going-concern basis. |
ACKNOWLEDGEMENTS
ICICI Bank is grateful to the Government of India, RBI and SEBI, for their continued co-operation, support and advice. ICICI Bank is thankful to the domestic and international banking community, rating agencies and stock exchanges for their support in resource mobilisation.
ICICI Bank would also like to take this opportunity to express sincere thanks to its valued clients and customers, including depositors and bondholders, for their continued patronage. The Directors express their deep sense of appreciation to all employees, who continue to display outstanding professionalism and commitment, enabling the organisation to achieve market leadership in its business operations and to operate successfully as a universal bank. Finally, the Directors wish to express their gratitude to the Members for their continued trust and support.
For and on behalf of the Board | |
Place : Mumbai | N. VAGHUL |
Date : July 11, 2003 | Chairman |
AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE
To the Members of ICICI Bank Ltd.
We have examined the compliance of conditions of corporate governance by ICICI Bank Ltd. for the year ended on March 31, 2003, as stipulated in clause 49 of the Listing Agreement of the said Bank with stock exchanges.
The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Bank for ensuring the compliance the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the Bank has complied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement.
We state that no investor grievance is pending for a period exceeding one month against the Bank as per records maintained by the Shareholders/Investors Grievance Committee.
We further state that such compliance is neither an assurance as to the future viability of the Bank nor efficiency or effectiveness with which the management has conducted the affairs of the Bank.
For N. M. RAIJI & CO. | For S. R. BATLIBOI & CO. |
Chartered Accountants | Chartered Accountants |
JAYESH M. GANDHI | per VIREN H. MEHTA |
Partner | a Partner |
Mumbai: April 25, 2003 |
51
Managements Discussion & Analysis |
FINANCIALS AS PER INDIAN GAAP
The Appointed Date for the merger of erstwhile ICICI Limited (ICICI) and two of its wholly-owned subsidiaries, ICICI Personal Financial Services Limited (ICICI PFS) and ICICI Capital Services Limited (ICICI Capital) with ICICI Bank (the merger) was March 30, 2002. Accordingly, ICICI Banks profit and loss account for fiscal 2003 includes the full impact of the merger, whereas the Banks profit and loss account for fiscal 2002 included the results of operations of ICICI, ICICI PFS and ICICI Capital for only two days i.e. March 30 and 31, 2002. ICICI Banks profit and loss account for fiscal 2003 is therefore not comparable with the profit and loss account for fiscal 2002.
ICICI Banks operating profit (profit before provisions and tax, excluding gain on sale of ICICI Bank shares) increased to Rs. 13.80 billion in fiscal 2003 as compared to Rs. 5.45 billion in fiscal 2002. During fiscal 2003, the ICICI Bank Shares Trust divested 101.4 million shares of the Bank (transferred to the Trust by ICICI prior to the merger in accordance with the Scheme of Amalgamation) to strategic and institutional investors, resulting in capital gains of Rs. 11.91 billion for the Bank. During fiscal 2003, the Bank made total provisions and write-offs (including accelerated/ additional provisions and write-offs against loans and investments, primarily relating to ICICIs portfolio) of Rs. 17.91 billion. On account of deferred tax asset arising out of provisions made in fiscal 2003 and utilisation of fair value provisions against ICICIs portfolio created at the time of the merger and after taking into account the tax charge for the period, there was a net credit of Rs. 4.26 billion on account of Income tax. Profit after tax for fiscal 2003 was Rs. 12.06 billion compared to Rs. 2.58 billion for fiscal 2002.
Operating Results Data
Rs. billion |
Fiscal 2002 | Fiscal 2003 | |||
Interest income | 21.52 | 93.68 | ||
Interest expenditure | 15.59 | 79.44 | ||
Net interest income | 5.93 | 14.24 | ||
Non-interest income | 5.75 | 19.67 | ||
Fee income1 | 2.72 | 8.47 | ||
Treasury income2 | 2.92 | 4.47 | ||
Lease income | 0.11 | 5.37 | ||
Others | | 1.36 | ||
Operating income | 11.68 | 33.91 | ||
Operating expense | 5.98 | 15.35 | ||
Direct Marketing Agent (DMA) expense3 | 0.14 | 1.62 | ||
Lease depreciation | 0.11 | 3.14 | ||
Operating profit | 5.45 | 13.80 | ||
Profit on sale of ICICI Bank shares | | 11.91 | ||
Provisions (including additional/accelerated provisions), | ||||
net of write-backs | 2.55 | 17.91 | ||
Tax, net of deferred tax | 0.32 | (4.26) | ||
Profit after tax | 2.58 | 12.06 |
1 Includes merchant foreign exchange income.
2 Excludes merchant foreign exchange income.
3 Other than on auto loans, which is reduced from the interest income.
52
Managements Discussion & Analysis |
Net Interest Income and Spread Analysis
Rs. billion, except percentages |
Fiscal 2002 | Fiscal 2003 | |||
Average interest-earning assets | 222.39 | 905.16 | ||
Interest income | 21.52 | 92.391 | ||
Average interest-bearing liabilities | 207.37 | 891.62 | ||
Total interest expenses | 15.59 | 79.44 | ||
Net interest income | 5.93 | 12.95 | ||
Net interest margin | 2.67% | 1.43% | ||
Average yield (1) | 9.68% | 10.21% | ||
Average cost of funds (2) | 7.52% | 8.91% | ||
Average cost of deposits | 7.28% | 6.77% | ||
Yield spread (1) (2) | 2.16% | 1.30% |
1 Excluding dividend income of Rs. 1.29 billion.
The total interest income increased to Rs. 92.39 billion (excluding all dividend income) in fiscal 2003 compared to Rs. 21.52 billion in fiscal 2002, due to an increase in the average volume of interest-earning assets to Rs. 905.16 billion in fiscal 2003 from Rs. 222.39 billion in fiscal 2002. The yield on average interest earning assets was 10.21% for fiscal 2003 compared to 9.68% for fiscal 2002. The increase in yield was primarily on account of the higher-yielding loan portfolio of ICICI transferred to the Bank on merger. This was offset by the increase in lower-yielding Government securities portfolio and cash reserves with RBI, in compliance with Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) requirements on ICICIs outstanding liabilities transferred to the Bank on merger. The average volume of investment in Government securities increased by about Rs. 161.50 billion to Rs. 246.19 billion in fiscal 2003. ICICI Bank reduces the amortisation of premium on SLR investments in the Held-to-Maturity category from the interest income. This amortisation charge was Rs. 1.36 billion for fiscal 2003. ICICI Bank also reduces Direct Marketing Agent (DMA) commissions on auto loans from the interest income. These commissions are expensed upfront and not amortised. The auto DMA commissions reduced from the interest income in fiscal 2003 were Rs. 1.57 billion. Interest income also includes Rs. 0.24 billion of interest on Income-tax refund.
During fiscal 2003, the Bank adopted a new accounting policy for non-accrual of income on certain loans, including assistance to projects under implementation where the implementation has been significantly delayed and, in the opinion of the management, significant uncertainties exist as to the final financial closure and/or date of completion of the project; although such non-accrual is not required by RBI norms. Dividend income (other than from subsidiaries) of Rs. 1.29 billion (including Rs. 0.53 billion of dividend income from mutual fund units) is included in interest income in accordance with RBI norms, but is excluded for the purpose of spread analysis.
53
Managements Discussion & Analysis |
Aggregate interest expense increased to Rs. 79.44 billion in fiscal 2003 from Rs. 15.59 billion in fiscal 2002, due to increase in average interest bearing liabilities to Rs. 891.62 billion for fiscal 2003 from Rs. 207.37 billion for fiscal 2002 and increase in total cost of funds to 8.91% in fiscal 2003 from 7.52% in fiscal 2002. The increase in cost of funds was primarily due to the impact of the higher-cost borrowings of ICICI transferred to the Bank on merger. This was partially offset by the repayment of Rs. 224.00 billion of ICICIs liabilities and reduction in the cost of deposits. The average cost of deposits declined to 6.77% for fiscal 2003 from 7.28% for fiscal 2002.
ICICI Banks net interest margin and yield spread were adversely impacted by the large investments made in Government securities and cash balances with RBI in the latter half of fiscal 2002 to comply with SLR and CRR requirements on ICICIs outstanding higher-cost liabilities transferred to the Bank on merger. The yield spread decreased by 86 basis points to 1.30% in fiscal 2003 from 2.16% in fiscal 2002.
Non-Interest Income
Non-interest income increased to Rs. 19.67 billion in fiscal 2003 as compared to Rs. 5.75 billion in fiscal 2002. The components of non-interest income are discussed below:
Fee Income
Fee income increased to Rs. 8.47 billion in fiscal 2003 as compared to Rs. 2.72 billion in fiscal 2002. Retail banking fee income increased to Rs. 3.21 billion in fiscal 2003 as compared to Rs. 1.07 billion in fiscal 2002, primarily due to the growth in loan-processing fees, income from credit cards and other retail banking services. The number of credit cards increased to about 1 million at March 31, 2003 from about 0.6 million at March 31, 2002. Corporate banking fee income increased to Rs. 5.26 billion in fiscal 2003 from Rs. 1.65 billion in fiscal 2002, driven primarily by increase in transaction banking and other fees.
Treasury Income
The total income from treasury-related activities increased to Rs. 4.47 billion in fiscal 2003 from Rs. 2.92 billion in fiscal 2002, due to the increase in trading profits on Government securities and corporate debt trading as a result of the declining interest rate environment. Profit from foreign exchange transactions is net of forward premium expenses of Rs. 0.64 billion on foreign currency liabilities.
Lease Income
Leased assets of Rs. 22.27 billion were transferred to the Bank from ICICI on merger. Leased assets of Rs. 17.70 billion were outstanding at March 31, 2003. Gross lease income for fiscal 2003 was Rs. 5.37 billion and the related lease depreciation was Rs. 3.14 billion.
Others
Other non-interest income in fiscal 2003 includes dividend income received from subsidiaries of Rs. 1.09 billion.
54
Managements Discussion & Analysis |
Operating Expense
Operating expense for fiscal 2003 was Rs. 15.35 billion (excluding lease depreciation of Rs. 3.14 billion and DMA expense of Rs.1.62 billion) compared to Rs. 5.98 billion for fiscal 2002. The increase in operating expense was primarily due to inclusion of the operations of ICICI, ICICI Capital and ICICI PFS and the growth in the retail franchise, including lease and maintenance of ATMs, credit card expenses, call centre expenses and technology expenses. The number of savings accounts increased to about 4.26 million at March 31, 2003 from about 2.1 million at March 31, 2002. The credit and debit cards increased to about 4.50 million at March 31, 2003 from about 1.30 million at March 31, 2002. The number of ATMs increased to 1,675 at March 31, 2003 from 1,000 at March 31, 2002. The operating expenses as a percentage to average assets was 1.46% for fiscal 2003 compared to 2.55% for fiscal 2002.
The following table sets forth, for the periods indicated, the break-up of the principal components of operating expense.
Rs. billion |
Fiscal 2002 | Fiscal 2003 | |||
Salary | 1.47 | 4.03 | ||
Rents, taxes & lighting | 0.66 | 1.12 | ||
Printing & stationery | 0.35 | 0.75 | ||
Postage & courier | 0.38 | 1.04 | ||
Repairs & maintenance | 0.78 | 1.45 | ||
Insurance | 0.14 | 0.25 | ||
Bank charges | 0.12 | 0.23 | ||
Depreciation | 0.52 | 1.91 | ||
Others | 1.56 | 4.57 | ||
Operating expenses | 5.98 | 15.35 |
DMA Expense
ICICI Bank incurred DMA expenses of Rs. 1.62 billion on the retail asset portfolio (other than auto loans). Retail assets increased to Rs. 191.32 billion at March 31, 2003 from Rs. 61.25 billion at March 31, 2002.
Provisions and Write-offs
ICICI Bank makes provisions/write-offs aggregating 50% of the secured portion of non-performing assets over a three-year period instead of the five-and-a-half year period prescribed by RBI. Loss assets and the unsecured portion of doubtful assets are fully provided for / written off. Additional provisions are made against specific non-performing assets if considered necessary by the management. For restructured or rescheduled assets, provision is made in accordance with the guidelines issued by the RBI, which require that the difference between the present values of the future interest as per the original loan agreement and the present values of future interest on the basis of the rescheduled terms be provided at the time of restructuring.
55
Managements Discussion & Analysis |
ICICI Bank has adopted a conservative general provisioning policy for its standard asset portfolio. The Bank had already created fair valuation provisions against the corporate and project finance portfolio acquired from ICICI in the merger. While Reserve Bank of India guidelines require only a 0.25% general provision against standard assets, ICICI Bank makes additional general provisions against standard assets having regard to overall portfolio quality, asset growth, economic conditions and other risk factors. During the year, ICICI Bank also made additional/accelerated provisions against loans and other assets, primarily relating to ICICIs portfolio.
ICICI Bank made aggregate provisions and write-offs of Rs. 17.91 billion, net of write-backs, in fiscal 2003.
Income-Tax Expense
On account of deferred tax asset arising out of provisions made in fiscal 2003 and utilisation of fair value provisions against ICICIs portfolio created at the time of the merger and after taking into account the tax charge for the period, there was a net credit of Rs. 4.26 billion on account of Income tax. Deferred-tax asset has been accounted for in accordance with the provisions of Accounting Standard 22 issued by the Institute of Chartered Accountants of India, which requires recognition of deferred-tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Charge to profit for tax expense in fiscal 2002 was Rs. 0.32 billion after deferred-tax credit of Rs. 0.90 billion.
FINANCIAL CONDITION
The following table sets forth, for the periods indicated, the summarised balance sheet of ICICI Bank.
Rs. billion |
March 31, | March 31, | |||
2002 | 2003 | |||
Assets: | ||||
Cash, balances with banks & SLR | 355.78 | 320.72 | ||
Cash & balances with RBI & banks | 127.86 | 64.89 | ||
SLR investments | 227.92 | 255.83 | ||
Advances | 470.35 | 532.79 | ||
Debentures & bonds | 64.36 | 56.90 | ||
Other investments | 66.63 | 41.89 | ||
Fixed assets | 42.39 | 40.61 | ||
Other assets | 41.55 | 75.21 | ||
Total assets | 1,041.06 | 1,068.12 | ||
Liabilities: | ||||
Equity capital & reserves | 62.45 | 69.33 | ||
Equity capital | 6.13 | 6.13 | ||
Reserves | 56.32 | 63.20 | ||
Preference capital | 3.50 | 3.50 | ||
Deposits | 320.85 | 481.69 | ||
Savings deposits | 24.97 | 37.93 | ||
Current deposits | 27.36 | 36.89 | ||
Term deposits | 268.52 | 406.87 | ||
Borrowings | 589.70 | 440.52 | ||
Of which: Subordinated debt1 | 97.51 | 97.50 | ||
Other liabilities | 64.56 | 73.08 | ||
Total liabilities | 1,041.06 | 1,068.12 |
1 Included in other liabilities in schedule 5 of the balance sheet.
56
Managements Discussion & Analysis |
ICICI Banks total assets increased marginally to Rs. 1,068.12 billion at March 31, 2003 from Rs. 1,041.06 billion at March 31, 2002. Net advances increased to Rs. 532.79 billion at March 31, 2003 from Rs. 470.35 billion at March 31, 2002. Retail assets increased to about Rs. 191.32 billion at March 31, 2003 constituting about 18% of total assets as compared to about 6% of total assets at March 31, 2002. Cash, balances with Reserve Bank of India and banks, money at call and short notice and SLR investments at March 31, 2003 were Rs. 320.72 billion compared to Rs. 355.78 billion at March 31, 2002. Total investments at March 31, 2003 decreased marginally to Rs. 354.62 billion compared to Rs. 358.91 billion at March 31, 2002. SLR investments included in total investments were Rs. 255.83 billion at March 31, 2003 compared to Rs. 227.92 billion at March 31, 2002. Other assets increased to Rs. 75.21 billion at March 31, 2003 from Rs. 41.55 billion at March 31, 2002. Other assets at March 31, 2003 include Rs. 15.32 billion of application money on shares and debentures, while at March 31, 2002, application money on shares debentures (aggregating Rs. 9.21 billion at that date) were included in investments.
The net worth at March 31, 2003 increased to Rs. 69.33 billion from Rs. 62.45 billion at March 31, 2002. Total deposits increased 50.1% to Rs. 481.69 billion at March 31, 2003 from Rs. 320.85 billion at March 31, 2002. ICICI Banks savings account deposits increased to Rs. 37.93 billion at March 31, 2003 from Rs. 24.97 billion at March 31, 2002, while current account deposits increased to Rs. 36.89 billion at March 31, 2003 from Rs. 27.36 billion at March 31, 2002. Term deposits increased to Rs. 406.87 billion at March 31, 2003 from Rs. 268.52 billion at March 31, 2002. Of the term deposits, value-added savings / current account deposits were about Rs. 85.74 billion at March 31, 2003 compared to about Rs. 53.42 billion at March 31, 2002. Total deposits at March 31, 2003 constituted 52.2% of ICICI Banks funding. Borrowings (including subordinated debt) decreased to Rs. 440.52 billion at March 31, 2003 from Rs. 589.70 billion at March 31, 2002. Of the total borrowings, borrowings raised by ICICI prior to the merger declined to Rs. 372.50 billion at March 31, 2003 from Rs. 582.10 billion at March 31, 2002. ICICI Bank raised about Rs. 25.00 billion through bond issues in the last quarter of fiscal 2003.
ICICI Banks total capital adequacy ratio at March 31, 2003 at 11.10% (including Tier-l capital adequacy of 7.05%) was significantly higher than the minimum requirement of 9% as per regulatory norms. Deferred-tax asset of Rs. 4.88 billion has been deducted from Tier-l capital in compliance with RBI guidelines. In accordance with RBI guidelines, Tier-l capital includes Rs. 2.31 billion out of the face value of Rs. 3.50 billion of 20-year non-cumulative preference shares issued to ITC Limited as a part of the scheme for merger of ITC Classic Finance Limited with ICICI. The table overleaf sets forth, for the periods indicated, details on ICICI Banks capital adequacy ratio.
57
Managements Discussion & Analysis |
Rs. billion, except percentages |
March 31, 2002 | March 31, 2003 | |||||||
|
||||||||
Amount | % of Risk- | Amount | % of Risk- | |||||
weighted | weighted | |||||||
assets | assets | |||||||
Tier-I capital | 58.87 | 7.47 | 58.071 | 7.05 | ||||
Tier-II capital2 | 31.25 | 3.97 | 33.39 | 4.05 | ||||
Total capital | 90.12 | 11.44 | 91.46 | 11.10 | ||||
Risk-weighted assets | 787.73 | 823.81 |
1 Deferred-tax asset of Rs. 4.88 billion netted off as per RBI guidelines.
2 Includes general provisions of Rs. 1.54 billion in fiscal 2002 and Rs. 3.08 billion in fiscal 2003.
Select Ratios
The following table sets forth, for the periods indicated, certain key ratios.
Fiscal 2002 | Fiscal 2003 | ||
Return on Net Worth (%) | 17.75 | 18.30 | |
Return on Assets1 | 1.10 | 1.15 | |
Earnings per Share (Rs.) | 11.61 | 19.68 | |
Book Value (Rs.) | 101.88 | 113.10 | |
Cost to income (%)2 | 51.69 | 49.88 | |
Cost to average assets (%)2 | 2.55 | 1.46 |
1 Return on assets is based on average daily assets.
2 Cost includes operating expense excluding DMA expense and lease depreciation. Total income includes net interest income and non-interest income (excluding gain on sale of ICICI Bank shares and net of lease depreciation).
CONSOLIDATED ACCOUNTS
The consolidated profit after tax was Rs. 11.52 billion including the results of operations of subsidiaries and affiliates of ICICI that became subsidiaries and affiliates of the Bank on merger. Future bonus provisions and non-amortisation of expenses by ICICI Prudential Life Insurance Company in line with insurance company accounting norms had a negative impact of Rs. 1.09 billion on the Banks consolidated profit. Life insurance companies worldwide require five to seven years to achieve break-even, in view of the business set-up and customer acquisition costs in the initial years as well as reserving for actuarial liability. The deficit in the initial years is usually higher for faster growing companies; the profit streams after break-even is achieved are expected to be correspondingly higher.
RECONCILIATION OF PROFITS AS PER INDIAN GAAP AND US GAAP
There are significant differences in the basis of accounting between US GAAP and Indian GAAP. Therefore, the financial statements under US GAAP and Indian GAAP for the Bank are not comparable. The impact of the key differences is set out overleaf:
58
Managements Discussion & Analysis |
a. | ICICI Banks net worth as per US GAAP on March 31, 2003 was Rs. 92.21 billion, which was significantly higher than the consolidated net worth as per Indian GAAP of Rs. 66.72 billion. |
b. | Under Indian GAAP, capital gains of Rs. 11.91 billion on the sale of shares of ICICI Bank and provisions of Rs. 17.91 billion were both accounted for in the profit and loss account. US GAAP requires the capital gains to be directly added to the net worth without being routed through the profit and loss account while provisions of Rs. 22.26 billion were accounted for in the profit and loss account under US GAAP. |
Thus, while the US GAAP profit and loss account does not include the capital gains, it includes the full negative impact of the provisions. | |
c. | Under US GAAP, ICICI is deemed to have acquired ICICI Bank and therefore ICICI Banks assets were fair-valued while accounting for the merger. Thus, ICICI Banks investment portfolio on the date of the merger was marked-to-market with a positive impact on the value of the portfolio and the net worth. As a result, treasury gains of Rs. 4.47 billion realized during the year and recognized as treasury income under Indian GAAP were lower by Rs. 2.15 billion as this amount was already recognized in the opening net worth under US GAAP. |
The technical accounting differences in respect of capital gains and treasury gains alone have a negative impact of Rs. 14.06 billion on the US GAAP profit and loss account, although the positive impact is accounted for in the net worth.
As a result of the significant differences in the basis of accounting under US GAAP and Indian GAAP, the Banks US GAAP accounts show a loss of Rs. 7.98 billion in fiscal 2003. A condensed reconciliation of consolidated profit after tax as per Indian GAAP with net income as per US GAAP for fiscal 2003 is set out in the following table :
Rs. billion |
Audited consolidated profit after tax as per Indian GAAP | 11.52 |
Adjustments 1: | |
Profit on sale of ICICI Bank shares | (11.91) |
Higher provision for loans & investments through profit & loss | |
account in US GAAP as compared to Indian GAAP | (4.93) |
Lower treasury income, already reflected in US GAAP stockholders | |
equity due to fair valuation of HTM securities on merger | (2.15) |
Amortization of intangibles / debt issue cost / fair values (net) | (0.84) |
Net impact of fee and expense amortization | 0.49 |
Other adjustments (including deferred taxation) | (0.16) |
Audited net income as per US GAAP | (7.98) |
1 Certain items have been aggregated/combined as considered appropriate.
59
Managements Discussion & Analysis |
ASSET QUALITY AND COMPOSITION
Loan Portfolio
ICICI Bank follows a strategy of building a diversified and de-risked asset portfolio and limiting or correcting concentrations in particular sectors.
ICICI Bank limits its exposure to any particular industry to 15.0% of its total exposure. The following table sets forth ICICI Banks industry-wise exposure at March 31, 2002 and at March 31, 2003.
Rs. billion, except percentages |
March 31, | March 31, | ||||
2002 | 2003 | ||||
Industry | % of total | % of total | Exposure1 | ||
Retail | 7.9 | 22.8 | 191.32 | ||
Power | 11.2 | 10.1 | 85.01 | ||
Iron & steel | 11.1 | 9.6 | 80.42 | ||
Services | 9.3 | 8.5 | 71.61 | ||
Telecommunications | 5.1 | 5.2 | 44.03 | ||
Textiles | 6.2 | 4.9 | 41.06 | ||
Crude petroleum & refining | 5.4 | 4.1 | 34.11 | ||
Engineering | 3.5 | 3.4 | 28.93 | ||
Electronics | 2.9 | 2.7 | 22.41 | ||
Metal & metal products | 2.5 | 2.4 | 20.04 | ||
Cement | 2.8 | 2.3 | 19.31 | ||
Petrochemicals | 1.2 | 2.1 | 17.83 | ||
Roads, ports & railways | 1.4 | 1.9 | 16.28 | ||
Chemicals | 2.5 | 1.7 | 13.96 | ||
Automobiles | 2.3 | 1.6 | 13.50 | ||
Fertilisers | 1.3 | 1.6 | 13.08 | ||
Paper & paper products | 2.2 | 1.5 | 12.56 | ||
Food processing | 1.4 | 1.4 | 11.83 | ||
Man-made fibres | 1.5 | 1.4 | 11.52 | ||
Hotels | 1.6 | 1.2 | 10.10 | ||
Sugar | 1.1 | 1.0 | 8.60 | ||
Plastics | 1.4 | 1.0 | 8.57 | ||
Shipping | 1.0 | 0.8 | 6.98 | ||
Non-banking finance companies | 1.3 | 0.7 | 5.92 | ||
Drugs & pharmaceuticals | 1.2 | 0.7 | 5.53 | ||
Rubber & rubber products | 0.5 | 0.3 | 2.91 | ||
Mining | 1.1 | 0.3 | 2.62 | ||
Other infrastructure | 0.3 | 0.2 | 1.87 | ||
Miscellaneous | 8.8 | 4.6 | 38.68 | ||
Total | 100.0 | 100.0 | 840.59 |
1 Includes principal outstanding, charges and non-fund-based exposures at 50%.
60
Managements Discussion & Analysis |
At March 31, 2003, the largest exposure was to retail finance, which constituted 22.8% of total exposure. Other sectors that constituted a significant portion of exposure were power (10.1%), iron & steel (9.6%) and services (8.5%).
As per RBI guidelines, the current exposure ceiling for a single borrower is 15% of total capital and for a group of borrowers is 40% of total capital. However, in the case of financing for infrastructure projects, the limit for a single borrower may be extended to 20% of total capital and for a group may be extended to 50% of total capital. Total capital comprises Tier-I and Tier-II capital as defined for determining capital adequacy.
The largest borrower at March 31, 2003 accounted for approximately 2.4% of ICICI Banks total exposure and 22.3% of ICICI Banks total capital. The Bank has received RBIs permission to exceed the exposure limit for this borrower. The largest borrower group at March 31, 2003 accounted for approximately 4.8% of ICICI Banks total exposure and 44.2% of ICICI Banks total capital which is within the prescribed limit taking into account infrastructure financing. At March 31, 2003, ICICI Banks ten largest individual borrowers in aggregate accounted for approximately 12.0% of its total exposure and its ten largest borrower groups in aggregate accounted for approximately 23.1% of its total exposure.
CLASSIFICATION OF LOAN ASSETS
All credit exposures are classified as per RBI guidelines into performing and non-performing assets. Further, non-performing assets are classified into sub-standard, doubtful and loss assets. The RBI guidelines require restructured assets to be separately disclosed.
The following table sets forth classification of net customer assets (net of write-offs and provisions) of ICICI Bank at March 31, 2002 and at March 31, 2003.
Rs. billion |
March 31, | March 31, | ||
2002 | 2003 | ||
Loss assets | | | |
Doubtful assets | 21.80 | 19.90 | |
Sub-standard assets | 12.57 | 12.52 | |
Of which, restructured sub-standard assets | 0.18 | | |
Less: general provisions held against non-performing assets | 7.16 | 0.91 | |
Standard assets | 548.05 | 609.00 | |
Of which, restructured standard assets | 46.98 | 89.43 | |
Net customer assets | 575.26 | 640.51 |
1 All loss assets have been written off or provided for.
2 Provisions of Rs. 0.91 billion are held as general provisions against non-performing assets at March 31, 2003.
61
Managements Discussion & Analysis |
The ratio of net non-performing assets to net customer assets increased marginally to 4.9% at March 31, 2003 from 4.7% at March 31, 2002. At March 31, 2003, the gross non-performing assets (net of write-offs) were Rs. 58.89 billion compared to Rs. 53.69 billion at March 31, 2002. Including write-offs against ICICIs assets, the gross non-performing loans at March 31, 2003 were Rs. 84.14 billion compared to Rs. 74.66 billion at March 31, 2002. The coverage ratio (i.e. total provisions and write-offs made against non-performing assets as a percentage of gross non-performing assets) at March 31, 2003 was 62.6% compared to 63.6% at March 31, 2002. In addition, ICICI Bank held a provision cover of 5.5% against its performing corporate portfolio.
At March 31, 2003, the net outstanding amount of the 20 largest non-performing cases where ICICI Bank has decided to recall loans and enforce its security interest against the borrowers was Rs. 6.76 billion with no individual borrower accounting for more than Rs. 1.19 billion. At March 31, 2003, the net outstanding amount of the 20 largest non-performing cases, other than where ICICI Bank had decided to recall loans, aggregated Rs. 10.36 billion, with no individual borrower accounting for more than Rs. 1.39 billion.
Classification of Non-Performing Loans by Industry
The following table sets forth the classification of net non-performing loans by industry sector at March 31, 2002 and March 31, 2003.
Rs. billion, except percentages |
March 31, | March 31, | ||||
2002 | 2003 | ||||
% of total | % of total | Net | |||
outstanding | |||||
Textiles | 15.1 | 16.3 | 5.27 | ||
Iron & steel | 15.4 | 13.3 | 4.30 | ||
Man-made fibres | 8.3 | 9.8 | 3.17 | ||
Engineering | 7.0 | 8.9 | 2.90 | ||
Chemicals | 7.9 | 8.7 | 2.83 | ||
Metal & metal products | 5.8 | 6.9 | 2.23 | ||
Services | 0.7 | 4.8 | 1.57 | ||
Food processing | 4.9 | 3.2 | 1.04 | ||
Paper & paper products | 4.0 | 3.0 | 0.96 | ||
Petrochemicals | 4.0 | 2.7 | 0.87 | ||
Drugs | 3.4 | 2.5 | 0.81 | ||
Cement | 3.0 | 2.4 | 0.79 | ||
Plastic | 2.7 | 2.1 | 0.69 | ||
Electronics | 2.2 | 2.0 | 0.65 | ||
Sugar | 1.6 | 1.9 | 0.63 | ||
Rubber & rubber products | 0.7 | 0.7 | 0.23 | ||
Shipping | 0.9 | 0.6 | 0.19 | ||
Non-banking finance companies | 0.9 | 0.2 | 0.07 | ||
Hotels | 1.5 | 0.2 | 0.05 | ||
Miscellaneous & others | 10.0 | 9.8 | 3.17 | ||
Total of above | 100.0 | 100.0 | 32.42 | ||
Less: general provisions against non-performing loans | 0.91 | ||||
Net non-performing loans | 31.51 |
62
Section 217 | |
Statement pursuant to Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 (forming part of the Directors Report for the year ended March 31, 2003) in respect of employees of ICICI Bank Limited |
|
||||||||||||
Remuneration | ||||||||||||
Received | ||||||||||||
Desig./ |
|
Expe- | Date of | |||||||||
Nature | rience | Commence- | ||||||||||
of | Gross | Net | (in | ment of | ||||||||
Name, Qualifications and Age (in years) | Duties*** | (Rs.) | (Rs.) | years) | Employment | Last Employment | ||||||
|
||||||||||||
Bagchi Anup, B.Tech (Chem.), PGDM, (32) | DGM | 2419517 | 1593956 | 11 | 26-05-92 | | ||||||
Bakshi Sandeep, B.Sc, PGDBM, (42)* | GM | 2431289 | 1586007 | 19 | 01-12-86 | Project Co-ordinator, The United Group | ||||||
Basu Arnab, BE (Elec.), PGDM, (36) | DGM | 2554220 | 1682780 | 12 | 15-01-92 | Ex. Assistant to MD, INCAB Industries | ||||||
Batra Mohit, BE (Prod.), MS, (37) | JGM | 2638270 | 1715923 | 11 | 24-04-92 | | ||||||
Bharathan K., B.Com, ACA, (52) | GM | 2848122 | 1789931 | 26 | 16-12-81 | Manager, Lakshmi Vilas Bank Limited | ||||||
Chakraborty Suvalaxmi, (Ms.), B.Com, CA, (36) | JGM | 3291038 | 2139748 | 15 | 01-02-89 | Junior Officer, Price Waterhouse | ||||||
Daruwala Zarin, (Ms.), B.Com, CS, CA, (38) | DGM | 2714815 | 1742813 | 14 | 21-06-89 | | ||||||
Gopinath M.N., B.Com, MBA, CAIIB, (54) | GM | 3375091 | 2181114 | 34 | 01-06-95 | Asst. General Manager, Bank of India | ||||||
Gupte Lalita D., (Ms.), BA (Hons.), MMS, (54)+ | JMD | 7091789 | 4235830 | 32 | 15-06-71 | | ||||||
Kamath K.V., BE (Mech.), PGDBA, (55)+ | MD&CEO | 6939387 | 3899519 | 32 | 01-05-96 | Adviser to the Chairman, Bakrie Group, Indonesia | ||||||
Kannan N.S., BE( Mech.), PGDM, (37) | GM | 4161482 | 2712387 | 15 | 02-05-91 | Executive, SRF Limited | ||||||
Kannan R, M.Tech (Chem.), DFM, CFA, (55) | GM | 3794267 | 2529339 | 31 | 01-06-77 | Process Design Engr., Southern Nitro Chemical Limited | ||||||
Karati A., B.Com, LLB, (57) | GM | 4288697 | 2649846 | 39 | 01-08-78 | The India Machinery Company Limited | ||||||
Kerkar Sanjiv, B.Tech (Chem.), MFM, (52) | SGM | 5108949 | 3216318 | 27 | 26-11-96 | Director-Operations, Asian Finance and Investment | ||||||
Khasnobis S, BE (Mech.), (48) | GM | 3399778 | 2230150 | 23 | 12-01-81 | Asst. Indust. Engr., Hindustan Motors Limited | ||||||
Kochhar Chanda (Ms.), BA, MMS, ICWAI, (41)+ | ED | 3671811 | 2172750 | 19 | 17-04-84 | | ||||||
Kusre A.T., M.Tech. (Chem.), (53) | GM | 3638490 | 2353408 | 29 | 04-01-80 | Officer, State Bank of Hyderabad | ||||||
Madhav Kalyan B.P., BE, PGDM, (33)* | DGM | 764394 | 539125 | 12 | 30-06-95 | Branch Manager, Standard Chartered Bank | ||||||
Mehta Jyotin, B.Com, CA, CS, ICWA, (45) | GM&CS | 2788787 | 1733211 | 20 | 01-03-00 | Vice President, Finance & CS, Bharat Shell | ||||||
Mhatre Sangeeta V., (Ms.), B.Com, CA, (39) | DGM | 2838352 | 1815386 | 14 | 12-06-89 | | ||||||
Mor Nachiket (Dr.), B.Sc, PGDM, Phd, (Fin. Eco.), (39)+ | ED | 4686642 | 2960892 | 16 | 04-01-01 | | ||||||
Morparia Kalpana (Ms.), B.Sc, LLB, (53)+ | ED | 7112652 | 4440418 | 27 | 05-11-75 | Legal Asst., Malubhai Jamiatram & Madon | ||||||
Mukerji Ananda, B.Tech., PGDM, (43) | SGM | 5015562 | 3076477 | 18 | 15-01-02 | CFO, BPL Communications Limited | ||||||
Mukerji Nita, (Ms.), BA, PGDM, (37) | JGM | 2760593 | 1813855 | 14 | 01-06-89 | | ||||||
Mukherji S., BA, MMS, M.Sc. (Lon), (50)+ | ED | 5262268 | 3251730 | 25 | 02-01-78 | Research Associate, London School of Economics | ||||||
Mulye Vishakha V.,(Ms.) B.Com, CA, (34) | JGM | 2969450 | 1899973 | 11 | 01-03-93 | Officer, Deutsche Bank | ||||||
Nambiar Suvek, BE, MBA, (32) | DGM | 2474752 | 1651207 | 9 | 02-05-94 | Executive, Wipro Infotech | ||||||
Narayanaswamy Ramesh, BE, (36)* | AGM | 622232 | 557315 | 10 | 18-02-93 | Assistant Engr, SPIC Heavy Chemicals Divn. | ||||||
Nirantar R.B., B.Com, BGL, CAIIB, DIR&PM, (48) | GM | 2435653 | 1590146 | 28 | 23-05-94 | Manager, Union Bank of India | ||||||
Nirula Ramni, (Ms.), BA, MBA, (50) | SGM | 4285579 | 2630729 | 27 | 01-12-75 | | ||||||
Pinge N.D., B.Com, BGL, ACA, (44) | GM | 3543304 | 2181624 | 19 | 06-04-98 | Director, Anik Financial | ||||||
Puri-Buch Madhabi, (Ms.), BA, PGDM, DPR (UK), (37) | GM | 4017189 | 2518068 | 15 | 02-01-97 | Research Director, MARG | ||||||
Ramkumar K, B.Sc, PGDPM & IR, (41) | GM | 3581191 | 2319354 | 18 | 02-07-01 | Gen. Manager (HR), ICI India Limited | ||||||
Ramnath Renuka, (Ms.), BText, MMS, (41)* | GM | 4323538 | 2770791 | 17 | 09-07-97 | Gen. Manager (HR), ICICI Securities Limited | ||||||
Rao Mrutyunjaya, BE (Mech.), (47) | GM | 4130643 | 2731143 | 24 | 22-03-82 | Jr. Executive, Bharat Heavy Electricals Limited | ||||||
Ravikumar P.H., B.Com, CAIIB, (51) | SGM | 3936025 | 2577860 | 29 | 15-07-94 | Chief Manager, Bank of India | ||||||
Sarma P.J.V., B.Tech (Chem.), DFM, AICWA, (45) | GM | 2506141 | 1572865 | 23 | 14-07-80 | | ||||||
Shah Devdatt, B.Tech, MBA, (48)* | SGM | 14153768 | 9521614 | 24 | 01-01-99 | MD (India), Canadian Imperial Bank of Commerce | ||||||
Shah Nimish, B.Com, ICWA, CA, (32) | DGM | 2437937 | 1537294 | 11 | 03-06-93 | Ind. Trainee, CitiBank | ||||||
Shah Shalini, (Ms.), B.Com, FCA, (55) | GM | 2715435 | 1648173 | 31 | 25-04-77 | Chartered Accountant | ||||||
Sinor H.N., B.Com, LLB, JAIIB, (58)+ | JMD | 4490400 | 2546661 | 37 | 01-07-97 | Executive Director, Central Bank of India | ||||||
Srivastava O.P., M.Sc, PGDM, CAIIB, (48) | GM | 3031787 | 2048627 | 26 | 03-05-93 | Sr. Vice President, PNB Capital Services Limited | ||||||
Swaminathan Balaji, B.Com, CA, ICWA, (38) | SGM | 3796580 | 2301976 | 14 | 01-08-01 | Partner, KPMG | ||||||
Vaidyanathan V., B.Com, MBA, (35) | GM | 3195946 | 2218264 | 13 | 06-03-00 | Sales Head, CitiBank | ||||||
Vedasagar R., B.Sc, BL, (50) | GM | 2703301 | 1879981 | 25 | 04-07-80 | Advocate | ||||||
|
* | Indicates part of the year | |||||
+ | Nature of employment contractual | |||||
*** | Designation/Nature of Duties - Abbreviations | |||||
MD&CEO | - Managing Director & Chief Executive Officer | JMD | - Joint Managing Director | ED | - Executive Director | |
SGM | - Senior General Manager | GM&CS | - General Manager & Company Secretary | GM | - General Manager | |
JGM | - Joint General Manager | DGM | - Deputy General Manager | AGM | - Assistant General Manager | |
Other employees are in the permanent employment of the Company, governed by its rule and conditions of service. |
Notes:
1. Gross
remuneration includes Salary, Banks contribution to Provident
and Superannuation Funds etc.
2. Net
remuneration is shown after deduction from gross remuneration of
contribution to Provident and Superannuation Fund, Profession Tax
& Income Tax.
3. None
of the employees mentioned above is a relative of any Director.
4. Designation,
Nature of Duties and Remuneration are as on March 31, 2003.
For and on behalf of the Board
N.
VAGHUL
Chairman
Mumbai, July 11, 2003
F1
financials |
F2
auditors report | |
to the members of ICICI BANK LIMITED |
1. | We have audited the attached Balance Sheet of ICICI Bank Limited (the Bank) as at MarchG31, 2003 and also the Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Banks management. Our responsibility is to express an opinion on these financial statements based on our audit. |
2. | We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. |
3. | In accordance with the provisions of Section 29 of the Banking Regulation Act, 1949 (the Banking Regulation Act) read with the provisions of sub-sections (1), (2) and (5) of Section 211 and sub-section (5) of Section 227 of the Companies Act, 1956 (the Companies Act), the balance sheet and the profit and loss account, are not required to be and are not drawn up in accordance with Schedule VI to the Companies Act. The balance sheet and profit and loss account are, therefore drawn up in conformity with Forms A and B (revised) of the Third Schedule to the Banking Regulation Act. |
4. | We report that : |
a) | We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit and have found them to be satisfactory; | |
b) | In our opinion, the transactions of the Bank which have come to our notice have been within its powers; | |
c) | In our opinion, proper books of account as required by law have been kept by the Bank so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the branches not visited by us; | |
d) | The balance sheet and profit and loss account dealt with by this report are in agreement with the books of account; | |
e) | In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of SectionG211 of the Companies Act, insofar as they apply to the Bank; | |
f) | On the basis of written representations received from the directors, as on March 31, 2003, and taken on record by the Board of Directors, we report that none of the directors is disqualified from being appointed as a director in terms of clauseG(g) of sub-sectionG(1) of SectionG274 of the Companies Act; | |
g) | In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes thereon give the information required by the Companies Act in the manner so required for banking companies, and give a true and fair view in conformity with the accounting principles generally accepted in India: |
i. | in case of the balance sheet, of the state of the affairs of the Bank as at March 31, 2003; | ||
ii. | in case of the profit and loss account, of the profit for the year ended on that date; and | ||
iii. | in case of cash flow statement, of the cash flows for the year ended on that date. |
For N.M. RAIJI & CO. | For S.R. BATLIBOI & CO. |
Chartered Accountants | Chartered Accountants |
JAYESH M. GANDHI | per VIREN H. MEHTA |
Partner | a Partner |
Mumbai: April 25, 2003 | |
F3 |
balance sheet | |
as at March 31, 2003 |
As on | |||||
Schedule | (Rs. in 000s) | 31.03.2002 | |||
CAPITAL AND LIABILITIES | |||||
Capital | 1 | 9,626,600 | 9,625,472 | ||
Reserves and Surplus | 2 | 63,206,538 | 56,324,080 | ||
Deposits | 3 | 481,693,063 | 320,851,111 | ||
Borrowings | 4 | 343,024,203 | 492,186,592 | ||
Other liabilities and provisions | 5 | 170,569,258 | 162,075,756 | ||
TOTAL | 1,068,119,662 | 1,041,063,011 | |||
|
|||||
ASSETS | |||||
Cash and balance with Reserve Bank of India | 6 | 48,861,445 | 17,744,682 | ||
Balances with banks and money at call and short notice | 7 | 16,028,581 | 110,118,817 | ||
Investments | 8 | 354,623,002 | 358,910,797 | ||
Advances | 9 | 532,794,144 | 470,348,661 | ||
Fixed Assets | 10 | 40,607,274 | 42,393,443 | ||
Other Assets | 11 | 75,205,216 | 41,546,611 | ||
TOTAL | 1,068,119,662 | 1,041,063,011 | |||
|
|||||
Contingent liabilities | 12 | 894,385,070 | 394,465,858 | ||
Bills for collection | 13,367,843 | 13,234,184 | |||
Significant Accounting Policies and Notes to Accounts | 18 | ||||
Cash Flow Statement | 19 | ||||
The Schedules referred to above form an integral part of the Balance Sheet. |
As per our Report of even date | For and onbehalf of the Board of Directors | ||
For N.M. RAIJI & CO. | N. VAGHUL | K. V. KAMATH | |
Chartered Accountants | Chairman | Managing Director & CEO | |
JAYESH M. GANDHI | LALITA D. GUPTE | KALPANA MORPARIA | |
Partner | Joint Managing Director | Executive Director | |
For S.R. BATLIBOI & CO. | NACHIKET MOR | CHANDA D. KOCHHAR | |
Chartered Accountants | Executive Director | Executive Director | |
per VIREN H. MEHTA | S. MUKHERJI | BALAJI SWAMINATHAN | |
a Partner | Executive Director | Senior General Manager | |
JYOTIN MEHTA | N.S. KANNAN | G. VENKATAKRISHNAN | |
Place : Mumbai | General Manager & | Chief Financial Officer & | General Manager - |
Date : April 25, 2003 | Company Secretary | Treasurer | Accounting & Taxation Group |
F4
profit and loss account | |
for the year ended March 31, 2003 |
Year ended | |||||||
Schedule | (Rs. in 000s) | 31.03.2002 | |||||
I. | INCOME | ||||||
Interest earned | 13 | 93,680,561 | 21,519,297 | ||||
Other income | 14 | 19,677,741 | 5,746,598 | ||||
Profit on sale of shares of ICICI Bank Limited | |||||||
held by erstwhile ICICI Limited | 11,910,517 | | |||||
|
|
||||||
TOTAL | 125,268,819 | 27,265,895 | |||||
|
|||||||
II. | EXPENDITURE | ||||||
Interest expended | 15 | 79,439,989 | 15,589,235 | ||||
Operating expenses | 16 | 20,116,900 | 6,225,770 | ||||
Provisions and contingencies | 17 | 13,650,139 | 2,867,900 | ||||
|
|
||||||
TOTAL | 113,207,028 | 24,682,905 | |||||
|
|||||||
III. | PROFIT/LOSS | ||||||
Net profit for the year | 12,061,791 | 2,582,990 | |||||
Profit brought forward | 195,614 | 8,294 | |||||
|
|
||||||
TOTAL | 12,257,405 | 2,591,284 | |||||
|
|||||||
IV. | APPROPRIATIONS/TRANSFERS | ||||||
Statutory Reserve | 3,020,000 | 650,000 | |||||
Transfer from Debenture Redemption Reserve | (100,000) | | |||||
Capital Reserves | 2,000,000 | | |||||
Investment Fluctuation Reserve | 1,000,000 | 160,000 | |||||
Special Reserve | 500,000 | 140,000 | |||||
Revenue and other Reserves | 600,000 | 960,000 | |||||
Proposed equity share Dividend | 4,597,758 | | |||||
Proposed preference share Dividend | 35 | | |||||
Interim dividend paid | | 440,717 | |||||
Corporate dividend tax | 589,092 | 44,953 | |||||
Balance carried over to Balance Sheet | 50,520 | 195,614 | |||||
|
|
||||||
TOTAL | 12,257,405 | 2,591,284 | |||||
|
|||||||
Significant Accounting Policies and Notes to Accounts | 18 | ||||||
Cash Flow Statement | 19 | ||||||
Earning per Share (Refer Note B. 9 ) | |||||||
Basic (Rs.) | 19.68 | 11.61 | |||||
Diluted (Rs.) | 19.65 | 11.61 | |||||
The Schedules referred to above form an integral part of the Profit and Loss Account. |
As per our Report of even date | For and onbehalf of the Board of Directors | ||
For N.M. RAIJI & CO. | N. VAGHUL | K. V. KAMATH | |
Chartered Accountants | Chairman | Managing Director & CEO | |
JAYESH M. GANDHI | LALITA D. GUPTE | KALPANA MORPARIA | |
Partner | Joint Managing Director | Executive Director | |
For S.R. BATLIBOI & CO. | NACHIKET MOR | CHANDA D. KOCHHAR | |
Chartered Accountants | Executive Director | Executive Director | |
per VIREN H. MEHTA | S. MUKHERJI | BALAJI SWAMINATHAN | |
a Partner | Executive Director | Senior General Manager | |
JYOTIN MEHTA | N.S. KANNAN | G. VENKATAKRISHNAN | |
Place : Mumbai | General Manager & | Chief Financial Officer & | General Manager - |
Date : April 25, 2003 | Company Secretary | Treasurer | Accounting & Taxation Group |
schedules | |
forming part of the Balance Sheet |
As on | ||||
(Rs. in 000s) | 31.03.2002 | |||
SCHEDULE 1 CAPITAL | ||||
Authorised Capital | ||||
1,550,000,000 equity shares of Rs. 10 each | ||||
[Previous year 300,000,000 equity shares of Rs. 10 each] | 15,500,000 | 3,000,000 | ||
350 preference shares of Rs. 10 million each | 3,500,000 | | ||
|
|
|||
Issued, Subscribed and Paid-up Capital | ||||
613,031,404 [Previous year 220,358,680] equity shares of Rs. 10 each1 | 6,130,314 | 2,203,587 | ||
Less: Calls unpaid | (3,744) | | ||
Add: Issued 3,000 equity shares of Rs. 10 each on exercise of | ||||
employee stock option | 30 | | ||
Share Capital Suspense [Net] | ||||
[Previous year: represents face value of 392,672,724 equity shares to | ||||
be issued to share holders of ICICI Limited on amalgamation] | | 3,921,885 | ||
Preference Share Capital2 | ||||
[Represents face value of 350 preference shares of Rs. 10 million each | ||||
issued to preference share holders of erstwhile ICICI Limited on | ||||
amalgamation redeemable at par on April 20, 2018] | 3,500,000 | | ||
Preference Share Capital Suspense2 | ||||
[Represents face value of 350 preference shares to be issued to | ||||
preference share holders of ICICI Limited on amalgamation redeemable | ||||
at par on April 20, 2018] | | 3,500,000 | ||
|
|
|||
TOTAL | 9,626,600 | 9,625,472 | ||
|
|
1. | Includes : | |
a) | 31,818,180 underlying equity shares consequent to the ADS issue | |
b) | 23,539,800 equity shares issued to the equity share holders of Bank of Madura Limited on amalgamation | |
c) | 264,465,582 equity shares issued to the equity share holders [excluding ADS holders] of ICICI Limited on amalgamation | |
d) | 128,207,142 underlying equity shares issued to the ADS holders of ICICI Limited on amalgamation | |
2. | The notification from Ministry of Finance has currently exempted the Bank from the restriction of Section 12 (1) of the Banking Regulation Act, 1949, which prohibits issue of preference shares by banks. |
F6
schedules | ||
forming part of the Balance Sheet | Continued |
As on | |||||
(Rs. in 000s) | 31.03.2002 | ||||
SCHEDULE 2 RESERVES AND SURPLUS | |||||
I. | Statutory Reserve | ||||
Opening balance | 2,494,307 | 1,844,307 | |||
Additions during the year | 3,020,000 | 650,000 | |||
Deductions during the year | | | |||
Closing balance | 5,514,307 | 2,494,307 | |||
II. | Debenture Redemption Reserve | ||||
Opening balance | 100,000 | | |||
Additions during the year | | 100,000 | |||
Deductions during the year | 100,000 | | |||
Closing balance | | 100,000 | |||
III. | Special Reserve | ||||
Opening balance | 10,940,000 | | |||
Additions during the year | 500,000 | 10,940,000 | |||
Deductions during the year | | | |||
Closing balance | 11,440,000 | 10,940,000 | |||
IV. | Share Premium | ||||
Opening balance * | 8,021,352 | 8,014,085 | |||
Additions during the year on (exercise of employee stock options) . | 285 | | |||
Deductions during the year | | | |||
Closing balance | 8,021,637 | 8,014,085 | |||
V. | Investment Fluctuation Reserve | ||||
Opening balance | 273,350 | 113,350 | |||
Additions during the year | 1,000,000 | 160,000 | |||
Deductions during the year | | | |||
Closing balance | 1,273,350 | 273,350 | |||
VI. | Capital Reserve | ||||
Opening balance | | | |||
Additions during the year | 2,000,000 | | |||
Deductions during the year | | | |||
Closing balance | 2,000,000 | | |||
VII. | Revenue and other Reserves | ||||
Opening balance | **34,306,724 | 911,206 | |||
Additions during the year | 600,000 | 33,395,518 | |||
Deductions during the year | | | |||
Closing balance | 34,906,724 | **34,306,724 | |||
VIII. | Balance in Profit and Loss Account | 50,520 | 195,614 | ||
|
|
||||
TOTAL | 63,206,538 | 56,324,080 | |||
|
|
* | Net of Share Premium in Arrears Rs. 24.1 million. [Previous year Rs. 31.4 million] | |
** | Includes | |
a) | amount transferred on amalgamation of Bank of Madura Limited Rs. 20.7 million. | |
b) | Rs. 117.7 million being excess of face value of equity shares issued over net assets and reserves of Bank of Madura Limited on amalgamation. | |
c) | Rs. 32,108.2 million on amalgamation with ICICI Limited, ICICI Personal Financial Services Limited and ICICI Capital Services Limited. | |
d) | Rs. 960.0 million transferred from Profit and Loss Account. | |
Net of | e) | Rs. 327.3 million being deferred tax liability as at March 31, 2001 in accordance with the transitional provisions of Accounting Standard 22 on Accounting for Income-Taxes. |
F7
schedules | ||
forming part of the Balance Sheet | Continued |
As on | |||||||
(Rs. in 000s) | 31.03.2002 | ||||||
SCHEDULE 3 DEPOSITS | |||||||
A. | I. | Demand Deposits | |||||
i) | From banks | 919,592 | 1,089,946 | ||||
ii) | From others | 35,974,853 | 26,271,587 | ||||
II. | Savings Bank Deposits | 37,932,081 | 24,970,029 | ||||
III. | Term Deposits | ||||||
i) | From banks | 53,585,875 | 44,229,583 | ||||
ii) | From others | 353,280,662 | 224,289,966 | ||||
|
|
||||||
TOTAL | 481,693,063 | 320,851,111 | |||||
|
|
||||||
B. | I. | Deposits of branches in India | 481,693,063 | 320,851,111 | |||
|
|
||||||
TOTAL | 481,693,063 | 320,851,111 | |||||
|
|||||||
SCHEDULE 4 BORROWINGS | |||||||
I. | Borrowings In India | ||||||
i) | Reserve Bank of India | | 1,408,900 | ||||
ii) | Other banks | 24,469,090 | 26,875,980 | ||||
iii) | Other institutions and agencies | ||||||
a) | Government of India | 5,210,408 | 6,009,357 | ||||
b) | Financial Institutions | 25,658,489 | 13,882,623 | ||||
II. | Borrowings In the form of | ||||||
i) | Deposits taken over from erstwhile ICICI Limited | 5,062,808 | 42,507,596 | ||||
ii) | Commercial Paper | | 5,495,306 | ||||
iii) | Bonds and Debentures (excluding subordinated debt) | ||||||
a) | Debentures and Bonds guaranteed by the | ||||||
Government of India | 14,815,000 | 18,240,000 | |||||
b) | Tax free Bonds | 800,000 | 800,000 | ||||
c) | Non convertible portion of partly convertible notes | | 1,331,936 | ||||
d) | Borrowings under private placement of bonds | ||||||
carrying maturity of one to thirty years from the date | |||||||
of placement | 91,339,109 | 179,096,817 | |||||
e) | Bonds Issued under multiple option/safety bonds series | ||||||
Regular Interest Bonds | 16,722,052 | 34,175,231 | |||||
Deep Discount Bonds | 6,098,808 | 6,214,122 | |||||
Bonds with premium warrants | 588,947 | 506,078 | |||||
Encash Bonds | 1,892,690 | 2,493,030 | |||||
Tax Saving Bonds | 80,125,313 | 74,933,163 | |||||
Easy Installment Bonds | 31,337 | 31,359 | |||||
Pension Bonds | 54,469 | 51,727 | |||||
f) | Application Money pending allotment | 11,238,896 | 5,374,495 | ||||
III. | Borrowings Outside India | ||||||
i) | From Multilateral/Bilateral Credit Agencies | ||||||
(guaranteed by the Government of India equivalent of | |||||||
Rs. 20,335.6 million) | 25,417,795 | 25,213,694 | |||||
ii) | From International Banks, Institutions and Consortiums | 27,947,996 | 29,347,658 | ||||
iii) | By way of Bonds and Notes | 5,550,996 | 18,197,520 | ||||
|
|
||||||
TOTAL | 343,024,203 | 492,186,592 | |||||
|
Secured borrowings in I, II and III above is Rs. NIL
F8
schedules | ||
forming part of the Balance Sheet | Continued |
As on | ||||||
(Rs. in 000s) | 31.03.2002 | |||||
SCHEDULE 5 OTHER LIABILITIES AND PROVISIONS | ||||||
I. | Bills payable | 10,305,536 | 8,173,313 | |||
II. | Inter-office adjustments (net) | | 330,459 | |||
III. | Interest accrued | 16,191,657 | 22,895,118 | |||
IV. | Unsecured Redeemable Debentures/Bonds | 97,495,259 | 97,513,141 | |||
[Subordinated for Tier II Capital] | ||||||
V. | Others | |||||
a) | Security Deposits from Clients | 3,540,625 | 3,865,561 | |||
b) | Sundry creditors | 15,411,986 | 11,539,851 | |||
c) | Received for disbursements under special program | 2,548,454 | 2,547,297 | |||
d) | Swap Suspense (Refer Note B. 12 c) | | 253,910 | |||
e) | ERAS Exchange Fluctuation Account | | 679,347 | |||
f) | Other Liabilities (including provisions) * | 25,075,741 | 14,277,759 | |||
|
|
|||||
TOTAL | 170,569,258 | 162,075,756 | ||||
|
||||||
* Includes | ||||||
a) | Deferred Tax Liabilities Rs. NIL [Previous year Rs. 1,547.6 million] | |||||
b) | Proposed dividend Rs. 4,597.8 million [Previous year Rs. NIL] | |||||
c) | Corporate dividend Tax payable Rs. 589.1 million [Previous year Rs. NIL] | |||||
SCHEDULE 6 CASH AND BALANCES WITH RESERVE BANK OF INDIA | ||||||
I. | Cash in hand (including foreign currency notes) | 3,364,709 | 2,458,991 | |||
II. | Balances with Reserve Bank of India in current accounts | 45,496,736 | 15,285,691 | |||
|
|
|||||
TOTAL | 48,861,445 | 17,744,682 | ||||
|
||||||
SCHEDULE 7 BALANCES WITH BANKS AND | ||||||
MONEY AT CALL AND SHORT NOTICE | ||||||
I. | In India | |||||
i) | Balances with banks | |||||
a) in Current Accounts | 2,150,990 | 8,960,684 | ||||
b) in Other Deposit Accounts | 5,954,857 | 19,221,425 | ||||
ii) | Money at call and short notice | |||||
a) with banks | 1,925,000 | 39,241,081 | ||||
b) with other institutions | 3,227,500 | 2,300,000 | ||||
|
|
|||||
TOTAL | 13,258,347 | 69,723,190 | ||||
|
|
|||||
II. | Outside India | |||||
i) | in Current Accounts | 910,655 | 1,503,322 | |||
ii) | in Other Deposit Accounts | 637,790 | 12,881,905 | |||
iii) | Money at call and short notice | 1,221,789 | 26,010,400 | |||
TOTAL | 2,770,234 | 40,395,627 | ||||
|
|
|||||
GRAND TOTAL (I + II) | 16,028,581 | 110,118,817 | ||||
|
F9
schedules | ||
forming part of the Balance Sheet | Continued |
As on | ||||||
(Rs. in 000s) | 31.03.2002 | |||||
SCHEDULE 8 INVESTMENTS [Net of Provisions] | ||||||
I. | Investments in India | |||||
i) | Government securities | 255,485,754 | 227,223,129 | |||
ii) | Other approved securities | 344,477 | 704,644 | |||
iii) | Shares | 16,424,107 | 19,086,468 | |||
iv) | Debentures and Bonds | 56,899,185 | 64,363,559 | |||
v) | Subsidiaries and/or joint ventures | 7,806,824 | 6,067,331 | |||
vi) | Others (CPs, Mutual Fund Units, etc.) | 17,576,975 | 41,344,499 | |||
|
|
|||||
TOTAL | 354,537,322 | 358,789,630 | ||||
|
||||||
II. | Investments outside India | |||||
i) | Subsidiaries and/or joint ventures abroad | 14,488 | 14,488 | |||
ii) | Others | 71,192 | 106,679 | |||
|
|
|||||
TOTAL | 85,680 | 121,167 | ||||
|
|
|||||
GRAND TOTAL (I + II) | 354,623,002 | 358,910,797 | ||||
|
||||||
SCHEDULE 9 ADVANCES | ||||||
A. | i) | Bills purchased and discounted | 4,376,415 | 16,541,223 | ||
ii) | Cash credits, overdrafts and loans repayable on demand .. | 31,340,244 | 24,025,073 | |||
iii) | Term loans | 489,028,169 | 421,476,594 | |||
iv) | Securitisation, Finance lease and Hire Purchase receivables | 8,049,316 | 8,305,771 | |||
|
|
|||||
TOTAL | 532,794,144 | 470,348,661 | ||||
|
||||||
B. | i) | Secured by tangible assets | ||||
[includes advances against Book Debt] | 500,684,919 | 446,042,464 | ||||
ii) | Covered by Bank/Government Guarantees | 16,998,486 | 10,293,611 | |||
iii) | Unsecured | 15,110,739 | 14,012,586 | |||
|
|
|||||
TOTAL | 532,794,144 | 470,348,661 | ||||
|
||||||
C. | I. | Advances in India | ||||
i) Priority Sector | 89,376,024 | 19,859,144 | ||||
ii) Public Sector | 18,974,073 | 43,562,087 | ||||
iii) Banks | 1,013,245 | 1,794,497 | ||||
iv) Others | 422,894,675 | 404,512,512 | ||||
|
|
|||||
TOTAL | 532,258,017 | 469,728,240 | ||||
|
||||||
II. | Advances outside India | |||||
i) Due from banks | | | ||||
ii) Due from others | ||||||
a) Bills purchased and discounted | | | ||||
b) Syndicated loans | | | ||||
c) Others | 536,127 | 620,421 | ||||
|
|
|||||
TOTAL | 536,127 | 620,421 | ||||
|
|
|||||
GRAND TOTAL (C. I and II) | 532,794,144 | 470,348,661 | ||||
|
F10
schedules | ||
forming part of the Balance Sheet | Continued |
As on | |||||
(Rs. in 000s) | 31.03.2002 | ||||
SCHEDULE 10 FIXED ASSETS | |||||
I. | Premises | ||||
At cost as on March 31st of preceding year | 14,431,673 | 2,030,868 | |||
Additions during the year | 3,683,243 | 165,790 | |||
Additions on Amalgamation | | 12,377,806 | |||
Deductions during the year | (2,053,076) | (142,791) | |||
Depreciation to date | (659,371) | (390,937) | |||
Net block | 15,402,469 | 14,040,736 | |||
II. | Other Fixed Assets (including Furniture and Fixtures) | ||||
At cost as on March 31st of preceding year | 7,133,585 | 2,535,245 | |||
Additions during the year | 3,779,516 | 1,194,808 | |||
Additions on Amalgamation | | 3,413,358 | |||
Deductions during the year | (300,252) | (9,826) | |||
Depreciation to date | (3,109,580) | (1,480,552) | |||
Net block | 7,503,269 | 5,653,033 | |||
III. | Assets given on Lease | ||||
At cost as on March 31st of preceding year* | 23,377,605 | 1,330,663 | |||
Additions during the year | 343,565 | | |||
Additions on amalgamation | | 22,270,582 | |||
Deductions during the year | (2,266,029) | (223,640) | |||
Depreciation to date, accumulated lease adjustment and provisions | (3,753,605) | (677,931) | |||
Net block | 17,701,536 | 22,699,674 | |||
|
|
||||
TOTAL | 40,607,274 | 42,393,443 | |||
|
|||||
* Includes repossessed Leased Asset Rs. 96.0 million. | |||||
SCHEDULE 11 OTHER ASSETS | |||||
I. | Inter-office adjustments (net) | 1,034,655 | | ||
II. | Interest accrued | 19,582,564 | 18,473,846 | ||
III. | Tax paid in advance/tax deducted at source (net) | 14,140,278 | 9,870,068 | ||
IV. | Stationery and Stamps | 8,084 | 5,034 | ||
V. | Non-banking assets acquired in satisfaction of claims* | 4,538,354 | 2,067,795 | ||
VI. | Others | ||||
a) Advance for Capital Assets | 1,562,088 | 1,987,449 | |||
b) Outstanding Fees and Other Income | 1,776,206 | 1,910,861 | |||
c) Exchange Fluctuation Suspense with Government of India | |||||
(Refer Note B. 12 b) | 923,573 | 1,111,919 | |||
d) Swap Suspense (Refer Note B. 12 c) | 128,667 | | |||
e) Recoverable from Subsidiary Companies | 182,276 | 199,341 | |||
f) Others ** | 31,328,471 | ***5,920,298 | |||
|
|
||||
TOTAL | 75,205,216 | 41,546,611 | |||
|
|||||
* | Includes certain non-banking assets acquired in satisfaction of claims are in the process of being transferred in the Banks name. | ||||
** | Includes Net Deferred Tax Asset of Rs. 4,878.3 million [Previous year Net Deferred Tax Liability Rs. 1,547.6 million]. | ||||
*** | Includes Rs. 1,244.5 million [representing 101,395,949 equity shares being shares held by erstwhile ICICI Limited in ICICI Bank Limited] transferred to a trust. |
SCHEDULE 12 CONTINGENT LIABILITIES | |||||
I. | Claims against the Bank not acknowledged as debts | 20,251,450 | 10,232,637 | ||
II. | Liability for partly paid investments | 1,804,936 | 2,615,161 | ||
III. | Liability on account of outstanding forward exchange contracts. | 251,030,498 | 152,545,916 | ||
IV. | Guarantees given on behalf of constituents in India | 106,348,281 | 93,516,016 | ||
V. | Acceptances, endorsements and other obligations | 43,251,942 | 17,391,049 | ||
VI. | Currency Swaps | 29,013,220 | 20,414,675 | ||
VII. | Interest Rate Swaps | 413,544,698 | 78,541,565 | ||
VIII. | Other items for which the Bank is contingently liable | 29,140,045 | 19,208,839 | ||
|
|
||||
TOTAL | 894,385,070 | 394,465,858 | |||
|
|
||||
F11 |
schedules | ||
forming part of the Balance Sheet | Continued |
Year ended | |||||
(Rs. in 000s) | 31.03.2002 | ||||
SCHEDULE 13 INTEREST EARNED | |||||
I. | Interest/discount on advances/bills | 60,162,439 | 7,716,671 | ||
II. | Income on investments | 29,104,415 | 12,338,000 | ||
III. | Interest on balances with Reserve Bank of India and | ||||
other inter-bank funds | 2,355,668 | 1,226,191 | |||
IV. | Others | 2,058,039 | 238,435 | ||
|
|
||||
TOTAL | 93,680,561 | 21,519,297 | |||
|
|||||
SCHEDULE 14 OTHER INCOME | |||||
I. | Commission, exchange and brokerage | 7,917,880 | 2,297,841 | ||
II. | Profit/(Loss) on sale of investments (net) | 4,923,328 | 3,057,134 | ||
III. | Profit/(Loss) on revaluation of investments (net) | 1,076 | (145,997) | ||
IV. | Profit/(Loss) on sale of land, buildings and other assets (net) | (65,038) | (627) | ||
V. | Profit/(Loss) on foreign exchange transactions (net) (including | ||||
premium amortisation) | 102,425 | 372,983 | |||
VI. | Income earned by way of dividends, etc. from subsidiary | ||||
companies and/or joint ventures abroad/in India | 1,094,239 | | |||
VII. | Miscellaneous Income (including Lease Income) | 5,703,831 | 165,264 | ||
|
|
||||
TOTAL | 19,677,741 | 5,746,598 | |||
|
|||||
SCHEDULE 15 INTEREST EXPENDED | |||||
I. | Interest on deposits | 24,797,095 | 13,889,252 | ||
II. | Interest on Reserve Bank of India/inter-bank borrowings | 1,833,699 | 478,387 | ||
III. | Others (including interest on borrowing of erstwhile ICICI Limited) | 52,809,195 | 1,221,596 | ||
|
|
||||
TOTAL | 79,439,989 | 15,589,235 | |||
|
|||||
SCHEDULE 16 OPERATING EXPENSES | |||||
I. | Payments to and provisions for employees | 4,030,246 | 1,471,774 | ||
II. | Rent, taxes and lighting | 1,115,796 | 662,783 | ||
III. | Printing and Stationery | 747,174 | 353,022 | ||
IV. | Advertisement and publicity | 581,767 | 79,657 | ||
V. | Depreciation on Banks property | 1,914,703 | 525,955 | ||
VI. | Depreciation on Leased assets | 3,144,712 | 114,958 | ||
VII. | Directors fees, allowances and expenses | 1,317 | 1,569 | ||
VIII. | Auditors fees and expenses (including branch auditors) | 15,000 | 3,076 | ||
IX. | Law Charges | 85,153 | 15,149 | ||
X. | Postages, Telegrams, Telephones, etc. | 1,041,519 | 377,226 | ||
XI. | Repairs and maintenance | 1,448,654 | 783,346 | ||
XII. | Insurance | 251,809 | 141,498 | ||
XIII. | Other expenditure | 5,739,050 | *1,695,757 | ||
|
|
||||
TOTAL | 20,116,900 | 6,225,770 | |||
|
|||||
* Includes Rs. 91.5 million amortisation of ADS issue expenses. | |||||
SCHEDULE 17 PROVISIONS AND CONTINGENCIES | |||||
I. | Income Tax | ||||
Current period tax | 2,145,480 | 1,213,300 | |||
Deferred tax adjustment | (6,425,900) | (903,300) | |||
II. | Wealth Tax | 22,500 | 5,000 | ||
III. | Additional depreciation/(write-back of depreciation) on investments | 3,094,311 | (157,000) | ||
IV. | Provision for advances (net) | 13,209,848 | 2,736,100 | ||
V. | Prudential provision on standard assets | 1,540,000 | (53,200) | ||
VI. | Others | 63,900 | 27,000 | ||
|
|
||||
TOTAL | 13,650,139 | 2,867,900 | |||
|
|||||
F12 |
schedules | ||
forming part of the Accounts | Continued |
SCHEDULE 18
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
Overview
ICICI Bank Limited (ICICI Bank or the Bank), incorporated in Vadodara, India is a publicly held bank engaged in providing a wide range of banking and financial services including commercial banking and treasury operations. ICICI Bank is a banking company governed by the Banking Regulation Act, 1949.
Basis of preparation
In fiscal 2001, ICICI Bank acquired and merged Bank of Madura into itself in an all-stock deal. Effective March 30, 2002, ICICI Bank acquired ICICI Limited (ICICI) and two of its retail finance subsidiaries, ICICI Personal Financial Services Limited (I PFS) and ICICI Capital Services Limited (I CAPS) along with ICICIs interest in its subsidiaries in an all-stock deal. The amalgamation was accounted for as per the approved Scheme of Amalgamation and the purchase method of accounting.
The accounting and reporting policies of ICICI Bank used in the preparation of these financial statements conform with Generally Accepted Accounting Principles (GAAP) in India, the guidelines issued by the Reserve Bank of India (RBI) from time to time and practices generally prevailing within the banking industry in India. The Bank follows the accrual method of accounting and historical cost convention.
The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
A. | SIGNIFICANT ACCOUNTING POLICIES | |
1. | Revenue Recognition | |
a) | Interest income is recognised in the Profit and Loss Account as it accrues except in the case of non-performing assets where it is recognised upon realization as per the prudential norms of the Reserve Bank of India. Accrual of income is also suspended on certain other loans, including projects under implementation where the implementation has been significantly delayed and in the opinion of the management significant uncertainties exist as to the final financial closure and/or date of completion of the project. | |
b) | Income from hire purchase operations is accrued by applying the interest rate implicit on outstanding investments. | |
c) | Income from leases is calculated by applying the interest rate implicit in the lease to the net investment outstanding on the lease over the primary lease period. Leases effected from April 1, 2001 have been accounted as per Accounting Standard 19 on Accounting for leases issued by the Institute of Chartered Accountants of India (ICAI). | |
d) | Income on discounted instruments is recognised over the tenure of the instrument on a constant yield basis. | |
e) | Dividend is accounted on an accrual basis when the right to receive the dividend is established. | |
f) | Fees received as a compensation of future interest sacrifice is amortised over the remaining period of the facility. | |
g) | Arrangers fee is accrued proportionately where more than 75% of the total amount of finance has been arranged. | |
h) | All other fees are recognised upfront on their becoming due. | |
i) | Income arising from sell down of loan assets is recognised upfront in excess of the future servicing cost of the assets sold and projected delinquencies and included in Interest income. | |
j) | Guarantee commission is recognised over the period of the guarantee. | |
2. | Investments | |
Investments are valued in accordance with the extant RBI guidelines on investment classification and valuation as under : | ||
a) | All investments are categorised into Held to Maturity, Available for sale and Trading. Reclassifications, if any, in any category are accounted for as per the RBI guidelines. Under each category the investments are further classified under (a) Government Securities (b) other approved securities (c) shares (d) bonds and debentures (e) subsidiaries and joint ventures and (f) others. | |
b) | Held to Maturity securities are carried at their acquisition cost or at amortised cost if acquired at a premium over the face value. A provision is made for other than temporary diminution. |
F13
schedules | ||
forming part of the Accounts | Continued |
c) | Available for sale and Trading securities are valued periodically as per RBI guidelines. | |
The market/fair
value for the purpose of periodical valuation of quoted investments
included in the Available for Sale and Held
for Trading categories would be the market price of the
scrip as available from the trades/quotes on the stock exchanges,
SGL account transactions, price list of RBI, prices declared
by Primary Dealers Association of India jointly with Fixed Income
Money Market and Derivatives Association (FIMMDA)
periodically. The market/fair value of other than quoted SLR securities for the purpose of periodical valuation of investments included in the Available for Sale and Trading categories is as per the rates put out by Fixed Income Money Market and Derivatives Association (FIMMDA). The valuation of non-SLR securities, other than those quoted on the stock exchanges, wherever linked to the YTM rates, is with a mark-up (reflecting associated credit risk) over the YTM rates for government securities put out by FIMMDA. Securities shall be valued scripwise and depreciation/appreciation aggregated for each category. Net appreciation in each basket if any, being unrealised, is ignored, while net depreciation is provided for. |
||
d) | Costs such as brokerage, commission etc., pertaining to investments, paid at the time of acquisition, are charged to revenue. | |
e) | Broken period interest on debt instruments is treated as a revenue item. | |
f) | Profit on sale of investment in the Held to Maturity category is credited to the revenue account and thereafter is appropriated, (net of applicable taxes and statutory reserve requirements) to Capital Reserve. Such appropriation is carried out at the year end. | |
3. | Provisions/Write-offs on loans and other credit facilities | |
a) | In addition to the general provision of 0.25% made on standard assets in accordance with the RBI guidelines the Bank maintains general provisions to cover potential credit losses which are inherent in any loan portfolio but not identified. For standard assets, additional general provisions are determined having regard to overall portfolio quality, asset growth, economic conditions and other risk factors. | |
b) | The Bank has
incorporated the assets taken over from ICICI in its books at
carrying values as appearing in the books of ICICI with a provision
made based on the fair valuation exercise carried out by an independent
firm. To
the extent future provisions are required on the assets taken
over from ICICI, the provision created on fair valuation of the
assets at the time of the amalgamation is used. Amounts recovered against other debts written off in earlier years and provisions no longer considered necessary in the context of the current status of the borrower are recognised in the Profit and Loss Account. |
|
c) | All credit exposures are classified as per the RBI guidelines, into performing and non-performing assets. Further, non-performing assets are classified into sub-standard, doubtful and loss assets for provisioning based on the criteria stipulated by the RBI. Provisions are generally made on substandard and doubtful assets at rates equal to or higher than those prescribed by the RBI. The secured portion of the sub-standard and doubtful assets is provided at 50% over a three-year period instead of five and a half years as prescribed by the RBI. Loss assets and unsecured portion of doubtful assets are fully provided/written off. Additional provisions are made against specific non-performing assets over and above what is stated above, if in the opinion of the management, increased provisions are necessary. | |
d) | For restructured/rescheduled assets, provision is made in accordance with the guidelines issued by the RBI, which requires the present value of the interest sacrifice be provided at the time of restructuring. | |
e) | In the case
of other than restructured loan accounts classified as NPAs,
the account is reclassified as standard account if
arrears of interest and principal are paid by the borrower. In respect of loan accounts subject to restructuring, asset category is upgraded to standard account if the borrower demonstrates, over a minimum of one year, the ability to repay the loan in accordance with the contractual terms. |
|
f) | In addition to the provisions required to be held according to the asset classification status, provisions are held for country exposure (other than for home country). The countries are categorised into seven risk categories namely insignificant, low, moderate, high, very high, restricted and off-credit and provisioning made on a graded scale ranging from 0.25% to 100%. For exposures with contractual maturity of less than 180 days, 25% of the normal requirement is held. |
F14
schedules | ||
forming part of the Accounts | Continued |
4. | Fixed assets and depreciation | |
a) | Premises and other fixed assets are carried at cost less accumulated depreciation. Depreciation is charged over the estimated useful life of a fixed asset on a straight line basis. The rates of depreciation for fixed assets are : | |
Asset | Depreciation Rate | ||
|
|||
Premises owned by the Bank | 1.63% | ||
Improvements to leasehold premises | 1.63% | ||
or over the lease period, | |||
whichever is higher | |||
ATMs | 12.50% | ||
Plant and Machinery like Air-conditioners, Xerox machines, etc | 10% | ||
Furniture and Fixtures | 15% | ||
Motor vehicles | 20% | ||
Computers | 33.33% | ||
Others (including Software and system development expenses) . | 25% | ||
b) | Depreciation on leased assets is made on a straight-line basis at the higher of the rates determined with reference to the primary period of lease and the rates specified in Schedule XIV to the Companies Act, 1956. | |
c) | Assets purchased and sold during the year are depreciated on the basis of actual number of days the asset has been put to use. | |
d) | Items costing less than Rs. 5,000 are fully depreciated in the year of purchase. | |
5. | Foreign Currency transactions | |
a) | Revenues and expenditure are translated at the exchange rates prevailing on the date of the transaction. Monetary assets and liabilities are translated at closing exchange rates notified by the Foreign Exchange Dealers Association of India (FEDAI) at the balance sheet date and the resulting profits/losses are included in the Profit and Loss Account. |
|
b) | Outstanding forward exchange contracts are stated at contracted rates and are revalued at the exchange rates notified by FEDAI for specified maturities and at interpolated rates for contracts of in-between maturities. The resultant gains or losses are recognised in the Profit and Loss Account. | |
c) | Contingent Liabilities on account of guarantees, endorsements and other obligations are stated at the exchange rates notified by FEDAI at the Balance Sheet date. | |
6. | Accounting for Derivative Contracts |
The Bank enters into derivative contracts such as foreign currency options, interest rate and currency swaps and cross currency interest rate swaps to hedge on-balance sheet assets and liabilities or for trading purposes. The swap contracts entered to hedge on-balance assets and liabilities are structured such that they bear an opposite and offsetting impact with the underlying on-balance sheet items. The impact of such derivative instruments are correlated with the movement of underlying assets and accounted pursuant to the principles of hedge accounting. | |
Interest income/expense is accrued on Interest Rate Swaps (IRS) and currency swaps designated as hedges and booked in the Profit and Loss Account. Trading IRS, trading currency swaps and foreign currency options, outstanding at the Balance Sheet date is marked to market and the resulting loss if any, is recorded in the Profit and Loss Account. | |
7. | Employee Stock Option Scheme (ESOS) |
The Bank has formulated an Employees Stock Option Scheme. The Scheme provides that employees are granted an option to acquire equity shares of the Bank that vests in graded manner. The options may be exercised within a specified period. Since the exercise price of the option is the closing market price as on the date of grant, there is no compensation cost. | |
8. | Staff benefits |
For employees covered under group gratuity scheme and group superannuation scheme of LIC, gratuity and superannuation charge to Profit and Loss Account is on the basis of premium charged by LIC. Provision for gratuity and pension for other employees and leave encashment liability is determined as per actuarial valuation. Defined contributions for Provident Fund are charged to the Profit and Loss Account based on contributions made in terms of the scheme. | |
9. | Income Taxes |
Income tax expense is the aggregate amount of current tax and deferred tax charge. Taxes on income are accrued in the same period as the revenue and expenses to which they relate. Current period taxes are determined in accordance with the Income Tax Act, 1961. Deferred tax adjustments comprise of changes in the deferred tax assets or liabilities during the year. |
F15
schedules | ||
forming part of the Accounts | Continued |
Deferred tax assets and liabilities are recognised for the future tax consequences of temporary differences arising between the carrying values of assets and liabilities and their respective tax basis and operating carry forward losses. Deferred tax assets are recognised only after giving due consideration to prudence. Deferred tax asset and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date. The impact on account of changes in the deferred tax assets and liabilities is also recognised in the income statement. | |
Deferred tax assets are recognised based upon managements judgement as to whether realisation is considered reasonably certain. | |
10. | Translation of the Financial Statements of Foreign Representative Offices |
In accordance with the guidelines issued by the Reserve Bank of India, all assets, liabilities, income and expenditure of the foreign representative offices of the Bank have been converted at the closing rate prevailing on the balance sheet date. | |
B. | NOTES FORMING PART OF THE ACCOUNTS |
1. | Information about Business and Geographical segments |
The Bank had been reporting segmental results under three business segments namely Retail Banking, Corporate Banking and Treasury & Corporate office. Consequent to the merger of erstwhile ICICI Limited and two of its subsidiaries ICICI PFS Limited and ICICI Capital Services Limited with the Bank, the following has been considered as reportable segments : | |
| Commercial Banking comprising the retail and corporate banking business of the Bank. | |
| Investment Banking comprising the rupee and forex treasury of the Bank | |
Based on such allocations, segmental Balance Sheet as on March 31, 2003 and segmental Profit & Loss account for the year ended March 31, 2003 have been prepared. |
(Rupees in million) | |||||||||||||||
|
|
||||||||||||||
Business segments | Commercial Banking | Investment Banking | Total | ||||||||||||
Current | Previous | Current | Previous | Current | Previous | ||||||||||
Particulars | Year | year | year | year | year | year | |||||||||
|
|
||||||||||||||
1. | Revenue (before profit on | ||||||||||||||
sale of shares of ICICI Bank | |||||||||||||||
Limited held by erstwhile | |||||||||||||||
ICICI Limited) | 92,717.0 | 22,891.2 | 29,157.5 | 7,550.9 | 121,874.5 | 30,442.1 | |||||||||
2. | Less: Inter segment Revenue | | | | | (8,515.6) | (3,176.2) | ||||||||
3. | Total Revenue (1) (2) | | | | | 113,358.9 | 27,265.9 | ||||||||
4. | O p e r a t i n g P r o f i t ( i. e. | ||||||||||||||
Profit before unallocated | |||||||||||||||
expenses, extraordinary profit, | |||||||||||||||
and tax) | 9,456.0 | 4,326.2 | 4,346.1 | 1,124.5 | 13,802.1 | 5,450.9 | |||||||||
5. | Unallocated expenses | | | | | | | ||||||||
6. | Profit on sale of shares of | ||||||||||||||
ICICI Bank Limited held by | |||||||||||||||
erstwhile ICICI Limited | | | 11,910.0 | | 11,910.0 | | |||||||||
7. | Provisions (net) including | ||||||||||||||
Accelerated/Additional | |||||||||||||||
Provisions | 17,305.7 | 2,709.9 | 602.4 | (157.0) | 17,908.1 | 2,552.9 | |||||||||
8. | Profit before tax (4)-(5)-(6)-(7) | (7,849.7) | 1,616.3 | 15,653.7 | 1,281.7 | 7,804.0 | 2,898.0 | ||||||||
9. | Income tax expenses (net)/ | ||||||||||||||
(net deferred tax credit) | | | | | (4,257.8) | 315.0 | |||||||||
10. | Net Profit (8)-(9) | | | | | 12,061.8 | 2,583.0 | ||||||||
Other Information | |||||||||||||||
11. | Segment assets | 685,550.8 | 669,889.9 | 363,550.4 | 361,303.1 | 1,049,101.2 | 1,031,193.0 | ||||||||
12. | Unallocated assets | | | | | 19,018.5 | 9,870.0 | ||||||||
13. | Total assets (11)+(12) | | | | | 1,068,119.7 | 1,041,063.0 | ||||||||
14. | Segment liabilities | 800,361.9 | 742,014.9 | 267,757.8 | 297,500.1 | 1,068,119.7 | 1,039,515.0 | ||||||||
15. | Unallocated liabilities | | | | | | 1,548.0 | ||||||||
16. | Total liabilities (14)+(15) | | | | | 1,068,119.7 | 1,041,063.0 | ||||||||
|
|
||||||||||||||
The business operations of the Bank are largely concentrated in India. Activities outside India are restricted to resource mobilisation in international markets. The assets and income from foreign operations are immaterial. |
F16
schedules | ||
forming part of the Accounts | Continued |
2. | Preference Shares |
Certain Government Securities amounting to Rs. 1,244.8 million (2002 : Rs. 1,304.6 million) have been earmarked against redemption of preference share capital, which falls due for redemption on April 20, 2018 as per the original issue terms. | |
3. | Employee Stock Option Scheme |
In terms of Employee Stock Option Scheme, the maximum number of options granted to any Eligible Employee in a financial year shall not exceed 0.05% of the issued equity shares of the Bank at the time of grant of the options and aggregate of all such options granted to the Eligible Employees shall not exceed 5% of the aggregate number of the issued equity shares of the Bank subsequent to the amalgamation of ICICI, I CAPS and I PFS with the Bank and the issuance of equity shares by the Bank pursuant to the amalgamation of ICICI, I CAPS and I PFS with the Bank. | |
In terms of the Scheme, 12,610,275 options (2002 : 13,343,625 options) granted to eligible employees were outstanding as at March 31, 2003. | |
Stock option activity | |
A summary of the status of the Banks option plan is presented below: |
Year ended | Year ended | ||||
March 31, 2003 | March 31, 2002 | ||||
|
|
||||
Option shares | Option shares | ||||
outstanding | outstanding | ||||
Outstanding at the beginning of the year | 13,343,625 | 1,636,125 | |||
Add: Granted during the year | | 4,735,200 | |||
Options taken over on Amalgamation | | *7,015,800 | |||
Less: Forfeited during the year | 730,350 | 43,500 | |||
Exercised during the year | 3,000 | | |||
Outstanding at the end of the year | 12,610,275 | 13,343,625 | |||
* Represents options granted to option holders of erstwhile ICICI Limited in the share swap ratio. | |||||
4. | Subordinated Debt |
Subordinated debt includes Index bonds amounting to Rs.A95.8Amillion, (2002 : Rs.88.0 million) which carry a detachable warrant entitling bondholders to a right to receive an amount linked to the BSE Sensitive Index (Sensex) per terms of the issue. The liability of the Bank arising out of changes in the Sensex has been hedged by earmarking its investments of an equivalent amount in the UTI Index Equity Fund whose value is based on the Sensex. The Bank has not issued any subordinated debt during the current year. | |
5. | Fixed Assets and Depreciation |
The Bank depreciated Automatic Teller Machines (ATMs) over its useful life estimated as 6 years or over the lease period for ATMs taken on lease. Effective April 1, 2002 the Bank revised the useful life of the ATMs to 8 years based on an evaluation done by the management. | |
Accordingly, the depreciation charged for the current year was lower by Rs. 29.0 million. | |
6. | Investments |
Effective AprilA1, 2002, the Bank has changed the methodology for ascertaining the carrying cost of fixed income bearing securities from Weighted Average Method to First-In-First-Out Method. The impact due to the aforementioned change on the Profit and Loss Account for the year ended March 31, 2003 has resulted into a profit amounting to Rs. 132.2 million. | |
Investments include shares and debentures amounting to Rs. 3,781.9 million, which are in the process of being registered in the name of the Bank. | |
Investments also include government securities amounting to Rs. 703.5 million (representing face value of securities) pledged with certain banks and institutions for cheque drawal and clearing facilities. | |
Repurchase Transactions | |
During the current year, the Bank has changed its method of accounting repurchase transactions and reverse repurchase transactions. These transactions have been accounted for as a sale and forward purchase, or purchase and a forward sale transactions in the current year as against a borrowing or lending transaction in the previous year. The net impact of the same on the profit and loss account is not material. |
F17
schedules | ||
forming part of the Accounts | Continued |
7. | Deferred Tax |
On March 31, 2003, the Bank has recorded net deferred tax asset of Rs.A4,878.3Amillion, (2002 : Deferred tax liability of Rs. 1,547.6 million) which has been included in other assets. | |
A composition of deferred tax assets and liabilities into major items is given below : |
(Rupees in million) | ||||||||
|
||||||||
Particulars | March 31, 2003 | March 31, 2002 | ||||||
Amortisation of premium on investments | 527.4 | 85.2 | ||||||
Provision for bad and doubtful debts | 12,988.7 | 7,139.7 | ||||||
Others | 845.3 | 1,306.7 | ||||||
|
|
|||||||
14,361.4 | 8,531.6 | |||||||
Less: | Deferred Tax Liability | |||||||
Depreciation on fixed assets | 9,246.9 | 9,910.5 | ||||||
Others | 236.2 | 168.7 | ||||||
|
|
|||||||
9,483.1 | 10,079.2 | |||||||
|
|
|||||||
Net Deferred Tax Asset/(Liability) | 4,878.3 | (1,547.6) | ||||||
|
|
8. | Related party transactions |
ICICI Bank has entered into transactions with the following related parties: | |
| Subsidiaries, Joint Ventures and subsidiaries; | |
| Key Management Personnel and their relatives | |
The related party transactions can be categorised as follows : |
|
|
|
|
|
|||||
Key | |||||||||
Management | |||||||||
Items/Related Party | Subsidiaries | Associates | Personnel@ | Total | |||||
|
|
|
|
|
|||||
Deposits | 2,343.0 | 4.4 | 20.3 | 2,367.7 | |||||
Rendering of services | 244.8 | 2.6 | | 247.4 | |||||
Insurance premiums paid | | 106.0 | | 106.0 | |||||
|
|
|
|
|
|||||
@ Whole-time Directors of the Board and their relatives. |
Remuneration
paid to the Directors of ICICI Bank Limited during the year ended
March 31, 2003 was Rs. 41.0 million The list of related parties is as follows : Subsidiaries and Joint Ventures ICICI Venture Funds Management Company Limited, ICICI Securities and Finance Company Limited, ICICI Brokerage Services Limited, ICICI International Limited, ICICI Trusteeship Services Limited, ICICI Home Finance Company Limited, ICICI Investment Management Company Limited, ICICI Securities Holdings Inc., ICICI Securities Inc., ICICI Bank UK Limited, ICICI Prudential Life Insurance Company Limited, and ICICI Lombard General Insurance Company Limited. Associates Prudential ICICI Asset Management Company Limited, Prudential ICICI Trust Limited, ICICI Equity Fund, ICICI Eco-net Internet and Technology Fund, ICICI Emerging Sectors Fund, ICICI Strategic Investments Fund, ICICI Property Trust, and TCW/ICICI Investment Partners L.L.C. |
|
9. | Earnings Per Share (EPS) |
The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard-20, Earnings Per Share. Basic earnings per share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding for the year. Diluted earnings per share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year. |
F18
schedules | ||
forming part of the Accounts | Continued |
The computation of Earnings Per Share is set out below : | |||||
Rupees in millionexcept per share data | |||||
|
|
||||
March 31, 2003 | March 31, 2002 | ||||
Basic | |||||
Weighted Average no. of equity shares | |||||
Outstanding (Nos.) | 613,031,569 | *222,510,311 | |||
Net Profit | 12,061.8 | 2,583.0 | |||
Earnings per Share (Rs.) | 19.68 | 11.61 | |||
Diluted | |||||
Weighted Average no. of equity shares | |||||
Outstanding (Nos.) | 613,750,295 | *222,510,311 | |||
Net Profit | 12,061.8 | 2,583.0 | |||
Earnings per Share (Rs.) | 19.65 | 11.61 | |||
Nominal Value per share (Rs.) | 10.00 | 10.00 |
* | 39,26,72,724 shares issued on amalgamation of ICICI Limited have been considered for computation of weighted average number of equity shares. | |
The dilutive impact is mainly due to options issued to employees by the Bank | ||
10. | Assets under lease | |
10.1 | Assets under operating lease | |
The future lease rentals are given in the table below : |
(Rupees in million) | |||
|
|||
Period | March 31, 2003 | ||
Not later than one year | 108.5 | ||
Later than one year and not later than five years | 537.9 | ||
Later than five years | 472.0 | ||
|
|||
Total | 1,118.4 | ||
|
|||
10.2 | Assets under finance lease | ||
The future lease rentals are given in the table below : |
(Rupees in million) | |||
|
|||
Period | March 31, 2003 | ||
Total of future minimum lease payments | 1,161.0 | ||
Present value of lease payments | 818.1 | ||
Unmatured finance charges | 342.9 | ||
Maturity profile of total of future minimum lease payments | |||
Not later than one year | 166.0 | ||
Later than one year and not later than five years | 831.9 | ||
Later than five years | 163.1 | ||
|
|||
Total | 1,161.0 | ||
|
|||
11. | Additional Disclosures | ||
The following additional disclosures have been made taking into account RBI guidelines in this regard. | |||
11.1 | Capital Adequacy Ratio | ||
The Capital to Weighted Risk Assets Ratio (CRAR) as assessed by the Bank on the basis of the attached financial statements and guidelines issued by RBI is given in the table below : |
F19
schedules | ||
forming part of the Accounts | Continued |
(Rupees in million) | |||||
|
|||||
March 31, 2003 | March 31, 2002 | ||||
Tier I Capital* | 58,072.3 | 58,873.2 | |||
Tier II Capital | 33,387.5 | 31,248.0 | |||
Total Capital | 91,459.8 | 90,121.2 | |||
|
|
||||
Total Risk Weighted assets and contingents | 823,805.4 | 787,832.1 | |||
|
|
||||
Capital Ratios (per cent) | |||||
Tier I | 7.05% | 7.47% | |||
Tier II | 4.05% | 3.97% | |||
|
|
||||
Total Capital | 11.10% | 11.44% | |||
|
|
||||
* | Tier I Capital includes the preference shares which are due for redemption in 2018, as reduced by the amount of corpus created in accordance with Reserve Bank of India guidelines. | |
11.2 | Business/Information ratios | |
The business/information ratios for the years ended March 31, 2003 and March 31, 2002 are given in the table below : |
(Rupees in million) | ||||||
|
||||||
March 31, 2003 | March 31, 2002 | |||||
(i) | Interest income to working funds (percent) | 9.07% | 8.44% | |||
(ii) | Non-interest income to working funds (percent) | 1.91% | 2.25% | |||
(iii) | Operating profit to working funds (percent) | 2.49% | 2.14% | |||
(iv) | Return on assets (percent) | 1.13% | 0.67% | |||
(v) | Business per employee (average deposits plus average advances) | 112.0 | *48.6 | |||
(vi) | Profit per employee | 1.1 | *0.5 | |||
(vii) | Net non-performing advances (funded) to net advances (percent) | 5.21% | 5.48% | |||
* | based on weighted average number of employees. | |||||
For the purposes of computing the above ratios working funds represents the average of total assets as reported to the Reserve Bank of India under Section 27 of the Banking Regulation Act, 1949. | ||||||
11.3 | Maturity Pattern | |||||
a) | Rupee denominated assets and liabilities as on March 31, 2003 | |||||
The maturity pattern of rupee denominated assets and liabilities of the Bank as on March 31, 2003 is given below: | ||||||
(Rupees in million) | |||||||||
Loans & | Investment | ||||||||
Maturity Buckets | Advances | Securities | Deposits | Borrowings | |||||
1 to 14 days | 14,165.3 | 32,828.6 | 40,141.0 | 6,715.7 | |||||
15 to 28 days | 1,810.0 | 21,956.9 | 14,275.7 | 3,035.4 | |||||
29 days to 3 months | 18,592.5 | 36,459.5 | 67,790.7 | 17,445.0 | |||||
3 to 6 months | 17,052.9 | 18,736.1 | 26,369.2 | 18,111.5 | |||||
6 months to 1 year | 40,059.6 | 43,943.5 | 102,763.0 | 49,366.1 | |||||
1 to 3 years | 148,660.2 | 110,286.9 | 198,621.2 | 129,667.8 | |||||
3 to 5 years | 81,199.1 | 22,173.4 | 10,631.5 | 22,079.9 | |||||
Above 5 years | 142,587.7 | 68,238.2 | 6,885.0 | 28,231.6 | |||||
|
|
|
|
||||||
Total | 464,127.3 | 354,623.1 | 467,477.3 | 274,653.0 | |||||
|
|
|
|
F20
schedules | ||
forming part of the Accounts | Continued |
b) | Rupee denominated assets and liabilities as on March 31, 2002. | |
The maturity pattern of rupee denominated assets and liabilities of the Bank as on March 31, 2002 is given below : |
(Rupees in million) | |||||||||
Loans & Advances | Investment | ||||||||
Maturity Buckets | (net of bill | Securities | Deposits | Borrowings | |||||
rediscounting) | |||||||||
1 to 14 days | 8,256.4 | 13,199.8 | 31,520.6 | 9,964.9 | |||||
15 to 28 days | 3,569.2 | 6,862.4 | 9,217.7 | 14,997.1 | |||||
29 days to 3 months | 25,529.4 | 28,901.8 | 48,170.6 | 44,152.0 | |||||
3 to 6 months | 23,315.0 | 26,753.0 | 27,790.6 | 32,293.2 | |||||
6 months to 1 year | 37,108.7 | 52,187.7 | 57,985.5 | 89,428.6 | |||||
1 to 3 years | 132,256.2 | 73,657.6 | 128,935.9 | 141,625.6 | |||||
3 to 5 years | 75,373.3 | 44,746.1 | 4,031.8 | 39,513.0 | |||||
Above 5 years | 137,006.9 | 115,570.6 | 1,442.1 | 28,482.3 | |||||
|
|
|
|
||||||
Total | 442,415.1 | 361,879.0 | 309,094.8 | 400,456.7 | |||||
|
|
|
|
c) | Forex denominated assets and liabilities as on March 31, 2003. | |
The maturity pattern of forex denominated assets and liabilities as on March 31, 2003 is given below: |
(Rupees in million) | |||||||||
Balances with | |||||||||
banks and | |||||||||
Loans & | money at call | ||||||||
Maturity Buckets | Advances | and short notice | Deposits | Borrowings | |||||
1 to 14 days | 341.3 | 2,770.2 | 677.7 | 1,579.2 | |||||
15 to 28 days | 545.0 | | 233.6 | 1.0 | |||||
29 days to 3 months | 1,202.8 | | 1,063.9 | 6,620.9 | |||||
3 to 6 months | 2,003.3 | | 1,610.2 | 8,591.3 | |||||
6 months to 1 year | 6,889.3 | | 3,603.0 | 10,132.7 | |||||
1 to 3 years | 17,575.2 | | 7,026.7 | 9,834.9 | |||||
3 to 5 years | 11,553.8 | | 0.7 | 13,099.4 | |||||
Above 5 years | 28,556.1 | | | 18,511.8 | |||||
|
|
|
|
||||||
Total | 68,666.8 | 2,770.2 | 14,215.8 | 68,371.2 | |||||
|
|
|
|
||||||
d) | Forex denominated assets and liabilities as on March 31, 2002. | |
The maturity pattern of forex denominated assets and liabilities as on March 31, 2002 is given below: | ||
(Rupeesin million) | |||||||||||||
|
|||||||||||||
Balances | |||||||||||||
with banks | |||||||||||||
and money | |||||||||||||
Loans & | at call and | Other | Other | ||||||||||
Maturity Buckets | Advances | short notice | Deposits | Borrowings | assets | liabilities | |||||||
1 to 14 days | 521.7 | 27,513.7 | 598.0 | 257.7 | 319.1 | 325.9 | |||||||
15 to 28 days | 300.0 | 12,881.9 | 228.6 | 1.0 | | | |||||||
29 days to 3 months | 1,384.0 | | 913.4 | 5,575.4 | | | |||||||
3 to 6 months | 1,761.0 | | 1,283.4 | 8,190.4 | | | |||||||
6 months to 1 year | 2,528.4 | | 3,208.6 | 26,920.5 | | | |||||||
1 to 3 years | 10,383.6 | | 5,521.1 | 16,413.6 | | | |||||||
3 to 5 years | 12,851.3 | | 3.2 | 12,142.8 | | | |||||||
Above 5 years | 19,234.0 | | | 22,228.5 | | | |||||||
|
|
|
|
|
|
||||||||
Total | 48,964.0 | 40,395.6 | 11,756.3 | 91,729.90 | 319.1 | 325.9 | |||||||
|
|
|
|
|
|
||||||||
Notes : |
| In compiling the information of maturity pattern (refer 11.3 (a) , 11.3 (b), 11.3 (c) and 11.3 (d) above), certain estimates and assumptions have been made by the management which have been relied upon by the auditors. | |
| Assets and liabilities in foreign currency exclude off-balance sheet assets and liabilities. |
F21
schedules | ||
forming part of the Accounts | Continued |
11.4 | Advances | |
(i) | Lending
to sensitive sectors |
|
(Rupees in million) | ||||||
|
||||||
March 31, 2003 | March 31, 2002 | |||||
Capital Market Sector* | 1,692.7 | 1,715.5 | ||||
Real Estate Sector | 20,941.8 | 4,757.8 | ||||
Commodities Sector | 1,663.6 | 1,109.6 | ||||
* represents loans to NBFC and brokers against pledge of shares. | ||||||
(ii) | Movement of Gross NPA (Funded) during the year | |||||
(Rupees in million) | ||||||
|
||||||
2003 | 2002 | |||||
As on March 31 | 50,130.3 | 4,092.5 | ||||
Additions during the year | 11,937.7 | 48,772.9 | ||||
|
|
|||||
62,068.0 | 52,865.4 | |||||
Less: Reductions during the year | 11,794.2 | 2,735.1 | ||||
|
|
|||||
As on March 31 | 50,273.8 | 50,130.3 | ||||
|
|
|||||
(iii) | Provision for NPAs | |||||
(Rupees in million) | ||||||
|
||||||
2003 | 2002 | |||||
Provision netted from Advances as on March 31 | 23,838.1 | 2,059.0 | ||||
Add: Provisions made during the year (including utilisation of fair | ||||||
value provisions) | 6,704.8 | 23,120.3 | ||||
|
|
|||||
30,542.9 | 25,179.3 | |||||
Less: write-offs/recovery | 8,506.8 | 1,341.2 | ||||
|
|
|||||
Provision netted off from advances as on March 31 | 22,036.1 | 23,838.1 | ||||
|
|
|||||
(iv) | Information
in respect of restructured assets |
|||||
(Rupees in million) | |||||
|
|||||
March 31, 2003 | March 31, 2002 | ||||
Amount of Standard assets subjected to restructuring | *89,431.7 | 46,978.4 | |||
Amount of Sub-standard assets subjected to restructuring | | 177.4 | |||
|
|
||||
Total amount of loan assets subjected to restructuring | 89,431.7 | 47,155.8 | |||
|
|
* | The above includes assets amounting to Rs. 39,282.4 million subject to restructuring under Corporate Debt Restructuring mechanism constituted by Reserve Bank of India | ||
11.5 | Investments |
(Rupees in million) | ||||||||||
|
||||||||||
March 31, 2003 | March 31, 2002 | |||||||||
|
|
|||||||||
In India | Outside India | In India | Outside India | |||||||
Gross | value | 370,454.5 | 356.7 | 380,232.1 | 142.9 | |||||
Less: | Provision for depreciation and Fair | |||||||||
Value adjustments | 15,917.2 | 271.0 | 21,442.5 | 21.7 | ||||||
|
|
|
|
|||||||
Net value | 354,537.3 | 85.7 | 358,789.6 | 121.2 | ||||||
|
|
|
|
F22
schedules | ||
forming part of the Accounts | Continued |
Provision for depreciation on Investments | ||||||
(Rupees in million) | ||||||
|
||||||
2003 | 2002 | |||||
As on March 31 | * 17,330.0 | 421.3 | ||||
Add: | Provision made during the year (including utilisation of fair value | |||||
provisions) | (3,168.5) | 17,135.8 | ||||
|
|
|||||
Less: | Transfer to Investment Fluctuation Reserve | | 160.0 | |||
Write-off during the year | | 67.1 | ||||
|
|
|||||
As on March 31 | 14,161.5 | 17,330.0 | ||||
|
|
|||||
* | Excludes provision on Application Money Rs. 1,166.1 million. | |||||
11.6 | Investments in equity shares and equity like instruments | |||||
(Rupees in million) | |||||
|
|||||
March 31, 2003 | March 31, 2002 | ||||
Shares | 6,330.2 | 7,208.1 | |||
Convertible debentures | 1,898.2 | 1,198.2 | |||
Units of Equity oriented mutual funds | 578.9 | 3,528.6 | |||
Investment in Venture Capital Funds | 3,352.6 | 6,685.6 | |||
Others (loans against collateral, advances to brokers) | 1,400.2 | 4,121.9 | |||
|
|
||||
Total | 13,560.1 | 22,742.4 | |||
|
|
||||
11.7 | Investments in jointly controlled entities | ||||
Investments include Rs. 4,026.1 million representing the Banks interests in the following jointly controlled entities. | |||||
Country/ | Percentage | |||||
Sr. No. | Name of the Company | Residence | Holding | |||
1. | ICICI Prudential Life Insurance Company Limited | India | 74.00% | |||
2. | ICICI Lombard General Insurance Company Limited | India | 74.00% | |||
3. | Prudential ICICI Asset Management Company Limited | India | **44.99% | |||
4. | Prudential ICICI Trust Limited | India | **44.80% | |||
** Indicates holding by ICICI Bank Limited along with its subsidiaries. | ||||||
The aggregate amounts of assets, liabilities, income and expenses relating to the Banks interests in the above entities follow : | ||||||
(Rupees in million) | ||||||
|
|
|
|
|||
Liabilities | Amount | Assets | Amount | |||
|
|
|
|
|||
Capital and Reserves | 2,370.9 | Cash and Bank balances | 522.1 | |||
Other liabilities | 2,113.7 | Investments | 6,775.2 | |||
Liabilities on life policies in force | 3,911.7 | Fixed assets | 352.8 | |||
Other assets | 746.2 | |||||
|
||||||
Total | 8,396.3 | Total | 8,396.3 | |||
|
|
|||||
(Rupees in million) | ||||||
|
|
|
|
|||
Expenses | Amount | Income | Amount | |||
|
|
|
|
|||
Interest Expenses | 2.0 | Interest income | 254.0 | |||
Other expenses | Other income | |||||
Premium ceded and Change in | 2,588.1 | Insurance premium/commission | 4,942.3 | |||
liability for life policies in force | ||||||
Others | 3,988.0 | Others | 410.4 | |||
Provisions | 37.6 | |||||
|
||||||
Total | 6,615.7 | Total | 5,606.7 | |||
|
|
|||||
F23 |
schedules | ||
forming part of the Accounts | Continued |
11.8 | Risk category-wise country-wise exposure |
The country exposure of the Bank is categorised into seven risk categories listed in the following table. Since the country exposure (net) of the Bank does not exceed 2% of the total funded assets, no provision is required to be maintained for country exposures. | |
(Rupees in million) | |||
|
|||
Risk Category | Exposure (net) as | ||
on March 31, 2003 | |||
Insignificant | 3,559.5 | ||
Low | 205.9 | ||
Moderate | 13.5 | ||
High | 12.5 | ||
|
|||
Total | 3,791.4 | ||
|
|||
11.9 | Interest Rate Swaps |
(Rupees in million) | ||||
|
||||
Notional Principal | Hedging | 29,730.0 | ||
Trading | 348,337.8 | |||
Fair Value | Trading | 308.8 | ||
Associated Credit Risk | Trading | 422.8 | ||
Market Risk (Trading Swaps) | In the event of 100 basis points rise in the interest rates, there will be a negative impact of Rs. 38.1 million on the swap book. | |||
Collateral | As per prevailing market practice, collateral is not insisted upon from counter party. | |||
Credit risk
concentration (Trading Swaps) |
Standard Chartered Grindlays Bank Rs. 246.7 million. | |||
12. | Others | |||
a. | Credit Exposure to | % age to | % age to | % age to | % age to | |||||
Capital funds | Total Exposure | Capital funds | Total Exposure | |||||||
|
|
|
|
|||||||
As at March 31, 2003 | As at March 31, 2002 | |||||||||
(a) | Single Largest Borrower | 22.3% | 2.4% | 21.4% | 2.4% | |||||
(b) | Largest Borrower Group | 44.2% | 4.8% | 41.3% | 4.5% | |||||
(c) | Top ten Single Borrowers | |||||||||
No. 1 | 22.3% | 2.4% | 21.4% | 2.4% | ||||||
No. 2 | 21.1% | 2.3% | 20.2% | 2.2% | ||||||
No. 3 | 13.8% | 1.5% | 14.1% | 1.5% | ||||||
No. 4 | 11.8% | 1.3% | 13.4% | 1.5% | ||||||
No. 5 | 10.9% | 1.2% | 12.6% | 1.4% | ||||||
No. 6 | 10.0% | 1.1% | 12.2% | 1.3% | ||||||
No. 7 | 8.9% | 1.0% | 11.0% | 1.2% | ||||||
No. 8 | 8.9% | 1.0% | 10.1% | 1.1% | ||||||
No. 9 | 8.6% | 0.9% | 9.4% | 1.0% | ||||||
No. 10 | 8.2% | 0.9% | 9.3% | 1.0% | ||||||
(d) | Top ten Borrower Groups | |||||||||
No. 1 | 44.2% | 4.8% | 41.3% | 4.5% | ||||||
No. 2 | 28.1% | 3.1% | 32.7% | 3.6% | ||||||
No. 3 | 28.1% | 3.1% | 23.5% | 2.6% | ||||||
No. 4 | 25.2% | 2.7% | 21.0% | 2.3% | ||||||
No. 5 | 19.1% | 2.1% | 19.2% | 2.1% | ||||||
No. 6 | 18.5% | 2.0% | 13.4% | 1.5% | ||||||
No. 7 | 14.3% | 1.6% | 12.1% | 1.3% | ||||||
No. 8 | 11.8% | 1.3% | 11.9% | 1.3% | ||||||
No. 9 | 11.4% | 1.2% | 11.8% | 1.3% | ||||||
No. 10 | 11.0% | 1.2% | 10.8% | 1.2% | ||||||
% age to Total | % age to Total | |||||||||
Exposure | Exposure | |||||||||
As at | As at | |||||||||
March 31, 2003 | March 31, 2002 | |||||||||
(e) | Five largest Industrial Sectors |
No. 1 | 10.1% | 10.9% | |||||||
No. 2 | 9.6% | 10.7% | |||||||
No. 3 | 8.5% | 9.1% | |||||||
No. 4 | 5.2% | 6.2% | |||||||
No. 5 | 4.9% | 5.1% |
F24
schedules | ||
forming part of the Accounts | Continued |
b. | Exchange Fluctuation | |
Exchange Fluctuation aggregating Rs. 923.6 million, which arises on account of Rupee-tying Agreements with the Government of India, is held in Exchange Fluctuation Suspense with Government Account pending adjustment at maturity on receipt of payments from the Government for repayments to foreign lenders. | ||
c. | Swap suspense (net) Swap Suspense (net) aggregating Rs. 128.7 million (debit), which arises out of conversion of foreign currency swaps, is held in Swap Suspense Account and will be reversed at conclusion of swap transactions with swap counter parties. d. Exchange Risk Administration Scheme Under the Exchange Risk Administration Scheme (ERAS), the Government of India has agreed to extend support to the Exchange Risk Administration Fund (ERAF), when it is in deficit and recoup its contribution in the event of surplus. The Bank can claim from the positive balance in the ERAF account maintained by the Industrial Development Bank of India (IDBI) to the extent of the deficit in the ERAS Exchange Fluctuation Account. If the balance in the ERAF account with IDBI is insufficient, a claim will be made on the Government of India through IDBI. | |
The Government of India has foreclosed the scheme vide their letter F. N. 6 (3)/2002-IF.1 dated January 28, 2003. The total amount payable to the Government of India under the scheme amounting to Rs. 493.6 million has been included in Other Liabilities. | ||
e. | Profit on sale of shares in ICICI Bank Limited is in respect of the shares held by erstwhile ICICI Limited and transferred to a Board of Trustees as per the scheme of amalgamation. | |
13. | Comparative figures | |
Consequent on the merger of ICICI, I PFS and I CAPS with the Bank effective March 30, 2002, current year figures are not comparable with those of the previous year. Figures of the previous year have been regrouped to conform to the current years presentation. | ||
Signatures to Schedules 1 to 19 |
For and on behalf of the Board of Directors | |||
N. VAGHUL | K. V. KAMATH | ||
Chairman | Managing Director & CEO | ||
LALITA D. GUPTE | KALPANA MORPARIA | ||
Joint Managing Director | Executive Director | ||
NACHIKET MOR | CHANDA D. KOCHHAR | ||
Executive Director | Executive Director | ||
S. MUKHERJI | BALAJI SWAMINATHAN | ||
Executive Director | Senior General Manager | ||
JYOTIN MEHTA | N. S. KANNAN | G. VENKATAKRISHNAN | |
Place : Mumbai | General Manager & | Chief Financial Officer & | General Manager - |
Date : April 25, 2003 | Company Secretary | Treasurer | Accounting & Taxation Group |
F25
cash flow statement | ||
for the year ended March 31, 2003 |
SCHEDULE 19 | (Rs. in 000) | |||||
|
|
|
|
|||
Particulars | 2002-2003 | 2001-2002 | ||||
|
|
|
||||
CASH FLOW FROM OPERATING ACTIVITIES | ||||||
Net profit before taxes | 7,803,872 | 2,897,990 | ||||
Adjustment for : | ||||||
Depreciation on fixed assets | 5,059,415 | 640,913 | ||||
Net (appreciation)/depreciation on investments | 3,094,311 | (157,000) | ||||
Provision in respect of non-performing assets (including prudential provision | ||||||
on standard assets) | 14,749,848 | 2,682,900 | ||||
Provision for contingencies & others | 63,900 | 27,000 | ||||
Loss on sale of fixed assets | 65,038 | 627 | ||||
|
|
|||||
30,836,384 | 6,092,430 | |||||
Adjustments for : | ||||||
(Increase) / Decrease in Investments | 1,193,485 | (153,127,918) | ||||
(Increase) / Decrease in Advances | (74,578,831) | 23,033,299 | ||||
Increase / (Decrease) in Borrowings | (149,162,389) | (14,704,085) | ||||
Increase / (Decrease) in Deposits | 160,841,952 | 157,069,033 | ||||
(Increase) / Decrease in Other assets | (24,500,144) | (5,070,756) | ||||
Increase / (Decrease) in Other liabilities and provisions | 3,266,612 | 10,395,316 | ||||
|
|
|||||
(82,939,315) | 17,594,889 | |||||
Payment of taxes (net) | (6,438,190) | (1,275,280) | ||||
|
|
|||||
Net cash generated from operating activities | (A) | (58,541,121) | 22,412,039 | |||
|
|
|||||
CASH FLOW FROM INVESTING ACTIVITIES | ||||||
Purchase of fixed assets | (4,516,874) | (244,184) | ||||
Proceeds from sale of fixed assets | 102,090 | 7,307 | ||||
|
|
|||||
Net cash generated from investing activities | (B) | (4,414,784) | (236,877) | |||
|
|
|||||
CASH FLOW FROM FINANCING ACTIVITIES | ||||||
Proceeds from issue of share capital | 315 | |||||
Repayment of subordinated debt | (17,882) | 2,285,354 | ||||
Dividend and dividend tax paid | | (971,340) | ||||
|
|
|||||
Net cash generated from financing activities | (C) | (17,567) | 1,314,014 | |||
|
|
|||||
Cash and cash equivalents on amalgamation | (D) | | 68,437,439 | |||
|
|
|||||
Net increase/(decrease) in cash and cash equivalents | (A)+(B)+(C)+(D) | (62,973,472) | 91,926,615 | |||
|
|
|||||
Cash and cash equivalents as at April 1st | 127,863,499 | 35,936,884 | ||||
Cash and cash equivalents as at March 31st | 64,890,027 | 127,863,499 | ||||
|
|
|
Cash and Cash equivalents represent Cash and balance with Reserve Bank of India and Balances with banks and money at call and short notice
For and on behalf of the Board of Directors | |||
N. VAGHUL | K. V. KAMATH | ||
Chairman | Managing Director & CEO | ||
LALITA D. GUPTE | KALPANA MORPARIA | ||
Joint Managing Director | Executive Director | ||
NACHIKET MOR | CHANDA D. KOCHHAR | ||
Executive Director | Executive Director | ||
S. MUKHERJI | BALAJI SWAMINATHAN | ||
Executive Director | Senior General Manager | ||
JYOTIN MEHTA | N.S. KANNAN | G. VENKATAKRISHNAN | |
Place : Mumbai | General Manager & | Chief Financial Officer & | General Manager - |
Date : April 25, 2003 | Company Secretary | Treasurer | Accounting & Taxation Group |
AUDITORS CERTIFICATE | ||
We have verified the attached cash flow statement of ICICI BANK LIMITED which has been compiled from and is based on the audited | ||
financial statements for the years ended March 31, 2003 and March 31, 2002. To the best of our knowledge and belief and according | ||
to the information and explanations given to us, it has been prepared pursuant to the requirements of Listing Agreements entered | ||
into by ICICI Bank with stock exchanges. | ||
For N. M. RAIJI & CO. | For S.R. BATLIBOI & CO. | |
Chartered Accountants | Chartered Accountants | |
JAYESH M. GANDHI | per VIREN H. MEHTA | |
Partner Place: Mumbai Date: April 25, 2003 |
a Partner |
F26
section 212 | ||
Statement pursuant to Section 212 of the Companies Act, 1956, relating to Subsidiary Companies |
|
||||||||
Sr. No. |
Name of the Subsidiary Company | Financial year of the Subsidiary ended on | Number of Equity Shares held by ICICI Bank and/or its nominees in the Subsidiary as on March 31, 2003 | Extent of interest of ICICI Bank in Capital of Subsidiary | Net aggregate amount of Profits/(Losses) of the Subsidiary so far as it concerns the Members of ICICI Bank and is not dealt with in the Accounts of ICICI Bank (see note 1) | Net aggregate amount of Profits/Losses of the Subsidiary so far as it concerns the Members of ICICI Bank dealt with or provided for in the Accounts of ICICI Bank (see note 2) | ||
Rs. in thousands | Rs. in thousands | |||||||
for the financial year ended March 31, 2003 | for the previous financial years of the subsidiary since it became a subsidiary | for the financial year ended on March 31, 2003 | for the previous financial years of the subsidiary since it became a subsidiary | |||||
|
||||||||
1. | ICICI Securities and Finance Company Limited | March 31, 2003 | 202,833,200 Equity Shares of Rs.10 each fully paid-up. | 99.9% | 318,664 | 1,258,110 | 710,510 | 1,567,850 |
2. | ICICI Brokerage Services Limited | March 31, 2003 | 4,500,700 Equity Shares of Rs. 10 each fully paid-up held by ICICI Securities and Finance Company Limited. | 99.9% | 54,774 | 93,987 | Nil | Nil |
3. | ICICI Venture Funds Management Company Limited | March 31, 2003 | 3,124,890 Equity Shares of Rs. 10 each fully paid. | 100% | 34,327 | 198,544 | 151,875 | 348,736 |
4. | ICICI International Limited, Mauritius | March 31, 2003 | 40,000 Ordinary Shares of USD 10 each fully paid-up. | 100% | 13 | 11,513 | 2,446 | 13,336 |
5. | ICICI Home Finance Company Limited | March 31, 2003 | 115,000,000 Equity Shares of Rs. 10 each fully paid. | 100% | 56,450 | 136,486 | 230,000 | Nil |
6. | ICICI Trusteeship Services Limited | March 31, 2003 | 800 Equity Shares of Rs. 10 each fully paid. | 100% | 225 | 214 | Nil | Nil |
7. | ICICI Investment Management Company Limited | March 31, 2003 | 10,000,700 Equity Shares of Rs. 10 each fully paid-up. | 100% | 5,242 | 7,623 | Nil | Nil |
8. | ICICI Prudential Life Insurance Company Limited | March 31, 2003 | 314,500,000 Equity Shares of Rs. 10 each fully paid-up | 74% | 1,089,142) | (775,928) | Nil | Nil |
9. | ICICI Lombard General Insurance Company Limited | March 31, 2003 | 81,400,000 Equity Shares of Rs.10 each fully paid-up | 74% | 24,405 | (75,429) | Nil | Nil |
10 | ICICI Securities Holdings, Inc. | March 31, 2003 | 1,600,000 Shares of USD 1 each held by ICICI Securities & Finance Company Limited | 99.9% | 3,057 | (9,103) | Nil | Nil |
11 | ICICI Securities Inc. | March 31, 2003 | 1,050,000 Commom Stock of USD 1 each, fully paid up held by ICICI Sec. Holding Inc. | 99.9% | (5,484) | (18,134) | Nil | Nil |
|
||||||||
1. | The above companies which were subsidiaries of erstwhile ICICI Limited have become subsidiaries of the Bank consequent to merger of ICICI Limited with ICICI Bank. | |||||||
2. | The amount received by the erstwhile ICICI Limited upto March 29, 2002 as dividend as also been included in the reserves of ICICI Bank. | |||||||
3. | ICICI Bank UK Limited (ICICI Bank UK) was incorporated on February 11, 2003 as a 100% subsidiary of ICICI Bank Limited with paid-up share capital of 1 pound. No accounts have been prepared for financial period ended on March 31, 2003. |
For and on behalf of the Board of Directors | |||
N. VAGHUL | K. V. KAMATH | ||
Chairman | Managing Director & CEO | ||
LALITA D. GUPTE | KALPANA MORPARIA | ||
Joint Managing Director | Executive Director | ||
NACHIKET MOR | CHANDA D. KOCHHAR | ||
Executive Director | Executive Director | ||
S. MUKHERJI | BALAJI SWAMINATHAN | ||
Executive Director | Senior General Manager | ||
JYOTIN MEHTA | N. S. KANNAN | G. VENKATAKRISHNAN | |
Place : Mumbai | General Manager & | Chief Financial Officer & | General Manager - |
Date : April 25, 2003 | Company Secretary | Treasurer | Accounting & Taxation Group |
F27
consolidated financial statements of ICICI Bank Limited and its subsidiaries |
F28
auditors report | ||
to the Board of Directors of ICICI Bank Limited on the Consolidated Financial Statements of ICICI Bank Limited and its Subsidiaries, Associates and Joint Ventures |
We have examined the attached consolidated balance sheet of ICICI Bank Limited, and its subsidiaries, associates and joint ventures (the Group) as at March 31, 2003, the Consolidated Profit and Loss Account and Consolidated Cash Flow Statement for the year then ended prepared in accordance with accounting principles generally accepted in India.
These financial statements are the responsibility of the ICICI Bank Limiteds management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in India. These Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements. We believe that our audit provides a reasonable basis for our opinion.
We did not jointly audit the financial statements of the subsidiaries, associates and joint ventures, whose financial statements reflect total assets of Rs.55,391.4 million as at March 31, 2003, and total revenues of Rs.8,083.5 million for the year then ended. These financial statements have been audited by either of us singly or jointly with others or by other auditors, insofar as it relates to the amounts included in respect of those subsidiaries, associates and joint ventures, is based on the report of those respective auditors.
We report that -
1. | We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit and have found them to be satisfactory; |
2. | The consolidated financial statements have been prepared by the Bank in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements, issued by the Institute of Chartered Accountants of India and on the basis of the separate financial statements of ICICI Bank Limited and its subsidiaries, associates and joint ventures included in the consolidated financial statements. |
3. | On the basis of the information and explanations given to us and on the consideration of the separate audit reports on individual audited financial statements of ICICI Bank Limited and its subsidiaries, associates and joint ventures, we are of the opinion that in conformity with the accounting principles generally accepted in India: |
a. | the Consolidated Balance Sheet gives a true and fair view of the state of affairs of the group as at March 31, 2003; | |
b. | the Consolidated Profit and Loss Account gives a true and fair view of the results of operations of the group for the year then ended; and | |
c. | the Consolidated Cash Flow Statement gives a true and fair view of the cash flows of the group for the year then ended. |
For N.M. RAIJI & CO. | For S.R. BATLIBOI & CO. |
Chartered Accountants | Chartered Accountants |
JAYESH M. GANDHI | per VIREN H. MEHTA |
Partner | a Partner |
Mumbai: April 25, 2003 |
F29
consolidated balance sheet | ||
as of March 31, 2003 |
As on | ||||||
Schedule | (Rs. in 000s) | 31.03.2002 | ||||
CAPITAL AND LIABILITIES | ||||||
Capital | 1 | 9,626,600 | 9,625,472 | |||
Reserves and Surplus | 2 | 60,594,980 | 54,163,567 | |||
Minority Interest | 71,309 | 608,580 | ||||
Deposits | 3 | 479,507,012 | 322,171,170 | |||
Borrowings | 4 | 367,215,827 | 516,140,058 | |||
Liabilities on Life Policies in force | 3,911,716 | 1,332,029 | ||||
Other liabilities and provisions | 5 | 173,404,234 | 164,130,138 | |||
TOTAL | 1,094,331,678 | 1,068,171,014 | ||||
|
||||||
ASSETS | ||||||
Cash and balance with Reserve Bank of India | 6 | 49,089,557 | 17,780,348 | |||
Balances with banks and money at call and short notice | 7 | 16,407,439 | 110,894,279 | |||
Investments | 8 | 377,753,510 | 372,748,416 | |||
Advances | 9 | 539,089,650 | 479,072,519 | |||
Fixed Assets | 10 | 41,257,334 | 44,151,919 | |||
Other Assets | 11 | 70,734,188 | 43,523,533 | |||
TOTAL | 1,094,331,678 | 1,068,171,014 | ||||
Contingent liabilities | 12 | 937,472,700 | 438,008,528 | |||
Bills for collection | 13,367,843 | 13,234,184 | ||||
Significant Accounting Policies and Notes to Accounts | 18 | |||||
Cash Flow Statement | 19 | |||||
The Schedules referred to aboveform an integral part of theBalance Sheet. | |||
As per our Report of even date | For and on behalf of the Board of Directors | ||
For N.M. RAIJI & CO. | N. VAGHUL | K. V. KAMATH | |
Chartered Accountants | Chairman | Managing Director & CEO | |
JAYESH M. GANDHI | LALITA D. GUPTE | KALPANA MORPARIA | |
Partner | Joint Managing Director | Executive Director | |
For S.R. BATLIBOI & CO. | NACHIKET MOR | CHANDA D. KOCHHAR | |
Chartered Accountants | Executive Director | Executive Director | |
per VIREN H. MEHTA | S. MUKHERJI | BALAJI SWAMINATHAN | |
a Partner | Executive Director | Senior General Manager | |
JYOTIN MEHTA | N.S. KANNAN | G. VENKATAKRISHNAN | |
Place : Mumbai | General Manager & | Chief Financial Officer & | General Manager - |
Date : April 25, 2003 | Company Secretary | Treasurer | Accounting & Taxation Group |
F30
consolidated profit and loss account | ||
for the year ended March 31, 2003 |
Year ended | |||||||
Schedule | (Rs. in 000s) | 31.03.2001 | |||||
I. | INCOME | ||||||
Interest earned | 13 | 96,908,195 | 21,539,054 | ||||
Other income | 14 | 25,239,011 | 5,791,261 | ||||
Profit on sale of shares of ICICI Bank Limited held by | |||||||
erstwhile ICICI Limited | 11,910,517 | ||||||
|
|||||||
TOTAL | 134,057,723 | 27,330,315 | |||||
|
|||||||
II. | EXPENDITURE | ||||||
Interest expended | 15 | 81,267,904 | 15,603,176 | ||||
Operating expenses | 16 | 27,482,541 | 6,254,801 | ||||
Provisions and contingencies | 17 | 13,791,720 | 2,887,464 | ||||
|
|
||||||
TOTAL | 122,542,165 | 24,745,441 | |||||
|
|||||||
III. | PROFIT/LOSS | ||||||
Net profit for the year | 11,515,558 | 2,584,874 | |||||
Minority Int. P/L Credit/(Debit) | (4,400) | (391) | |||||
Net profit after Minority Interest | 11,519,958 | 2,585,265 | |||||
Profit brought forward | 197,889 | 8,294 | |||||
|
|
||||||
TOTAL | 11,717,847 | 2,593,559 | |||||
|
|||||||
IV. | APPROPRIATIONS/TRANSFERS | ||||||
Statutory Reserve | 3,020,000 | 650,000 | |||||
Transfer from Debenture Redemption Reserve | (100,000) | ||||||
Capital Reserve | 2,000,000 | ||||||
Investment Fluctuation Reserve | 1,000,000 | 160,000 | |||||
Special Reserve | 500,000 | 140,000 | |||||
Revenue and other Reserves | 100,000 | 960,000 | |||||
Proposed equity share Dividend | 4,597,758 | ||||||
Proposed preference share Dividend | 35 | ||||||
Interim dividend paid | | 440,717 | |||||
Corporate dividend tax | 589,092 | 44,953 | |||||
Balance carried over to Balance Sheet | 10,962 | 197,889 | |||||
|
|
||||||
TOTAL | 11,717,847 | 2,593,559 | |||||
|
|||||||
Significant Accounting Policies and Notes to Accounts | 18 | ||||||
Cash Flow Statement | 19 | ||||||
Earning per Share (Refer note B. 9) | |||||||
Basic (Rs.) | 18.79 | 11. | |||||
Diluted (Rs.) | 18.77 | 11. | |||||
The Schedules referred to aboveform an integral part of theBalance Sheet. | |||
As per our Report of even date | For and on behalf of the Board of Directors | ||
For N.M. RAIJI & CO. | N. VAGHUL | K. V. KAMATH | |
Chartered Accountants | Chairman | Managing Director & CEO | |
JAYESH M. GANDHI | LALITA D. GUPTE | KALPANA MORPARIA | |
Partner | Joint Managing Director | Executive Director | |
For S.R. BATLIBOI & CO. | NACHIKET MOR | CHANDA D. KOCHHAR | |
Chartered Accountants | Executive Director | Executive Director | |
per VIREN H. MEHTA | S. MUKHERJI | BALAJI SWAMINATHAN | |
a Partner | Executive Director | Senior General Manager | |
JYOTIN MEHTA | N.S. KANNAN | G. VENKATAKRISHNAN | |
Place : Mumbai | General Manager & | Chief Financial Officer & | General Manager - |
Date : April 25, 2003 | Company Secretary | Treasurer | Accounting & Taxation Group |
F31
schedules | ||
forming part of the Consolidated Balance Sheet as on March 31, 2003 |
As on | ||||
(Rs. in 000s) | 31.03.2002 | |||
SCHEDULE 1 CAPITAL | ||||
Authorised Capital | ||||
1550,000,000 equity shares of Rs. 10 each | 15,500,000 | 3,000,000 | ||
(Previous year 300,000,000 equity shares of Rs. 10 each) | ||||
350 preference shares of Rs 10 million each. | 3,500,000 | | ||
|
|
|||
Issued, Subscribed and Paid-up Capital | ||||
613,031,404 (Previous year 220,358,680) equity shares of Rs. 10 each1 | 6,130,314 | 2,203,587 | ||
Less: Calls unpaid | (3,744) | | ||
Add: Issued 3,000 equity shares of Rs. 10 each on exercise of | ||||
employee stock option | 30 | | ||
Share Capital Suspense (Net) | ||||
[Previous year : represents face value of 392,672,724 equity shares to | ||||
be issued to shareholders of ICICI Limited on amalgamation] | | 3,921,885 | ||
Preference Share Capital2 | ||||
[Represents face value of 350 preference shares of Rs. 10 million | ||||
each issued to preference share holders of erstwhile ICICI Limited on | ||||
amalgamation redeemable at par on April 20, 2018] | 3,500,000 | | ||
Preference Share Capital Suspense2 | ||||
[Represents face value of 350 preference shares to be issued to | ||||
preference share holders of ICICI Limited on amalgamation redeemable | ||||
at par on April 20, 2018] | | 3,500,000 | ||
|
|
|||
TOTAL | 9,626,600 | 9,625,472 | ||
|
||||
1. | Includes: | |
a) | 31,818,180 underlying equity shares consequent to the ADS issue. | |
b) | 23,539,800 equity shares issued to the equity share holders of Bank of Madura Limited on amalgamation. | |
c) | 264,465,582 equity shares issued to the equity share holders [excluding ADS holders] of ICICI Limited on amalgamation. | |
d) | 128,207,142 underlying equity shares issued to the ADS holders of ICICI Limited onamalgamation. | |
2. | The notification from Ministry of Finance has currently exempted the Bank from the restriction of Section 12 (1) of the Banking Regulation Act, 1949, which prohibits issue of preference shares by banks. |
F32
schedules | ||
forming part of the Consolidated Balance Sheet as on March 31, 2003 | Continued |
As on | |||||
(Rs. in 000s) | 31.03.2002 | ||||
SCHEDULE 2 RESERVES AND SURPLUS | |||||
I. | Statutory Reserve | ||||
Opening balance | 2,627,337 | 1,844,307 | |||
Additions during the year | 3,044,990 | 783,030 | |||
Deductions during the year | | | |||
Closing balance | 5,672,327 | 2,627,337 | |||
II. | Debenture Redemption Reserve | ||||
Opening balance | 100,000 | | |||
Additions during the year | | 100,000 | |||
Deductions during the year | 100,000 | | |||
Closing balance | | 100,000 | |||
III. | Special Reserve | ||||
Opening balance | 10,973,030 | | |||
Additions during the year | 612,366 | 10,973,030 | |||
Deductions during the year | | | |||
Closing balance | 11,585,396 | 10,973,030 | |||
IV. | Share Premium | ||||
Opening balance* | 8,341,025 | 8,014,085 | |||
Additions during the year (on exercise of employee stock options) | 285 | 319,670 | |||
Deductions during the year | | | |||
Closing balance | 8,341,310 | 8,333,755 | |||
V. | Investment Fluctuation Reserve | ||||
Opening balance | 403,950 | 113,350 | |||
Additions during the year | 889,422 | 290,600 | |||
Deductions during the year | | | |||
Closing balance | 1,293,372 | 403,950 | |||
VI. | Capital Reserve | ||||
Opening balance | 141,300 | | |||
Additions during the year | 2,000,000 | 141,300 | |||
Deductions during the year** | (3,600) | | |||
Closing balance | 2,137,700 | 141,300 | |||
VII. | Revenue and other Reserves | ||||
Opening balance | ***31,386,306 | 911,206 | |||
Additions during the year | 167,607 | 30,475,100 | |||
Deductions during the year | | | |||
Closing balance | 31,553,913 | ***31,386,306 | |||
VII. | Balance in Profit and Loss Account | 10,962 | 197,889 | ||
|
|
||||
TOTAL | 60,594,980 | 54,163,567 | |||
|
|
||||
* | Net of Share Premium in Arrears Rs. 24.1 million. [Previous year Rs. 31.4 million] | |
** | Represents effect of deconsolidation of certain subsidiaries [Refer Schedule 18(A)(3)]. | |
*** | Includes: | |
a) | Amount transferred on amalgamation of Bank of Madura Limited Rs. 20.7 million. | |
b) | Rs. 117.7 million being excess of face value of equity shares issued over net assets and reserves of Bank of Madura Limited on amalgamation. | |
c) | Rs. 32,108.2 million on amalgamation with ICICI Limited, ICICI Personal Financial Services Limited and ICICI Capital Services Limited. | |
d) | Rs. 960.0 million transferred from Profit and Loss Account. | |
Net of | e) | Rs. 327.3 million being deferred tax liability as at March 31, 2001 in accordance with the transitional provisions of Accounting Standard 22 on Accounting for Income-Taxes. |
F33
schedules | ||
forming part of the Consolidated Balance Sheet as on March 31, 2003 | Continued |
As on | |||||||
(Rs. in 000s) | 31.03.2002 | ||||||
SCHEDULE 3 DEPOSITS | |||||||
A. | I. | Demand Deposits | |||||
i) | From banks | 919,592 | 1,089,978 | ||||
ii) | From others | 35,259,501 | 26,088,139 | ||||
II. | Savings Bank Deposits | 37,932,081 | 24,970,029 | ||||
III. | Term Deposits | ||||||
i) | From banks | 53,585,875 | 44,565,784 | ||||
ii) | From others | 351,809,963 | 225,457,240 | ||||
|
|
||||||
TOTAL | 479,507,012 | 322,171,170 | |||||
|
|
||||||
B. | I. | Deposits of branches in India | 479,507,012 | 322,171,170 | |||
|
|
||||||
TOTAL | 479,507,012 | 322,171,170 | |||||
|
|
||||||
SCHEDULE 4 BORROWINGS | |||||||
I. | Borrowings in India | ||||||
i) | Reserve Bank of India | 8,000,000 | 1,408,900 | ||||
ii) | Other banks | 36,837,487 | 26,877,535 | ||||
iii) | Other institutions and agencies | ||||||
a) | Government of India | 5,210,408 | 6,009,357 | ||||
b) | Financial Institutions | 25,658,489 | 21,842,092 | ||||
II. | Borrowings in the form of | ||||||
i) | Deposits (including deposits taken over from ICICI Limited) | 6,665,336 | 42,499,895 | ||||
ii) | Commercial Paper | 2,270,700 | 7,022,886 | ||||
iii) | Bonds and Debentures (excluding subordinated debt) | ||||||
a) | Debentures and Bonds guaranteed by the | ||||||
Government of India | 14,815,000 | 18,240,000 | |||||
b) | Tax free Bonds | 800,000 | 800,000 | ||||
c) | Non convertible portion of partly convertible notes | | 1,331,936 | ||||
d) | Borrowings under private placement of bonds carrying | ||||||
maturity of one to thirty years from the date of | |||||||
placement | 91,289,109 | 193,569,377 | |||||
e) | Bonds Issued under multiple option/safety bonds series | ||||||
- Regular Interest Bonds | 16,722,052 | 34,175,231 | |||||
- Deep Discount Bonds | 6,098,808 | 6,214,122 | |||||
- Bonds with premium warrants | 588,947 | 506,078 | |||||
- Index Bonds | | | |||||
- Encash Bonds | 1,892,690 | 2,493,030 | |||||
- Tax Saving Bonds | 80,125,313 | 74,933,163 | |||||
- Easy Instalment Bonds | 31,337 | 31,359 | |||||
- Pension Bonds | 54,469 | 51,729 | |||||
f) | Application Money pending allotment | 11,238,896 | 5,374,495 | ||||
III. | Borrowings outside India | ||||||
i) | From Multilateral/Bilateral Credit Agencies (guaranteed by | ||||||
the Government of India equivalent of Rs. 20,335.6 million) | 25,417,795 | 25,213,694 | |||||
ii) | From International Banks, Institutions and Consortiums | 27,947,995 | 29,347,659 | ||||
iii) | By way of Bonds and Notes | 5,550,996 | 18,197,520 | ||||
|
|
||||||
TOTAL | 367,215,827 | 516,140,058 | |||||
|
|
Secured borrowings in I, II and III above is Rs. 8,000 million (Previous year Rs. Nil)
schedules | ||
forming part of the Consolidated Balance Sheet as on March 31, 2003 | Continued |
As on | ||||||
(Rs. in 000s) | 31.03.2002 | |||||
SCHEDULE 5 OTHER LIABILITIES AND PROVISIONS | ||||||
I. | Bills payable | 10,305,536 | 8,173,313 | |||
II. | Inter-office adjustments (net) | | 330,459 | |||
III. | Interest accrued | 16,270,883 | 22,927,812 | |||
IV. | Unsecured Redeemable Debentures/Bonds | 97,495,259 | 97,513,141 | |||
[Subordinated for Tier II Capital] | ||||||
V. | Others | |||||
a) | Security Deposits from Clients | 3,540,625 | 813,904 | |||
b) | Sundry creditors | 17,337,676 | 12,567,657 | |||
c) | Received for disbursements under special program | 2,548,454 | 2,547,297 | |||
d) | Swap Suspense (Refer Note B. 11b) | | 253,910 | |||
e) | ERAS Exchange Fluctuation Account | | 679,348 | |||
f) | Liabilities on non-life policies in force | 42,242 | 14,788 | |||
g) | Other Liabilities (including provisions)* | 25,863,559 | 19,640,538 | |||
|
|
|||||
TOTAL | 173,404,235 | 165,462,167 | ||||
|
|
|||||
* | Includes: | |||||
a) | Deferred Tax Liabilities Rs NIL [Previous year | |||||
Rs. 1,470.5 million]. | ||||||
b) | Proposed dividend Rs 4,597.8 million [Previous year | |||||
Rs. NIL]. | ||||||
c) | Corporate dividend Tax payable Rs. 589.1 million [Pevious year Rs. NIL]. | |||||
SCHEDULE 6 CASH AND BALANCES WITH RESERVE BANK OF INDIA | ||||||
I. | Cash in hand (including foreign currency notes) | 3,591,341 | 2,492,657 | |||
II. | Balances with Reserve Bank of India | |||||
i) | In Current Accounts | 45,498,216 | 15,285,691 | |||
ii) | In Other Accounts | | 2,000 | |||
|
|
|||||
TOTAL | 49,089,557 | 17,780,348 | ||||
|
|
|||||
SCHEDULE 7 BALANCES WITH BANKS AND | ||||||
MONEY AT CALL AND SHORT NOTICE | ||||||
I. | In India | |||||
i) | Balances with banks | |||||
a) in Current Accounts | 2,360,618 | 9,495,956 | ||||
b) in Other Deposit Accounts | 6,116,918 | 19,421,614 | ||||
ii) | Money at call and short notice | |||||
a) with Banks | 1,925,000 | 39,241,081 | ||||
b) with Other Institutions | 3,227,500 | 2,340,000 | ||||
|
|
|||||
TOTAL | 13,630,036 | 70,498,651 | ||||
II. | Outside India | |||||
i) | in Current Accounts | 917,824 | 1,503,323 | |||
ii) | in Other Deposit Accounts | 637,790 | 12,881,905 | |||
iii) | Money at call and short notice | 1,221,789 | 26,010,400 | |||
|
|
|||||
TOTAL | 2,777,403 | 40,395,628 | ||||
|
|
|||||
GRAND TOTAL (I + II) | 16,407,439 | 110,894,279 | ||||
|
|
|||||
F35 |
schedules | ||
forming part of the Consolidated Balance Sheet as on March 31, 2003 | Continued |
As on | |||||||
(Rs. in 000s) | 31.03.2002 | ||||||
SCHEDULE 8 INVESTMENTS [Net of provision] | |||||||
I. | Investments in India | ||||||
i) | Government securities | 273,352,054 | 243,048,521 | ||||
ii) | Other approved securities | 344,477 | 704,645 | ||||
iii) | Shares | 26,388,366 | 25,970,806 | ||||
iv) | Debentures and Bonds | 62,215,264 | 69,590,999 | ||||
v) | Subsidiaries, joint ventures and/or associates | 14,426 | | ||||
vi) | Others (CPs, Mutual Fund Units, etc.) | 15,367,731 | 33,326,766 | ||||
|
|
||||||
TOTAL | 377,682,318 | 372,641,737 | |||||
|
|
||||||
II. | Investments outside India | ||||||
i) | Subsidiaries and/or joint ventures abroad | | | ||||
ii) | Others | 71,192 | 106,679 | ||||
|
|
||||||
TOTAL | 71,192 | 106,679 | |||||
|
|
||||||
GRAND TOTAL (I + II) | 377,753,510 | 372,748,416 | |||||
|
|
||||||
SCHEDULE 9 ADVANCES | |||||||
A. | i) | Bills purchased and discounted | 4,376,415 | 16,541,223 | |||
ii) | Cash credits, overdrafts and loans repayable on demand | 31,340,244 | 24,025,073 | ||||
iii) | Term loans | 495,323,675 | 430,200,453 | ||||
iv) | Securitisation, Finance lease and Hire Purchase receivables | 8,049,316 | 8,305,770 | ||||
|
|
||||||
TOTAL | 539,089,650 | 479,072,519 | |||||
|
|
||||||
B. | i) | Secured by tangible assets | |||||
[includes advances against Book Debt] | 506,696,440 | 446,042,464 | |||||
ii) | Covered by Bank/Government Guarantees | 16,998,486 | 10,293,612 | ||||
iii) | Unsecured | 15,394,724 | 22,736,443 | ||||
|
|
||||||
TOTAL | 539,089,650 | 479,072,519 | |||||
|
|
||||||
C. | I. | Advances in India | |||||
i) | Priority Sector | 89,376,024 | 19,859,144 | ||||
ii) | Public Sector | 18,974,073 | 43,562,087 | ||||
iii) | Banks | 1,013,245 | 1,794,497 | ||||
iv) | Others | 429,190,181 | 413,236,370 | ||||
|
|
||||||
TOTAL | 538,553,523 | 478,452,098 | |||||
|
|
||||||
II. | Advances outside India | ||||||
i) | Due from banks | | | ||||
ii) | Due from others | | | ||||
a) Bills purchased and discounted | | | |||||
b) Syndicated loans | | | |||||
c) Others | 536,127 | 620,421 | |||||
|
|
||||||
TOTAL | 536,127 | 620,421 | |||||
|
|
||||||
GRAND TOTAL (C. I and II) | 539,089,650 | 479,072,519 | |||||
|
|
F36
schedules | ||
forming part of the Consolidated Balance Sheet as on March 31, 2003 | Continued |
As on | |||||
(Rs. in 000s) | 31.03.2002 | ||||
SCHEDULE 10 FIXED ASSETS | |||||
I. | Premises | ||||
At cost as on March 31st of preceding period | 15,584,439 | 2,030,868 | |||
Additions during the year | 3,752,559 | 1,318,556 | |||
Additions on Amalgamation | | 12,377,806 | |||
Deductions during the year | (3,001,041) | (142,791) | |||
Depreciation to date | (723,665) | (390,937) | |||
|
|
||||
Net Block | 15,612,292 | 15,193,502 | |||
|
|
||||
II. | Other Fixed Assets (including Furniture and Fixtures) | ||||
At cost as on March 31st of preceding year | 7,670,105 | 2,535,245 | |||
Additions during the year | 4,009,073 | 1,731,328 | |||
Additions on Amalgamation | | 3,413,358 | |||
Deductions during the year | (384,691) | (9,826) | |||
Depreciation to date | (3,415,418) | (1,480,552) | |||
|
|
||||
Net Block | 7,879,069 | 6,189,553 | |||
|
|
||||
III. | Assets given on Lease | ||||
At cost as on March 31st of preceding year* | 23,446,795 | 1,330,663 | |||
Additions during the year | 343,565 | 69,190 | |||
Additions on amalgamation | | 22,270,582 | |||
Deductions during the year | (2,243,981) | (223,640) | |||
Depreciation to date, accumulated lease adjustment and provisions | (3,780,406) | (677,931) | |||
|
|
||||
Net Block | 17,765,973 | 22,768,864 | |||
|
|
||||
TOTAL | 41,257,334 | 44,151,919 | |||
|
|
||||
* | Includes repossessed Leased Asset Rs. 96.0 million | ||||
SCHEDULE 11 OTHER ASSETS | |||||
I. | Inter-office adjustments (net) | 1,034,655 | | ||
II. | Interest accrued | 19,761,130 | 18,654,284 | ||
III. | Tax paid in advance/tax deducted at source (net) | 14,192,470 | 10,156,251 | ||
IV. | Stationery and Stamps | 8,084 | 5,034 | ||
V. | Non-banking assets acquired in satisfaction of claims* | 4,538,354 | 2,067,795 | ||
VI. | Others | ||||
a) Advance for Capital Assets | 1,563,466 | 2,058,667 | |||
b) Outstanding Fees and Other Income | 2,527,873 | 1,732,539 | |||
c) Exchange Fluctuation Suspense with Government of India | |||||
(Refer Note B 11 (a)) | 923,573 | 1,111,919 | |||
d) Swap Suspense (Refer Note B 11 (b)) | 128,667 | | |||
e) Others** | 26,055,916 | ***7,737,044 | |||
|
|
||||
TOTAL | 70,734,188 | 43,523,533 | |||
|
|
||||
* | Includes certain non-banking assets acquired in satisfaction of claims are in the process of being transferred in the Banks name. | ||||
** | Includes Net Deferred Tax Asset of Rs. 5,053.9 million [Previous year Net Deferred Tax Liability Rs. 1,470.5 million]. | ||||
*** | Includes Rs. 1,244.5 million [representing 101,395,949 equity shares being shares held by erstwhile ICICI Limited in ICICI Bank Limited] transferred to a trust. |
SCHEDULE 12 CONTINGENT LIABILITIES
I. | Claims against the Bank not acknowledged as debts | 20,365,980 | 10,236,207 | ||
II. | Liability for partly paid investments | 1,804,936 | 2,615,161 | ||
III. | Liability on account of outstanding forward exchange contracts | 251,030,498 | 152,545,916 | ||
IV. | Guarantees given on behalf of constituents in India | 106,478,281 | 93,516,016 | ||
V. | Acceptances, endorsements and other obligations | 43,251,942 | 17,391,049 | ||
VI. | Currency Swaps | 29,109,450 | 20,414,675 | ||
VII. | Interest Rate Swaps | 455,894,698 | 122,041,565 | ||
VIII. | Other items for which the Bank is contingently liable | 29,536,915 | 19,247,939 | ||
|
|
||||
TOTAL | 937,472,700 | 438,008,528 | |||
|
|
||||
F37 |
schedules | ||
forming part of the Consolidated Profit and Loss Account for the year ended March 31, 2003 |
Year ended | |||||
(Rs. in 000s) | 31.03.2002 | ||||
SCHEDULE 13 INTEREST EARNED | |||||
I. | Interest/discount on advances/bills | 61,628,197 | 7,725,058 | ||
II. | Income on investments | 30,889,875 | 12,349,422 | ||
III. | Interest on balances with Reserve Bank of India and other inter- | ||||
bank funds | 2,368,947 | 1,226,299 | |||
IV. | Others | 2,021,176 | 238,275 | ||
|
|
||||
TOTAL | 96,908,195 | 21,539,054 | |||
|
|
||||
SCHEDULE 14 OTHER INCOME | |||||
I. | Commission, exchange and brokerage | 8,660,753 | 2,308,887 | ||
II. | Profit/(Loss) on sale of investments (net) | 5,866,324 | 3,057,134 | ||
III. | Profit/(Loss) on revaluation of investments (net) | 1,487 | (126,432) | ||
IV. | Profit/(Loss) on sale of land, buildings and other assets (net).. | (66,586) | (627) | ||
V. | Profit/(Loss) on foreign exchange transactions (net) (including | ||||
premium amortisation) | 102,431 | 372,200 | |||
VI. | Income earned by way of dividends, etc. from subsidiary | ||||
companies and/or joint ventures abroad/in India | | | |||
VII. | Miscellaneous Income (Including Lease Income) | 10,674,602 | 180,099 | ||
|
|
||||
TOTAL | 25,239,011 | 5,791,261 | |||
|
|
||||
SCHEDULE 15 INTEREST EXPENDED | |||||
I. | Interest on deposits | 24,797,095 | 13,896,190 | ||
II. | Interest on Reserve Bank of India/inter-bank borrowings | 3,076,050 | 478,387 | ||
III. | Others | 53,394,759 | 1,228,599 | ||
|
|
||||
TOTAL | 81,267,904 | 15,603,176 | |||
|
|
||||
SCHEDULE 16 OPERATING EXPENSES | |||||
I. | Payments to and provisions for employees | 4,894,633 | 1,475,464 | ||
II. | Rent, taxes and lighting | 1,439,530 | 664,685 | ||
III. | Printing and Stationery | 807,914 | 353,022 | ||
IV. | Advertisement and publicity | 892,789 | 79,657 | ||
V. | Depreciation on Banks property | 2,035,237 | 526,791 | ||
VI. | Depreciation on leased assets | 3,166,538 | 115,000 | ||
VII. | Directors fees, allowances and expenses | 2,199 | 1,569 | ||
VIII. | Auditors fees and expenses (including branch auditors) | 20,252 | 3,105 | ||
IX. | Law Charges | 178,387 | 15,149 | ||
X. | Postages, Telegrams, Telephones, etc. | 1,133,398 | 377,703 | ||
XI. | Repairs and maintenance | 1,555,653 | 783,916 | ||
XII. | Insurance | 269,697 | 141,533 | ||
XIII. | Other expenditure* | 11,086,314 | **1,717,207 | ||
|
|
||||
TOTAL | 27,482,541 | 6,254,801 | |||
|
|
||||
* | Includes Rs. 2,588.1 million (Previous year Rs. 0.9 million) for | ||||
Premium ceded and Change in liability for life policies in force. | |||||
** | Includes Rs. 91.5 million amortisation of ADS issue expenses. | ||||
SCHEDULE 17 PROVISIONS AND CONTINGENCIES | |||||
I. | Income Tax | ||||
Current period tax | 2,957,051 | 1,213,300 | |||
Deferred Tax adjustment | (6,518,520) | (903,300) | |||
II. | Wealth Tax | 22,500 | 5,000 | ||
III. | Additional depreciation/(write-back of depreciation) on investments . | 2,444,174 | (137,436) | ||
IV. | Provision for advances (net) | 13,282,615 | 2,682,900 | ||
V. | Prudential provision on standard assets | 1,540,000 | | ||
VI. | Others | 63,900 | 27,000 | ||
|
|
||||
13,791,720 | 2,887,464 | ||||
|
|
F38
schedules | ||
forming part of the Consolidated Accounts | Continued |
SCHEDULE 18
A. | SIGNIFICANT ACCOUNTING POLICIES |
1. | Overview |
ICICI Bank Limited together with its subsidiaries, joint ventures and associates (collectively, the Group) is a diversified financial services group providing a variety of banking and financial services including project finance, working capital finance, venture capital finance, investment banking, treasury products and services, retail banking and broking. | |
ICICI Bank Limited (ICICI Bank or the Bank), incorporated in Vadodara, India is a publicly held bank engaged in providing a wide range of banking and financial services including commercial banking and treasury operations. ICICI Bank is a banking company governed by the Banking Regulation Act, 1949. | |
2. | Principles of consolidation |
The consolidated financial statements include the accounts of ICICI Bank, its subsidiaries, associates and joint ventures. | |
The Bank consolidates all subsidiaries as defined in Accounting Standard (AS) 21 Consolidated Financial Statements issued by the Institute of Chartered Accountants of India (ICAI) on line by line basis by adding together like items of assets, liabilities, income and expenses. Further, the Bank accounts for investments in associates as defined by AS 23 Accounting for Investments in Associates in Consolidated Financial Statements by the equity method of accounting. The Bank has investments in certain joint ventures, which have been consolidated by the proportionate consolidation method as required by AS 27 on Financial Reporting of Interests in Joint Ventures. | |
3. | Basis of preparation |
In fiscal 2001, ICICI Bank acquired and merged Bank of Madura into itself in an all-stock deal. Effective March 30, 2002, ICICI Bank acquired ICICI Limited (ICICI) and two of its retail finance subsidiaries, ICICI Personal Financial Services Limited (I PFS) and ICICI Capital Services Limited (I CAPS) along with ICICIs interest in its subsidiaries in an all-stock deal. The amalgamation was accounted for as per the approved Scheme of Amalgamation and the purchase method of accounting. |
|
The accounting and reporting policies of the Group used in the preparation of these financial statements conform with the Accounting Standards issued by ICAI, the guidelines issued by the Reserve Bank of India (RBI), Insurance Regulatory and Development Association (IRDA) and National Housing Bank (NHB) from time to time as applicable to relevant companies and generally accepted accounting principles prevailing in India. | |
The Group follows the accrual method of accounting and historical cost convention. | |
The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. The consolidated financial statements include the results of the following entities: |
|
|
|
|
|
|
Sr. | Name of the Company | Country/ | Relation | Ownership | |
No. | Residence | Interest | |||
|
|
|
|
|
|
1. | ICICI Securities and Finance Company Limited | India | Subsidiary | 99.92% | |
2. | ICICI Brokerage Services Limited | India | Subsidiary | 99.92% | |
3. | ICICI Securities Inc. | USA | Subsidiary | 99.92% | |
4. | ICICI Securities Holding Inc. | USA | Subsidiary | 99.92% | |
5. | ICICI Venture Funds Management Company Limited | India | Subsidiary | 99.99% | |
6. | ICICI Home Finance Company Limited | India | Subsidiary | 100.00% | |
7. | ICICI Trusteeship Services Limited | India | Subsidiary | 100.00% | |
8. | ICICI Investment Management Company Limited | India | Subsidiary | 100.00% | |
9. | ICICI International Limited | Mauritius | Subsidiary | 100.00% | |
10. | ICICI Bank UK Limited | United Kingdom | Subsidiary | 100.00% | |
11. | ICICI Property Trust | India | Direct holding | 100.00% | |
12. | ICICI Eco-net Internet & Technology Fund | India | Direct holding | 92.12% | |
13. | ICICI Equity Fund | India | Direct holding | 100.00% | |
14. | ICICI Emerging Sectors Fund | India | Direct holding | 100.00% | |
15. | ICICI Strategic Investments Fund | India | Direct holding | 100.00% | |
|
|
|
|
|
|
F39 |
schedules | ||
forming part of the Consolidated Accounts | Continued |
The
financial statements of the subsidiaries used in the consolidation
are drawn upto the same reporting date as that of the Bank,
i.e. year ended March 31, 2003. |
|
|
|
|
|
Sr. | Name of the Company | Country/ | Percentage | |
No. | Residence | Holding | ||
|
|
|
|
|
1. | ICICI Prudential Life Insurance Company Limited | India | 74.00% | |
2. | ICICI Lombard General Insurance Company Limited | India | 74.00% | |
3. | Prudential ICICI Asset Management Company Limited | India | **44.99% | |
4. | Prudential ICICI Trust Limited | India | **44.80% | |
|
|
|
|
|
** | Indicates holding by ICICI Bank Limited along with its subsidiaries. | |||
During the year, the following entities (whose shares have been held by various funds managed by ICICI Venture Funds Management Company Limited, a subsidiary of the Bank), were deconsolidated since these investments had been made by the venture capital subsidiary of the Bank and the control in these entities is intended to be temporary: | ||||
1. | ICICI Web-Trade Limited | |||
2. | Reclamation Properties (India) Private Limited (formerly ICICI Properties Private Limited) | |||
3. | Reclamation Real Estate (India) Private Limited (formerly ICICI Real Estate Company Private Limited) | |||
4. | Reclamation Realty (India) Private Limited (formerly ICICI Realty Private Limited) | |||
5. | ICICI West Bengal Infrastructure Development Corporation Limited | |||
6. | ICICI KINFRA Limited | |||
7. | ICICI Knowledge Park | |||
ICICI Information Technology Fund, which had been consolidated as subsidiary as on March 31, 2002, has subsequently redeemed the holding of ICICI Bank during the current year and has since ceased to be a subsidiary. | ||||
4. | Revenue Recognition | |||
ICICI Bank Limited | ||||
a) | Interest income is recognised in the Profit and Loss Account as it accrues except in the case of non-performing assets where it is recognised upon realisation as per the prudential norms of RBI. Accrual of income is also suspended on certain other loans, including projects under implementation where the implementation has been significantly delayed and in the opinion of the management significant uncertainties exist as to the final financial closure and/or date of completion of the project. | |||
b) | Income from hire purchase operations is accrued by applying the interest rate implicit on outstanding investments. | |||
c) | Income from leases is calculated by applying the interest rate implicit in the lease to the net investment outstanding on the lease over the primary lease period. Leases effected from April 1, 2001 have been accounted as per AS 19 on Accounting for Leases issued by ICAI. | |||
d) | Income on discounted instruments is recognised over the tenure of the instrument on a constant yield basis. | |||
e) | Dividend is accounted on an accrual basis when the right to receive the dividend is established. | |||
f) | Fees received as a compensation of future interest sacrifice is amortised over the remaining period of the facility. | |||
g) | Arrangers fee is accrued proportionately where more than 75% of the total amount of finance has been arranged. | |||
h) | All other fees are recognised upfront on their becoming due. | |||
i) | Income arising from sell down of loan assets is recognised upfront in excess of the future servicing cost of the assets sold and projected delinquencies and included in Interest income. | |||
j) | Guarantee commission is recognised over the period of the guarantee. | |||
Other entities | ||||
k) | Fees earned on non-fund based activities such as issue management, loan syndication, financial advisory services etc., are recognised based on the stage of completion of assignments and the bills raised for the recovery of fees. | |||
l) | Income from brokerage activities is recognised as income on the trade date of the transaction. Related expenditure incurred for procuring business are accounted for as procurement expenses. | |||
m) | Contago transactions are treated as secured lending transactions and accordingly disclosed in the financial statements. The difference between purchase and sale values on such transactions is recognised in other income. | |||
n) | Insurance premium is recognised when due, over the contract period or over the period of risk. Premium deficiency is recognised if the sum of expected claim costs, related expenses and maintenance costs exceeds related reserves for unexpired risks. |
F40
schedules | ||
forming part of the Consolidated Accounts | Continued |
5. | Investments ICICI Bank Limited | |
Investments are valued in accordance with the extant RBI guidelines on investment classification and valuation as under: | ||
a) | All investments are categorised into Held to Maturity, Available for Sale and Trading. Reclassifications, if any, in any category are accounted for as per the RBI guidelines. Under each category the investments are further classified under (a) Government Securities (b) other approved securities (c) shares (d) bonds and debentures (e) subsidiaries and joint ventures and (f) others. | |
b) | Held to Maturity securities are carried at their acquisition cost or at amortised cost if acquired at a premium over the face value. A provision is made for other than temporary diminution. | |
c) | Available for Sale and Trading securities are valued periodically as per RBI guidelines. | |
The market/fair value for the purpose of periodical valuation of quoted investments included in the Available for Sale and Held for Trading categories would be the market price of the scrip as available from the trades/quotes on the stock exchanges, SGL account transactions, price list of RBI, prices declared by Primary Dealers Association of India jointly with Fixed Income Money Market and Derivatives Association (FIMMDA) periodically. | ||
The market/fair value of other than quoted SLR securities for the purpose of periodical valuation of investments included in the Available for Sale and Trading categories is as per the rates put out by FIMMDA. | ||
The valuation of non-SLR securities, other than those quoted on the stock exchanges, wherever linked to the YTM rates, is with a mark-up (reflecting associated credit risk) over the YTM rates for government securities put out by FIMMDA. | ||
Securities shall be valued scripwise and depreciation/appreciation aggregated for each category. Net appreciation in each basket if any, being unrealised, is ignored, while net depreciation is provided for. | ||
d) | Costs such as brokerage, commission etc., pertaining to investments, paid at the time of acquisition, are charged to revenue. | |
e) | Broken period interest on debt instruments is treated as a revenue item. | |
f) | Profit on sale of investment in the Held to Maturity category is credited to the revenue account and thereafter is appropriated, (net of applicable taxes and statutory reserve requirements) to Capital Reserve. Such appropriation is carried out at the year end. | |
Other entities | ||
In case of investments by ICICI Equity Fund, ICICI Eco-net Internet and Technology Fund, ICICI Emerging Sectors Fund and ICICI Strategic Investments Fund, brokerage, commission and stamp duty are included in the cost of acquisition while underwriting commission and fees earned are netted off from cost of investments. | ||
ICICI Equity Fund, ICICI Eco-net Internet and Technology Fund and ICICI Emerging Sectors Fund (schemes of ICICI Venture Capital Fund) value their investments as per Securities and Exchange Board of India (SEBI) guidelines issued from time to time. Total investments of these funds amount to Rs.Q7,716.9 million. Unrealised gains and temporary losses on investments are recognised as components of investors equity and are dealt with under Unrealised Investment Reserve. | ||
ICICI International Limited values their investments in accordance with International Accounting Standard (IAS) 39 (Financial Instruments: Recognition and Measurement). Value of the same is Rs.14.2 million. | ||
Other subsidiaries value their investments as per AS 13 Accounting for Investments issued by ICAI. Total investments of such subsidiaries amount to Rs.22,673.7 million. | ||
In case of ICICI Securities and Finance Company Limited and its subsidiaries, the repurchase and reverse repurchase transactions are treated as secured borrowing/lending transactions. The amount outstanding under these contracts as on March 31, 2003 was Rs. Nil. | ||
Insurance Associates | ||
ICICI Prudential Life Insurance Company Limited and ICICI Lombard General Insurance Company Limited are governed by Insurance Act, 1938 which value their investments in accordance with the provisions of Insurance Regulatory and Development Authority Regulation, 2002. Total investments of these two subsidiaries amount to Rs.6,460.2Qmillion. |
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schedules | ||
forming part of the Consolidated Accounts | Continued |
6. | Provision/Write-offs on loans and other credit facilities | |
a) | In addition to the general provision of 0.25% made on standard assets in accordance with the RBI guidelines the Bank maintains general provisions to cover potential credit losses which are inherent in any loan portfolio but not identified. For standard assets, additional general provisions are determined having regard to overall portfolio quality, asset growth, economic conditions and other risk factors. | |
b) | The Bank has incorporated the assets taken over from ICICI in its books at carrying values as appearing in the books of ICICI with a provision made based on the fair valuation exercise carried out by an independent firm. To the extent future provisions are required on the assets taken over from ICICI, the provision created on fair valuation of the assets at the time of the amalgamation is used. | |
Amounts recovered against other debts written off in earlier years and provisions no longer considered necessary in the context of the current status of the borrower are recognised in the Profit and Loss Account. | ||
c) | All credit exposures are classified as per the RBI guidelines, into performing and non-performing assets. Further, non-performing assets are classified into sub-standard, doubtful and loss assets for provisioning based on the criteria stipulated by the RBI. Provisions are generally made on substandard and doubtful assets at rates equal to or higher than those prescribed by the RBI. The secured portion of the substandard and doubtful assets is provided at 50% over a three-year period instead of five and a half years as prescribed by the RBI. Loss assets and unsecured portion of doubtful assets are fully provided/written off. Additional provisions are made against specific non-performing assets over and above what is stated above, if in the opinion of the management, increased provisions are necessary. | |
d) | For restructured/rescheduled assets, provision is made in accordance with the guidelines issued by the RBI, which requires the present value of the interest sacrifice be provided at the time of restructuring. | |
e) | In the case of other than restructured loan accounts classified as NPAs, the account is reclassified as Standard account if arrears of interest and principal are paid by the borrower. | |
In respect of loan accounts subject to restructuring, asset category is upgraded to standard account if the borrower demonstrates, over a minimum of one year, the ability to repay the loan in accordance with the contractual terms. | ||
f) | In addition to the provisions required to be held according to the asset classification status, provisions are held for country exposure (other than for home country). The countries are categorised into seven risk categories namely Insignificant, low, moderate, high, very high, restricted and off-credit and provisioning made on a graded scale ranging from 0.25% to 100%. For exposures with contractual maturity of less than 180 days, 25% of the normal requirement is held. | |
7. | Fixed
assets and depreciation ICICI Bank Limited |
|
a) | Premises and other fixed assets are carried at cost less accumulated depreciation charged over the estimated useful life of a fixed asset on a straight line basis. The rates of depreciation for fixed assets are: |
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|
|
Asset | Depreciation Rate | |
|
|
|
Premises owned by the Bank | 1.63% | |
Improvements to leasehold premises | 1.63% or over the lease period, | |
whichever is higher | ||
ATMs | 12.50% | |
Plant and Machinery like Air conditioners, Xerox machines, etc. | 10% | |
Furniture and Fixtures | 15% | |
Motor vehicles | 20% | |
Computers | 33.33% | |
Others (including Software and system development expenses) | 25% | |
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|
|
b) | Depreciation on leased assets is made on a straight-line basis at the higher of the rates determined with reference to the primary period of lease and the rates specified in Schedule XIV to the Companies Act, 1956. | |
c) | Assets purchased and sold during the year are depreciated on the basis of actual number of days the asset has been put to use. | |
d) | Items costing less than Rs.5,000 are fully depreciated in the year of purchase. |
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schedules | ||
forming part of the Consolidated Accounts | Continued |
Other entities | ||
e) | In case of ICICI Venture Funds Management Company Limited, depreciation on assets, other than leased assets, is charged on written down value method in accordance with the provisions of Schedule XIV of the Companies Act, 1956. The gross block, accumulated depreciation and net block in respect of such fixed assets as on March 31, 2003 for these subsidiaries was Rs.76.7 million, Rs.33.5 million and Rs.43.2 million respectively. | |
f) | In case of ICICI Securities and Finance Company Limited and its subsidiaries, depreciation on assets, other than leased assets and improvements to leased property, is charged on written down value method in accordance with the provisions of Schedule XIV of the Companies Act, 1956. The gross block, accumulated depreciation and net block in respect of such fixed assets as on March 31, 2003 for these subsidiaries was Rs. 206.9 million, Rs. 94.2 million and Rs. 112.7Qmillion respectively. | |
g) | In case of Prudential ICICI Asset Management Company Limited, fixed assets other than leasehold improvements are depreciated at written down value method based on economic lives of the assets as estimated by the management. The gross block, accumulated depreciation and net block in respect of such fixed assets as on March 31, 2003 was Rs.113.3 million, Rs.83.8 million and Rs.29.5 million respectively. | |
8. | Foreign
Currency transactions ICICI Bank Limited |
|
a) | Revenues and expenditure are translated at the exchange rates prevailing on the date of the transaction. Monetary assets and liabilities are translated at closing exchange rates notified by the Foreign Exchange Dealers Association of India (FEDAI) at the balance sheet date and the resulting profits/losses are included in the Profit and Loss Account. | |
b) | Outstanding forward exchange contracts are stated at contracted rates and are revalued at the exchange rates notified by FEDAI for specified maturities and at interpolated rates for contracts of in-between maturities. The resultant gains or losses are recognised in the Profit and Loss Account. | |
c) | Contingent Liabilities on account of guarantees, endorsements and other obligations are stated at the exchange rates notified by FEDAI at the Balance Sheet date. | |
Other entities | ||
d) | Financial statements of foreign subsidiaries/associates ICICI Securities Holding Inc., ICICI Securities Inc., ICICI International Limited and TCW/ICICI Investment Partners LLC. have been converted at the closing rates on the Balance Sheet date. | |
9. | Accounting
for Derivative Contracts ICICI Bank Limited |
|
The Bank enters into derivative contracts such as foreign currency options, interest rate and currency swaps and cross currency interest rate swaps to hedge on-balance sheet assets and liabilities or for trading purposes. The swap contracts entered to hedge on-balance assets and liabilities are structured such that they bear an opposite and offsetting impact with the underlying on-balance sheet items. The impact of such derivative instruments are correlated with the movement of underlying assets and accounted pursuant to the principles of hedge accounting. | ||
Interest income/expense is accrued on Interest Rate Swaps (IRS) and currency swaps designated as hedges and booked in the Profit and Loss Account. Trading IRS, trading currency swaps and foreign currency options, outstanding at the Balance Sheet date is marked to market and the resulting loss if any, is recorded in the Profit and Loss Account. |
||
Other entities | ||
In case of ICICI Securities Limited and its subsidiaries: | ||
a) | The gains are recognised only on settlement/expiry of the derivative instruments. | |
b) | All open positions are marked to market and the unrealised gains/loss are netted off on a scrip-wise basis. Mark-to-market gains, if any, are not recognised. | |
c) | Debit/credit balances on open positions are shown as current assets/liabilities, as the case may be. | |
10. | Employee Stock Option Scheme (ESOS) | |
The Group has formulated an Employees Stock Option Scheme. The Scheme provides that employees are granted an option to acquire equity shares of the Bank that vests in graded manner. The options may be exercised within a specified period. Since the exercise price of the option is the closing market price as on the date of grant, there is no compensation cost. |
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schedules | ||
forming part of the Consolidated Accounts | Continued |
11. | Staff benefits |
For employees covered under group gratuity scheme and group superannuation scheme of LIC, gratuity and superannuation charged to Profit and Loss Account is on the basis of premium charged by LIC. Provision for gratuity and pension for other employees and leave encashment liability is determined as per actuarial valuation. Defined contributions for Provident Fund are charged to the Profit and Loss Account based on contributions made in terms of the scheme. | |
12. | Income Tax |
Income tax expense is the aggregate amount of current tax and deferred tax charge. Taxes on income are accrued in the same period as the revenue and expenses to which they relate. Current period taxes are determined in accordance with the Income Tax Act, 1961. Deferred tax adjustments comprise of changes in the deferred tax assets or liabilities during the year. | |
Deferred tax assets and liabilities are recognised for the future tax consequences of temporary differences arising between the carrying values of assets and liabilities and their respective tax basis and operating carry forward losses. Deferred tax assets are recognised only after giving due consideration to prudence. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date. The impact on account of changes in the deferred tax assets and liabilities is also recognised in the income statement. | |
Deferred tax assets are recognised based upon managements judgement as to whether realisation is considered reasonably certain. | |
13. | Translation of the Financial Statements of Foreign Representative Offices |
In accordance with the guidelines issued by the Reserve Bank of India, all assets, liabilities, income and expenditure of the foreign representative offices of the Bank have been converted at the closing rate prevailing on the balance sheet date. | |
B. | NOTES FORMING PART OF THE ACCOUNTS |
1. | Preference Shares |
Certain Government Securities amounting to Rs.1,244.8 million (2002 : Rs.1,304.6Qmillion) have been earmarked against redemption of preference share capital, which falls due for redemption on April 20, 2018 as per the original issue terms. | |
2. | Employee Stock Option Scheme |
In terms of Employee Stock Option Scheme, the maximum number of options granted to any Eligible Employee in a financial year shall not exceed 0.05% of the issued equity shares of the Bank at the time of grant of the options and aggregate of all such options granted to the Eligible Employees shall not exceed 5% of the aggregate number of the issued equity shares of the Bank subsequent to the amalgamation of ICICI, I CAPS and I PFS with the Bank and the issuance of equity shares by the Bank pursuant to the amalgamation of ICICI, I CAPS and I PFS with the Bank. | |
In terms of the Scheme, 12,610,275 options (2002 : 13,343,625 options) granted to eligible employees were outstanding as at March 31, 2003. | |
Stock option activity | |
A summary of the status of the Banks option plan is presented below: |
Year ended | Year ended | ||||
March 31, 2003 | March 31, 2002 | ||||
|
|
||||
Option shares | Option shares | ||||
outstanding | outstanding | ||||
Outstanding at the beginning of the year | 13,343,625 | 1,636,125 | |||
Add: | Granted during the year | | 4,735,200 | ||
Options taken over on Amalgamation | | * 7,015,800 | |||
Less: | Forfeited during the year | 730,350 | 43,500 | ||
Exercised during the year | 3,000 | | |||
Outstanding at the end of the year | 12,610,275 | 13,343,625 | |||
* Represents options granted to option holders of erstwhile ICICI Limited in the share swap ratio. |
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schedules | ||
forming part of the Consolidated Accounts | Continued |
3. | Subordinated debt |
Subordinated debt includes Index bonds amounting to Rs.95.8Qmillion, (2002 : Rs.88.0 million) which carry a detachable warrant entitling bondholders to a right to receive an amount linked to the BSE Sensitive Index (Sensex) per terms of the issue. The liability of the Bank arising out of changes in the Sensex has been hedged by earmarking its investments of an equivalent amount in the UTI Index Equity Fund whose value is based on the Sensex. The Bank has not issued any subordinated debt during the current year. | |
4. | Fixed Assets and Depreciation |
The Bank depreciated Automatic Teller Machines (ATMs) over its useful life estimated as 6 years or over the lease period for ATMs taken on lease. Effective April 1, 2002 the Bank revised the useful life of the ATMs to 8 years based on an evaluation done by the management. | |
Accordingly, the depreciation charged for the current year was lower by Rs.29.0 million. | |
5. | Investments |
Effective AprilQ1, 2002, the Bank has changed the methodology for ascertaining the carrying cost of fixed income bearing securities from Weighted Average Method to First-In-First-Out Method. The impact due to the aforementioned change on the Profit and Loss Account for the year ended March 31, 2003 has resulted into a profit amounting to Rs. 132.2 million. | |
Investments include shares and debentures amounting to Rs. 3,781.9 million which are in the process of being registered in the name of the Bank. For ICICI Emerging Sectors Fund and ICICI Equity Fund, such investments amounted to Rs. 1,991.3 million and Rs. 1,683.2 million respectively. | |
Investments also include government securities amounting to Rs. 703.5 million (representing face value of securities) pledged with certain banks and institutions for cheque drawal and clearing facilities. | |
6. | Repurchase Transactions |
During the current year, the Bank as changed its method of accounting repurchase transactions and reverse repurchase transactions. These transactions have been accounted for as a sale and forward purchase or purchase and a forward sale transactions in the current year as against a borrowing or lending transaction in the previous year. The net impact of the same on the profit and loss account is not material. | |
7. | Deferred Tax |
On March 31, 2003, the Group has recorded net deferred tax asset of Rs. 5,053.9Qmillion, (2002 : Deferred tax liability of Rs. 1,470.5 million) which has been included in other assets. | |
A composition of deferred tax assets and liabilities into major items is given below: | |
Rupees in million | ||||
|
||||
Particulars | March 31, 2003 | March 31, 2002 | ||
Amortisation of premium on investments | 527.4 | 85.2 | ||
Provision for bad and doubtful debts | 13,164.1 | 7,144.8 | ||
Others | 879.3 | 1,430.1 | ||
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|
|||
14,570.8 | 8,660.1 | |||
|
|
|||
Less: Deferred Tax Liability | ||||
Depreciation on fixed assets | 9,275.0 | 9,938.3 | ||
Others | 241.9 | 192.3 | ||
9,516.9 | 10,130.6 | |||
|
|
|||
Net Deferred Tax Asset/(Liability) | 5,053.9 | (1,470.5) | ||
|
|
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schedules | ||
forming part of the Consolidated Accounts | Continued |
8. | Related party transactions |
ICICI Bank has entered into transactions with the following related parties:
Affiliates of the Bank;
Whole-time Directors of the Group
The related party transactions can be categorised as follows:
Rupees in million | |||||||
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|
|
|
||||
Whole-time | |||||||
Associates (1) & (2) | Directors | Total | |||||
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|
||||
Deposits | 161.5 | 20.3 | 181.8 | ||||
Receiving of services | 92.8 | | 92.8 | ||||
Insurance Premium paid | 106.0 | | 106.0 | ||||
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|
||||
(1) Prudential ICICI Asset Management Company Limited, Prudential ICICI Trust Limited, TCW/ICICI Investment Partners L.L.C. | |||||||
(2) Includes transactions with ICICI Prudential Life Insurance Company Limited and ICICI Lombard General Insurance Company Limited which have been accounted for as joint ventures in the consolidated financial statements. |
Remuneration paid to the Whole-time Directors of ICICI Bank Limited during the year ended March 31, 2003 was Rs. 41.0 million.
9. | Earnings Per Share (EPS) |
The Group reports basic and diluted earnings per equity share in accordance with Accounting Standard-20 (AS-20), Earnings per Share. Basic earnings per share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding for the year. Diluted earnings per share is computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year.
The computation of Earnings per Share is set out below :
Rupees in million except per share data | |||||
|
|
||||
March 31, 2003 | March 31, 2002 | ||||
Basic | |||||
Weighted Average no. of equity shares outstanding (Nos.) | 613,031,569 | *222,510,311 | |||
Net Profit | 11,520 | 2,583.0 | |||
Earnings per Share (Rs.) | 18.79 | 11.61 | |||
Diluted | |||||
Weighted Average no. of equity shares outstanding (Nos.) | 613,750,295 | *222,510,311 | |||
Net Profit | 11,520 | 2,583.0 | |||
Earnings per Share (Rs.) | 18.77 | 11.61 | |||
Nominal Value per share (Rs.) | 10.00 | 10.00 |
| 39,26,72,724 shares issued on amalgamation of ICICI Limited have been considered for computation of weighted average number of equity shares. | |
10. | Assets under lease | |
10.1 | Assets under operating lease |
The future lease rentals are given in the table below :
Rupees in million | |||
|
|
||
Period | March 31, 2003 | ||
Not later than one year | 111.9 | ||
Later than one year and not later than five years | 545.6 | ||
Later than five years | 472.0 | ||
|
|||
Total | 1,129.5 | ||
|
|
F46
schedules | ||
forming part of the Consolidated Accounts | Continued |
10.2 | Assets under finance lease |
The future lease rentals are given in the table below : | |||
Rupees in million | |||
|
|
||
Period | March 31, 2003 | ||
Total of future minimum lease payments | 1,161.0 | ||
Present value of lease payments | 818.1 | ||
Unmatured finance charges | 342.9 | ||
Maturity profile of total of future minimum lease payments | |||
Not later than one year | 166.0 | ||
Later than one year and not later than five years | 831.9 | ||
Later than five years | 163.1 | ||
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Total | 1,161.0 | ||
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||
11. | Other | |
a. | Exchange Fluctuation | |
Exchange Fluctuation aggregating Rs. 923.6 million, which arises on account of Rupee-tying Agreements with the Government of India, is held in Exchange Fluctuation Suspense with Government Account pending adjustment at maturity on receipt of payments from the Government for repayments to foreign lenders. | ||
b. | Swap suspense (net) | |
Swap Suspense (net) aggregating Rs.128.7 million (debit), which arises out of conversion of foreign currency swaps, is held in Swap Suspense Account and will be reversed at conclusion of swap transactions with swap counter parties. | ||
c. | Exchange Risk Administration Scheme | |
Under the Exchange Risk Administration Scheme (ERAS), the Government of India has agreed to extend support to the Exchange Risk Administration Fund (ERAF), when it is in deficit and recoup its contribution in the event of surplus. The Bank can claim from the positive balance in the ERAF account maintained by the Industrial Development Bank of India (IDBI) to the extent of the deficit in the ERAS Exchange Fluctuation Account. If the balance in the ERAF account with IDBI is insufficient, a claim will be made on the Government of India through IDBI. | ||
The Government of India has foreclosed the scheme vide their letter F. No.6 (3)/2002-IF.1 dated January 28, 2003. The total amount payable to the Government of India under the scheme amounting to Rs.493.6 million has been shown against the account Amount payable to GOI under ERAS. | ||
12. | Information about Business and Geographical segments | |
The Bank had been reporting segmental results, in accordance with AS 17 on Segment Reporting issued by ICAI, under the business segments Retail Banking, Corporate Banking, Treasury & Corporate Office and Others. Consequent to the merger of erstwhile ICICI Limited and two of its subsidiaries ICICI PFS Limited and ICICI Capital Services Limited with the Bank, the following have been considered as reportable segments: | ||
| Commercial Banking comprising the retail and corporate banking business of the Bank and ICICI Home Finance Company Limited. | |
| Investment Banking comprising the rupee and forex treasury of the Bank, the investment banking business of ICICI Securities & Finance Company Limited and its subsidiaries ICICI Venture Funds Management Company Limited, ICICI Eco-net Internet & Technology Fund, ICICI Equity Fund, ICICI Technology Incubator Fund, ICICI Emerging Fund, ICICI International Limited, ICICI Information Technology Fund, ICICI Advantage Fund and Strategic Investor Fund. | |
| Others comprising, ICICI Lombard General Insurance Company Limited, ICICI Prudential Life Insurance Company Limited, Prudential ICICI AMC Limited, Prudential ICICI Trust Limited, ICICI Property Trust, TCW/ICICI Investment Partner LLC., whose individual business is presently not material in relation to the consolidated financials. |
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schedules | ||
forming part of the Consolidated Accounts | Continued |
Based on such allocations, segmental Balance Sheet as on March 31, 2003 and segmental Profit & Loss Account for the year ended March 31, 2003 have been prepared.
Rupees in million | ||||||||||||||||
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Business segments | Commercial Banking | Investment Banking | Others | Total | ||||||||||||
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Particulars | Current | Previous | Current | Previous | Current | Previous | Current | Previous | ||||||||
year | year | year | year | year | year | year | year | |||||||||
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1. | Revenue (before profit on sale of shares of | |||||||||||||||
ICICI Bank Limited held by erstwhile ICICI Limited) | 94,132.4 | 22,955.3 | 30,923.0 | 7,550.9 | 5,607.9 | | 130,663.4 | 30,506.2 | ||||||||
2. | Less: Inter segment | |||||||||||||||
Revenue | | | | | | | (8,515.6) | (3,176.2) | ||||||||
3. | Total Revenue (1) -(2) | | | | | | | 122,147.8 | 27,330.0 | |||||||
4. | Operating Profit (i.e. Profit before unallocated | |||||||||||||||
expenses, extraordinary profit, provision, and tax) | 9,986.8 | 4,373.3 | 4,384.1 | 1,099.0 | (973.6) | | 13,397.3 | 5,472.3 | ||||||||
5. | Unallocated expenses | | | | | | | | | |||||||
6. | Profit on sale of expenses, extraordinary profit, | |||||||||||||||
shares of ICICI Bank Limited held by erstwhile | ||||||||||||||||
ICICI Limited | | | 11,910.0 | | | | 11,910.0 | | ||||||||
7. | Provisions (including accelerated / additional | |||||||||||||||
provision) | 17,370.2 | 2,757.0 | (43.9) | (180.0) | | | 17,326.3 | 2,577.0 | ||||||||
8. | Profit before tax (4)-(5)-(6)-(7) | (7,383.5) | 1,616.3 | 16,338.1 | 1,279.0 | (973.6) | | 7,981.0 | 2,895.3 | |||||||
9. | Income tax expenses (net) / (net deferred tax credit) | | | | | | | (3,539.0) | 310.0 | |||||||
10. | Net Profit (8)-(9) | | | | | | | 11,520.0 | 2,585.3 | |||||||
Other Information | ||||||||||||||||
11. | Segment assets | 692,536.9 | 678,328.2 | 374,262.6 | 361,303.1 | 8,285.8 | 18,383.4 | 1,075,085.3 | 1,058,014.7 | |||||||
12. | Unallocated assets | | | | | | | 19,246.4 | 10,156.3 | |||||||
13. | Total assets (11)+(12) | | | | | | | 1,094,331.7 | 1,068,171.0 | |||||||
14. | Segment liabilities | 808,680.2 | 740,102.9 | 281,400.7 | 297,500.1 | 4,250.8 | 29,270.0 | 1,094,331.7 | 1,066,873.0 | |||||||
15. | Unallocated liabilities | | | | | | | | 1,298.0 | |||||||
16. | Total liabilities (14)+(15) | | | | | | | 1,094,331.7 | 1,068,171.0 | |||||||
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The business operations of the Bank are largely concentrated in India. Activities outside India are restricted to resource mobilisation in international markets. The assets and income from foreign operations are immaterial. |
F48
schedules | ||
forming part of the Consolidated Accounts | Continued |
13. | Profit on sale of shares |
Profit on sale of shares in ICICI Bank Limited is in respect of the shares held by erstwhile ICICI Limited and transferred to a Board of Trustees as per the Scheme of Amalgamation.
14. | Additional disclosures |
Additional statutory information disclosed in separate financial statements of the Parent and the Subsidiaries having no bearing on the true and fair view of the Consolidated Financial Statements and also the information pertaining to the items which are not material have not been disclosed in the Consolidated Financial Statement in view of the general clarification issued by ICAI.
15. | Comparative figures |
Consequent to the merger of ICICI, I PFS and I CAPS with the Bank effective March 30, 2002, the previous year figures include the results of those entities for only two days. Hence, current year figures are not comparable with those of the previous year.
Consequent to AS 27 becoming mandatory with effect from April 1, 2002, the accounting treatment for consolidation during the current year in case of following entities is different from the previous year :
Sr. | Name of the Company | Relation during | Relation during | ||
No. | current year | previous year | |||
|
|||||
1. | ICICI Prudential Life Insurance Company Limited | Joint Venture | Subsidiary | ||
2. | ICICI Lombard General Insurance Company Limited | Joint Venture | Subsidiary | ||
3. | Prudential ICICI Asset Management Company Limited | Joint Venture | Associate | ||
4. | Prudential ICICI Trust Limited | Joint Venture | Associate | ||
|
Figures of the previous year have been regrouped to conform to the current years presentation.
Signatures to Schedules 1 to 19 | For and on behalf of the Board of Directors | ||
N. VAGHUL | K. V. KAMATH | ||
Chairman | Managing Director & CEO | ||
LALITA D. GUPTE | KALPANA MORPARIA | ||
Joint Managing Director | Executive Director | ||
NACHIKET MOR | CHANDA D. KOCHHAR | ||
Executive Director | Executive Director | ||
S. MUKHERJI | BALAJI SWAMINATHAN | ||
Executive Director | Senior General Manager | ||
JYOTIN MEHTA | N.S. KANNAN | G. VENKATAKRISHNAN | |
Place : Mumbai | General Manager & | Chief Financial Officer & | General Manager - |
Date : April 25, 2003 | Company Secretary | Treasurer | Accounting & Taxation Group |
F49
cash flow statement | ||
forming part of the Consolidated Accounts for the year ended March 31, 2003 |
SCHEDULE 19 Consolidated Cash Flow Statement for the year ended March 31, 2003
(Rs. in 000) | |||||
|
|
|
|
||
Particulars | 2002-2003 | 2001-2002 | |||
|
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|
|
||
Cash Flow from Operating Activities | |||||
Net profit before taxes | 7,958,489 | 2,899,912 | |||
Adjustments for : | |||||
Depreciation on fixed assets | 5,201,775 | 641,824 | |||
Net (appreciation)/depreciation on investments | 2,442,687 | (137,397) | |||
Provision in respect of non-performing assets (including prudential | |||||
provision on standard assets) | 14,822,615 | 2,682,876 | |||
Provision for contingencies & others | 63,900 | 26,925 | |||
Loss on sale of fixed assets | 66,586 | 648 | |||
|
|
||||
30,556,052 | 6,114,788 | ||||
Adjustments for : | |||||
(Increase)/Decrease in Investments | (7,299,473) | (153,127,884) | |||
(Increase)/Decrease in Advances | (74,839,746) | 23,033,282 | |||
Increase/(Decrease) in Borrowings | (148,924,231) | (14,704,074) | |||
Increase/(Decrease) in Deposits | 157,335,842 | 157,069,011 | |||
(Increase)/Decrease in Other assets | (16,595,338) | (5,070,725) | |||
Increase/(Decrease) in Other liabilities and provisions | 6,084,990 | 10,395,298 | |||
|
|
||||
(84,237,956) | 17,594,908 | ||||
Payment of taxes (net) | (7,053,848) | (1,275,292) | |||
|
|
||||
Net Cash Generated from Operating Activities | (A) | (60,735,752) | 22,434,404 | ||
|
|
||||
Cash flow from Investing Activities | |||||
Purchase of fixed assets | (2,477,199) | (244,187) | |||
Proceeds from sale of fixed assets | 103,423 | 7,282 | |||
|
|
||||
Net Cash Generated from Investing Activities | (B) | (2,373,776) | (236,905) | ||
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||||
Cash flow from Financing Activities | |||||
Proceeds from issue of share capital | 315 | | |||
Proceeds from issue of subordinated debt | (17,882) | 2,285,321 | |||
Dividend and dividend tax paid | (568) | (971,283) | |||
|
|
||||
Net Cash Generated from Financing Activities | (C) | (18,135) | 1,314,038 | ||
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|
||||
Cash and Cash Equivalents on Amalgamation | (D) | | 68,437,389 | ||
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||||
Effect of De-consolidation of Subsidiaries on Cash & Cash Equivalents | (E) | (49,968) | 788,801 | ||
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|
||||
Net Increase/(Decrease) in Cash and Cash Equivalents | (A)+(B)+(C)+(D)+(E) | (63,177,631) | 92,737,727 | ||
|
|
||||
Cash and Cash Equivalents as at April 1st | 128,674,627 | 35,936,900 | |||
Cash and Cash Equivalents as at March 31st | 65,496,996 | 128,674,627 | |||
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Cash and cash equivalents represent Cash and balances with Reserve Bank of India and Balances with banks and money at call and short notice. |
For and on behalf of the Board of Directors | |||
N. VAGHUL | K. V. KAMATH | ||
Chairman | Managing Director & CEO | ||
LALITA D. GUPTE | KALPANA MORPARIA | ||
Joint Managing Director | Executive Director | ||
NACHIKET MOR | CHANDA D. KOCHHAR | ||
Executive Director | Executive Director | ||
S. MUKHERJI | BALAJI SWAMINATHAN | ||
Executive Director | Senior General Manager | ||
JYOTIN MEHTA | N.S. KANNAN | G. VENKATAKRISHNAN | |
Place : Mumbai | General Manager & | Chief Financial Officer & | General Manager - |
Date : April 25, 2003 | Company Secretary | Treasurer | Accounting & Taxation Group |
AUDITORS CERTIFICATE
We have verified the attached consolidated cash flow statement of ICICI BANK LIMITED which has been compiled from and is based on the audited consolidated financial statements for the years ended March 31, 2003 and March 31, 2002. To the best of our knowledge and belief and according to the information and explanations given to us, it has been prepared pursuant to the requirements of Listing Agreements entered into by ICICI Bank with stock exchanges.
For N. M. RAIJI & CO. | For S.R. BATLIBOI & CO. |
Chartered Accountants | Chartered Accountants |
JAYESH M. GANDHI | per VIREN H. MEHTA |
Partner | a Partner |
Place: Mumbai | |
Date: April 25, 2003 |
F50
ICICI
BANK LIMITED
CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2001, 2002 AND 2003
PREPARED IN ACCORDANCE WITH
UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (US GAAP)
contents | ||
Independent Auditors' Report | F52 | |
Consolidated balance sheets | F53 | |
Consolidated statements of operations | F54 | |
Statements of stockholders equity and other comprehensive income | F56 | |
Consolidated statements of cash flows | F57 | |
Notes to the consolidated financial statements | F59 |
independent auditors report | ||
To the Board of Directors and Stockholders of ICICI Bank Limited |
We have audited the accompanying consolidated balance sheets of ICICI Bank Limited and subsidiaries as of March.31,.2002 and 2003, and the related consolidated statements of operations, stockholders equity and other comprehensive income, and cash flows for each of the years in the three-year period ended March.31,.2003. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ICICI Bank Limited and subsidiaries as of March.31,.2002 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended March.31,.2003, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 1 to the consolidated financial statements, effective April 1, 2001, the Company adopted the provisions of SFAS No. 142, Goodwill and Other Intangible Assets and SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities. As discussed in Note 1 to the consolidated financial statements, effective October 1, 2002, the Company adopted the provisions of SFAS No. 147, Acquisitions of Certain Financial Institutions, retroactive to April 1, 2001, the adoption date of SFAS No. 142.
The United States dollar amounts are presented in the accompanying consolidated financial statements solely for the convenience of the readers and have been translated into United States dollar on the basis described in Note.1.to the consolidated financial statements.
KPMG
Mumbai, India
June 28, 2003
F52
consolidated balance sheets |
(in millions, except share data) | |||||||
at March 31, | 2002(1) | 2003 | 2003 | ||||
Convenience | |||||||
translation | |||||||
into USD | |||||||
(unaudited) | |||||||
Rs. | Rs. | USD | |||||
Assets | |||||||
Cash and cash equivalents | 41,476 | 72,453 | 1,524 | ||||
Trading assets | 42,376 | 39,634 | 834 | ||||
Securities: | |||||||
Available for sale | 47,857 | 267,499 | 5,626 | ||||
Non-readily marketable equity securities | 8,268 | 9,418 | 198 | ||||
Venture capital investments | 3,921 | 3,704 | 78 | ||||
Investments in affiliates | 10,086 | 2,615 | 55 | ||||
Loans, net of allowance for loan losses, | |||||||
security deposits and unearned income | 523,601 | 630,421 | 13,258 | ||||
Customers liability on acceptances | 4,783 | 43,252 | 910 | ||||
Property and equipment, net | 12,577 | 21,215 | 446 | ||||
Assets held for sale | 2,029 | 2,306 | 48 | ||||
Goodwill | 2,250 | 4,787 | 101 | ||||
Intangible assets, net | | 5,118 | 107 | ||||
Deferred tax assets | 7,295 | 6,423 | 135 | ||||
Interest and fees receivable | 9,482 | 12,472 | 262 | ||||
Other assets | 27,361 | 58,946 | 1,240 | ||||
|
|
|
|||||
Total assets | 743,362 | 1,180,263 | 24,822 | ||||
|
|||||||
Liabilities | |||||||
Interest bearing deposits | 7,380 | 456,051 | 9,591 | ||||
Non-interest bearing deposits | | 35,239 | 741 | ||||
Trading liabilities | 17,105 | 26,086 | 549 | ||||
Short-term borrowings | 70,804 | 42,095 | 885 | ||||
Bank acceptances outstanding | 4,783 | 43,252 | 910 | ||||
Long-term debt | 511,458 | 400,812 | 8,429 | ||||
Redeemable preferred stock | 772 | 853 | 18 | ||||
Other borrowings | 5,787 | | | ||||
Taxes and dividends payable | 11,050 | 16,880 | 355 | ||||
Deferred tax liabilities | 1,144 | 460 | 9 | ||||
Other liabilities | 41,471 | 66,198 | 1,392 | ||||
|
|
|
|||||
Total liabilities | 671,754 | 1,087,926 | 22,879 | ||||
|
|
|
|||||
Commitments and contingencies (Note 29) | |||||||
Minority interest | 260 | 124 | 3 | ||||
Stockholders equity: | |||||||
Common stock at Rs. 10 par value: 800,000,000 and | |||||||
1,550,000,000 shares authorized as of March 31, 2002 and | |||||||
2003; Issued and outstanding 392,672,724 and 613,034,404 | |||||||
shares as of March 31, 2002 and 2003, respectively | 3,922 | 6,127 | 129 | ||||
Additional paid-in capital | 42,036 | 64,863 | 1,364 | ||||
Retained earnings | 26,229 | 18,246 | 384 | ||||
Deferred compensation | (7) | | | ||||
Accumulated other comprehensive income | (832) | 2,977 | 63 | ||||
|
|
|
|||||
Total stockholders equity | 71,348 | 92,213 | 1,940 | ||||
|
|
|
|||||
Total liabilities and stockholders equity | 743,362 | 1,180,263 | 24,822 | ||||
|
See accompanying notes to the consolidated financial statements.
(1) As restated for reverse acquisition and adoption of SFAS No. 147
F53
consolidated statements of operations | ||
(in millions, except share data) |
for the year ended March 31, | 2001(1) | 2002(2) | 2003 | 2003 | ||||
Convenience | ||||||||
translation | ||||||||
into USD | ||||||||
(unaudited) | ||||||||
Rs. | Rs. | Rs. | USD | |||||
Interest and dividend income | ||||||||
Interest and fees on loans | 75,272 | 75,237 | 75,080 | 1,579 | ||||
Interest and dividends on securities | 499 | 1,447 | 17,022 | 358 | ||||
Interest and dividends on trading assets | 2,837 | 1,715 | 2,754 | 58 | ||||
Interest on balances and deposits with banks | 910 | 368 | 1,151 | 24 | ||||
Other interest income | 586 | 100 | 2,096 | 44 | ||||
|
|
|
|
|||||
Total interest and dividend income | 80,104 | 78,867 | 98,103 | 2,063 | ||||
|
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|
|||||
Interest expense | ||||||||
Interest on deposits | 490 | 744 | 26,033 | 547 | ||||
Interest on long-term debt | 56,830 | 59,798 | 48,163 | 1,013 | ||||
Interest on short-term borrowings | 9,123 | 7,717 | 3,829 | 81 | ||||
Interest on trading liabilities | 1,446 | 911 | 3,114 | 65 | ||||
Other interest expense | 4 | 350 | 2,069 | 44 | ||||
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|
|||||
Total interest expense | 67,893 | 69,520 | 83,208 | 1,750 | ||||
|
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|
|||||
Net interest income | 12,211 | 9,347 | 14,895 | 313 | ||||
Provision for loan losses | 9,892 | 9,743 | 19,649 | 413 | ||||
|
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|
|||||
Net interest income/(loss) after provision for loan losses | 2,319 | (396) | (4,754) | (100) | ||||
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Non-interest income | ||||||||
Fees, commission and brokerage | 5,317 | 4,703 | 5,722 | 120 | ||||
Net gain on trading activities | 847 | 2,442 | 3,075 | 65 | ||||
Net gain/(loss) on venture capital investments | 62 | (316) | (1,278) | (27) | ||||
Net gain/(loss) on other securities | (1,776) | (3,256) | 956 | 20 | ||||
Net gain on sale of loans and credit substitutes | 705 | 1,979 | 2,795 | 59 | ||||
Foreign exchange income/(loss) | (108) | 78 | 92 | 2 | ||||
Software development and services | 701 | 1493 | 1,062 | 22 | ||||
Gain on sale of stock of subsidiaries/affiliates | 2,507 | 165 | | | ||||
Gain/(loss) on sale of property and equipment | (31) | 29 | 16 | | ||||
Rent | 413 | 310 | 117 | 2 | ||||
Other non-interest income | 606 | 521 | 696 | 15 | ||||
|
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|
|||||
Total non-interest income | 9,243 | 8,148 | 13,253 | 278 | ||||
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Non-interest expense | ||||||||
Salaries and employee benefits | 1,877 | 2,980 | 5,383 | 113 | ||||
General and administrative expenses | 3,342 | 4,616 | 12,581 | 264 | ||||
Amortization of goodwill and intangible assets | 260 | | 645 | 13 | ||||
|
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|
|||||
Total non-interest expense | 5,479 | 7,596 | 18,609 | 390 | ||||
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|||||
Income/(loss) before equity in earning/(loss) | ||||||||
of affiliates, minority interest, income taxes | ||||||||
and cumulative effect of accounting changes | 6,083 | 156 | (10,110) | (212) | ||||
Equity in earning/(loss) of affiliates | 735 | 294 | (958) | (20) | ||||
Minority interest | 1 | 83 | 24 | | ||||
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|
|||||
Income/(loss) before income taxes and | ||||||||
cumulative effect of accounting changes | 6,819 | 533 | (11,044) | (232) | ||||
Income tax (expense)/benefit | (189) | (251) | 3,061 | 64 | ||||
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|
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|
|||||
Income/(loss) before cumulative effect of accounting changes | 6,630 | 282 | (7,983) | (168) | ||||
Cumulative effect of accounting changes, net of tax | | 1,265 | | | ||||
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|
|||||
Net income/(loss) | 6,630 | 1,547 | (7,983) | (168) | ||||
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|||||
F54 |
consolidated statements of operations | ||
(in millions, except share data) |
for the year ended March 31, | 2001(1) | 2002(2) | 2003 | 2003 | ||||
Convenience | ||||||||
translation | ||||||||
into USD | ||||||||
(unaudited) | ||||||||
Rs. | Rs. | Rs. | USD | |||||
Earnings per equity share: Basic (Rs.) | ||||||||
Net income/(loss) before cumulative effect | ||||||||
of accounting changes | 16.88 | 0.72 | (14.18) | (0.30) | ||||
Cumulative effect of accounting changes | | 3.22 | | | ||||
|
|
|
|
|||||
Net income/(loss) | 16.88 | 3.94 | (14.18) | (0.30) | ||||
Earnings per equity share: Diluted (Rs.) | ||||||||
Net income/(loss) before cumulative effect of | ||||||||
accounting changes | 16.81 | 0.72 | (14.18) | (0.30) | ||||
Cumulative effect of accounting changes | | 3.22 | | | ||||
|
|
|
|
|||||
Net income/(loss) | 16.81 | 3.94 | (14.18) | (0.30) | ||||
Weighted average number of equity shares used in | ||||||||
computing earnings per equity share (millions) | ||||||||
Basic | 393 | 393 | 563 | 563 | ||||
Diluted | 393 | 393 | 563 | 563 | ||||
See accompanying notes to the consolidated financial statements. |
(1) Restated for reverse acquisition.
(2) Restated for reverse acquisition and adoption of SFAS No. 147.
F55
statements of stockholders equity and other comprehensive income | ||
(in millions, except share data) |
Accumu- | |||||||||||||||||
lated | |||||||||||||||||
Other | |||||||||||||||||
Common stock | Treasury Stock | Compre- | Total | ||||||||||||||
Additional | Deferred | hensive | Stock- | ||||||||||||||
No. of | Amount | No. of | Amount | Paid-In | Retained | Compen- | Income, | holders | |||||||||
Shares (1) | Shares | Capital | Earnings | sation | Net of Tax | Equity | |||||||||||
Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | Rs. | |||||||||||
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||||||||
Balance as of March 31, 2000 | 392,655,774 | 7,832 | | | 37,347 | 28,338 | (70) | (2,539) | 70,908 | ||||||||
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Effect of reverse acquisition on | |||||||||||||||||
capital structure | | (3,926) | | | 3,926 | | | | | ||||||||
Common stock issued on | |||||||||||||||||
exercize of stock options | 16,250 | | | | 3 | | | | 3 | ||||||||
Amortization of compensation | | | | | | | 37 | | 37 | ||||||||
Increase in carrying value on direct | |||||||||||||||||
issuance of stock by subsidiary | | | | | 1,242 | | | | 1,242 | ||||||||
Tax effect of increase in carrying | |||||||||||||||||
value on direct issuance of stock | |||||||||||||||||
by subsidiary | | | | | (605) | | | | (605) | ||||||||
Comprehensive income | |||||||||||||||||
Net income | | | | | | 6,630 | | | 6,630 | ||||||||
Net unrealized gain/(loss) on | |||||||||||||||||
securities, net of realization | | | | | | | | (1,674) | (1,674) | ||||||||
Translation adjustments | | | | | | | | 14 | 14 | ||||||||
|
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Comprehensive income/(loss) | | | | | | | | | 4,970 | ||||||||
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Cash dividends declared | |||||||||||||||||
(Re. 1 per common share) | | | | | | (772) | | | (772) | ||||||||
Other | | 16 | | | 123 | | | | 139 | ||||||||
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|
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|||||||||
Balance as of March 31, 2001 | 392,672,024 | 3,922 | | | 42,036 | 34,196 | (33) | (4,199) | 75,922 | ||||||||
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Common stock issued on exercise | |||||||||||||||||
of stock options | 700 | | | | | | | | | ||||||||
Amortization of compensation | | | | | | | 26 | | 26 | ||||||||
Comprehensive income | |||||||||||||||||
Net income | | | | | | 1,547 | | | 1547 | ||||||||
Net unrealized gain/(loss) on | |||||||||||||||||
securities, net of realization | | | | | | | | 3,283 | 3,283 | ||||||||
Translation adjustments | | | | | | | | 84 | 84 | ||||||||
|
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Comprehensive income/(loss) | | | | | | | | | 4,914 | ||||||||
|
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Cash dividends declared | |||||||||||||||||
(Rs. 11 per common share) | | | | | | (9,514) | | | (9,514) | ||||||||
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|
|
|
|
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|
|||||||||
Balance as of March 31, 2002(2) | 392,672,724 | 3,922 | | | 42,036 | 26,229 | (7) | (832) | 71,348 | ||||||||
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|
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Common stock issued on reverse | |||||||||||||||||
acquisition | 118,962,731 | 1,190 | | | 10,838 | | | | 12,028 | ||||||||
Fair value of stock options | |||||||||||||||||
assumed on reverse acquisition | | | | | 409 | | | | 409 | ||||||||
Treasury stock arising due to | |||||||||||||||||
reverse acquisition | 101,395,949 | | (101,395,949) | (8,204) | 8,204 | | | | | ||||||||
Sale of treasury stock | | 1,015 | 101,395,949 | 8,204 | 3,336 | | | | 12,555 | ||||||||
Common stock issued on | |||||||||||||||||
exercise of stock options | 3,000 | | | | | | | | | ||||||||
Increase in carrying value on direct | |||||||||||||||||
issuance of stock by subsidiary | | | | | 40 | | | | 40 | ||||||||
Amortization of compensation | | | | | | | 7 | | 7 | ||||||||
Comprehensive income | |||||||||||||||||
Net income/(loss) | | | | | | (7,983) | | | (7,983) | ||||||||
Net unrealized gain/(loss) on | |||||||||||||||||
securities, net of realization | | | | | | | | 3,731 | 3,731 | ||||||||
Translation adjustments | | | | | | | | 78 | 78 | ||||||||
|
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Comprehensive income/(loss) | | | | | | | | | (4,174) | ||||||||
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|
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|
|
|
|
|
|
|||||||||
Balance as of March 31, 2003 | 613,034,404 | 6,127 | | | 64,863 | 18,246 | | 2,977 | 92,213 | ||||||||
|
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|
|
|
|
|
|||||||||
Balance as of March 31, 2003 | |||||||||||||||||
(US$) (unaudited) | 129 | | 1,364 | 384 | | 63 | 1,940 | ||||||||||
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|
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|
|
See accompanying notes to the consolidated financial statements.
(1) Restated
for reverse acquisition.
(2) Restated
for reverse acquisition and adoption of SFAS No. 147.
F56
consolidated statements of cash flows | ||
(in millions, except share data) |
for the year ended March 31, | 2001 | 2002(1) | 2003 | 2003(1) | |||
Convenience | |||||||
translation | |||||||
into USD | |||||||
(unaudited) | |||||||
Rs. | Rs. | Rs. | USD | ||||
Operating activities | |||||||
Net income/(loss) | 6,630 | 1,547 | (7,983) | (168) | |||
Adjustments to reconcile net income to net cash | |||||||
(used in)/provided by operating activities: | |||||||
Provision for loan and other credit losses | 9,892 | 10,532 | 19,649 | 413 | |||
Depreciation | 663 | 786 | 2,438 | 51 | |||
Amortization | 1,180 | 1,193 | 5,815 | 122 | |||
Deferral of discounts and expenses on borrowings | 1,213 | 1,307 | 607 | 13 | |||
Deferred income tax | (4,339) | (3,245) | (4,348) | (91) | |||
Unrealised loss/ (gain) on trading securities | 136 | (80) | (117) | (2) | |||
Unrealised loss on venture capital investments | | 300 | 1,278 | 27 | |||
Other than temporary decline in value of other securities | 1,835 | 3,480 | 2,098 | 44 | |||
Unrealised loss/ (gain) on derivative transactions | | 190 | (1,009) | (21) | |||
Undistributed equity in earning/ (loss) of affiliates | (735) | (9) | 958 | 20 | |||
Minority interest | (1) | (83) | (24) | (1) | |||
(Gain)/loss on sale of property and equipment, net | 31 | (29) | (16) | | |||
(Gain)/loss on sale of securities available for sale | (121) | (349) | (956) | (20) | |||
Gain on sale of subsidiarys stock | (2,507) | (165) | | | |||
Gain on sale of loans | (705) | (1,979) | (2,795) | (59) | |||
Cumulative effect of accounting changes, net of tax | | (1,265) | | | |||
Change in assets and liabilities | |||||||
Trading account assets | 10,153 | (23,421) | 29,944 | 630 | |||
Interest and fees receivable | (107) | 3,583 | (2,990) | (63) | |||
Other assets | (2,389) | (12,783) | (34,295) | (721) | |||
Trading account liabilities | (4,857) | 4,352 | (13,656) | (287) | |||
Taxes payable | (1,302) | 552 | 5,830 | 122 | |||
Other liabilities | 879 | 14,422 | 4,663 | 98 | |||
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|
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Net cash (used in)/provided by operating activities | 15,549 | (1,164) | 5,091 | 107 | |||
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|
||||
Investing activities | |||||||
Purchase of held to maturity securities | (861) | | | | |||
Purchase of available for sale securities | (5,230) | (68,043) | (717,765) | (15,095) | |||
Purchase of venture capital investments | (4,094) | (504) | (1,268) | (27) | |||
Purchase of non-readily marketable equity securities | | (2,015) | (1,150) | (24) | |||
Proceeds from sale of held to maturity securities | | 640 | | | |||
Proceeds from sale of available for sale securities | 1,756 | 28,512 | 684,769 | 14,401 | |||
Proceeds from sale of venture capital investments | | 53 | 207 | 4 | |||
Proceeds from sale of non-readily marketable equity securities | 148 | 183 | | | |||
Proceeds from sale of subsidiarys stock | 4,075 | 302 | | | |||
Origination of loans, net | (97,868) | 69,439 | (56,243) | (1,183) | |||
Purchase of property and equipment | (3,785) | (1,701) | (6,943) | (146) | |||
Proceeds from sale of property and equipment | 145 | 128 | 504 | 11 | |||
Investments in affiliates | (1,161) | (1,159) | (1,691) | (36) | |||
Payment for business acquisition, net of cash acquired | (1,950) | (143) | 98,487 | 2,071 | |||
|
|
|
|
||||
Net cash (used in)/provided by investing activities | (108,825) | 25,692 | (1,093) | (24) | |||
|
|
|
|
||||
F57 |
consolidated statements of cash flows | ||
(contd.) | (in millions, except share data) |
for the year ended March 31, | 2001 | 2002(1) | 2003 | 2003(1) | |||
Convenience | |||||||
translation | |||||||
into USD | |||||||
(unaudited) | |||||||
Rs. | Rs. | Rs. | USD | ||||
Financing activities | |||||||
Increase in deposits, net | 8,050 | 1,308 | 158,290 | 3,329 | |||
Proceeds/ Repayment from short-term borrowings, net | 21,204 | (28,852) | (30,118) | (633) | |||
Proceeds from other borrowings | | 5,787 | | | |||
Proceeds from issuances of long-term debt | 182,015 | 158,905 | 10,631 | 224 | |||
Repayment of long-term debt | (112,047) | (142,019) | (124,979) | (2,628) | |||
Redemption of redeemable preferred stock | (9,577) | | | | |||
Proceeds from issuance of common stock | 142 | | 13,155 | 277 | |||
Proceeds from issuance of common stock by subsidiary | 465 | 390 | | | |||
Cash dividends paid | (775) | (9,514) | | | |||
|
|
|
|
||||
Net cash provided by/(used in) financing activities | 89,477 | (13,995) | 26,979 | 569 | |||
|
|
|
|
||||
Effect of de-consolidation of subsidiary on | |||||||
cash and cash equivalents | (36,361) | | | | |||
|
|
|
|
||||
Effect of exchange rate on cash and cash equivalents | (14) | (14) | | | |||
|
|
|
|
||||
Net increase/(decrease) in cash and cash equivalents | (40,174) | 10,519 | 30,977 | 652 | |||
Cash and cash equivalents at the beginning of the year | 71,131 | 30,957 | 41,476 | 872 | |||
|
|
|
|
||||
Cash and cash equivalents at the end of the year | 30,957 | 41,476 | 72,453 | 1,524 | |||
|
|
|
|
||||
Supplementary information: | |||||||
Cash paid for: | |||||||
Interest | 57,144 | 66,587 | 86,143 | 1,812 | |||
Taxes | 2,919 | 4,505 | 1,027 | 22 | |||
Non-cash items: | |||||||
Foreclosed assets | 2,024 | 1,188 | 673 | 14 | |||
Conversion of loan to equity shares | 1,982 | 1,586 | 4,495 | 95 | |||
Transfer of securities from held to maturity | |||||||
category to available for sale category | | 866 | | | |||
Change in unrealized gain/(loss) on | |||||||
securities available for sale, net | (1,674) | 3,283 | 5,205 | 109 | |||
Acquisitions | |||||||
Fair value of net assets acquired, excluding | |||||||
cash and cash equivalents | | | (37,948) | 798 | |||
Shares issued | | | 118,965,731 | | |||
Treasury stock | | | 8,204 | 173 |
See accompanying notes to the consolidated financial statements.
(1) Restated for reverse acquisition and adoption of SFAS No. 147
F58
notes to the consolidated financial statements | ||
Continued |
1. | Significant accounting policies |
Overview
ICICI Bank Limited (ICICI Bank) together with its subsidiaries and affiliates (collectively, the Company) is a diversified financial services group providing a variety of banking and financial services including project and corporate finance, working capital finance, venture capital finance, investment banking, treasury products and services, retail banking, broking and insurance. Further, the Company has an interest in the software development and services business. The Company is headquartered in Mumbai, India.
Effective April 1, 2002, ICICI Bank (which for periods prior to April 1, 2002 is referred to as the acquiree) and ICICI Limited (ICICI) consummated a transaction whereby shareholders of ICICI were issued shares of the acquiree in the ratio of 1:2. The transaction has been treated as a reverse acquisition for financial reporting purposes with ICICI (the acquirer) as the accounting acquirer and is further discussed in Note 3.
The consolidated balance sheet as of March 31, 2002, and the consolidated statements of operations, cash flows and stockholders equity and other comprehensive income for the year ended March 31, 2001 and 2002, presented herein, are those of the acquirer, even though the acquiree is the surviving legal entity subsequent to the reverse acquisition. As such, as further described in Note 2, they include the acquirers less than majority ownership interest in the acquiree accounted for by the equity method.
Principles of consolidation
The consolidated financial statements include the accounts of ICICI Bank and all of its subsidiaries, which are more than 50% owned and controlled. All significant inter company accounts and transactions are eliminated on consolidation. The Company accounts for investments in common stock of affiliates by the equity method where its investment in the voting stock gives it the ability to exercise significant influence over the investee.
The consolidation of the Companys majority ownership interest in two insurance companies acquired in each of fiscal.2001 and 2002 has now been deemed inappropriate because of substantive participative rights retained by the minority shareholders. Accordingly, such investees are no longer consolidated but are accounted for by the equity method. Prior period financial statements have been restated with no resultant impact on net income or stockholders equity.
Basis of preparation
The accounting and reporting policies of the Company used in the preparation of these consolidated financial statements reflect general industry practices and conform to generally accepted accounting principles in the United States (US GAAP).
The preparation of consolidated financial statements in conformity with US GAAP requires that management makes estimates and assumptions that affect the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported income and expense for the reporting period. The Company makes estimates for valuation of derivatives and securities, where no ready market exists, determining the level of allowance for loan losses and assessing recoverability of goodwill, intangible assets and deferred tax assets. Management believes that the estimates used in the preparation of the consolidated financial statements are prudent and reasonable. The actual results could differ from these estimates.
Foreign currencies
The consolidated financial statements are reported in Indian rupees (Rs.), the national currency of India. The functional currency of each entity within the Company is its respective local currency.
The assets and liabilities of the Companys foreign operations are translated into Indian rupees at current exchange rates, and revenues and expenses are translated at average exchange rates for the year. Resulting translation adjustments are reflected as a component of accumulated other comprehensive income.
Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.
Solely for the convenience of the readers, the financial statements as of and for the year ended March 31, 2003, have been translated into United States dollar at the noon buying rate in New York City on March.28, 2003, for cable transfers in Indian rupees, as certified for customs purposes by the Federal Reserve of New York of USD.1 = Rs. 47.55. No representation is made that the Indian rupee amounts have been, could have been or could be converted into United States dollars at such a rate or any other certain rate on March 31, 2003,.or at any other certain date.
F59
notes to the consolidated financial statements | ||
Continued |
Revenue recognition
Interest income is accounted on an accrual basis except in respect of impaired loans, where it is recognized on a cash basis. Income from leasing and hire purchase operations is accrued in a manner to provide a fixed rate of return on outstanding investments.
Fees from activities such as investment banking, loan syndication and financial advisory services are accrued based on milestones specified in the customer contracts. Fees for guarantees and letters of credit are amortised over the contracted period of the commitment.
Revenues from software development and services comprise income from time-and-material and fixed-price contracts. Revenue with respect to time-and-material contracts is recognized as related services are performed. Revenue with respect to fixed-price contracts is recognized in accordance with the percentage of completion method of accounting. Provisions for estimated losses on contracts-in-progress are recorded in the period in which such losses become probable based on the current contract estimates.
Cash equivalents
The Company considers all highly liquid investments, which are readily convertible into cash and have contractual maturities of three months or less from the date of purchase, to be cash equivalents. The carrying value of cash equivalents approximates fair value.
Securities and trading activities
The Company classifies investments in debt and readily marketable equity securities, other than investments held by certain venture capital subsidiaries, into two categories based upon managements intention at the time of purchase: trading securities and securities available for sale. Realized gains and losses on the sale of securities are recorded at the time of sale. For computing realized gains and losses on securities, the cost is ascertained using the First-In-First-Out Method.
As more fully explained in Note 6, the Company no longer classifies investments in debt securities as held to maturity, due to sale of certain held to maturity securities during the year ended March 31, 2002.
Trading assets, primarily debt securities and foreign exchange products, are recorded at fair value with realized and unrealized gains and losses included in non-interest income. Interest on trading securities is recorded in interest income. The fair value of trading assets is based upon quoted market prices or, if quoted market prices are not available, estimates using similar securities or pricing models.
Securities not classified as trading securities are classified as available for sale. These include securities used as part of the Companys asset liability management strategy, which may be sold in response to changes in interest rates, prepayment risk, liquidity needs and similar factors. Securities available for sale are recorded at fair value with unrealized gains and losses recorded, net of tax, as a component of accumulated other comprehensive income. Equity securities, which are traded on a securities exchange within six months of the balance sheet date are considered as publicly traded. The last quoted price of such securities is taken as their fair value. Non-readily marketable equity securities for which there is no readily determinable fair value are recorded at cost.
Securities on which there is an unrealized loss that is deemed to be other than temporary are written down to fair value with the loss recorded in non-interest income as a loss on other securities. Other than temporary decline is identified by management based on an evaluation of all significant factors including the length of time and the extent to which the fair value has been less than the cost, the financial condition and prospects of the issuer and the extent and ability of the Company to retain the investment for a period of time sufficient to allow for any probable recovery in fair value.
Securities acquired through conversion of loans in a troubled debt restructuring are recorded at the fair value on the date of conversion and subsequently accounted for as if acquired for cash.
The Companys venture capital subsidiaries carry their investments at fair value, with changes in fair value recognized in gain/loss on venture capital investments. The fair values of publicly traded venture capital investments are generally based upon quoted market prices. In certain situations, including thinly traded securities, large-block holdings, restricted shares or other special situations, the quoted market price is adjusted to produce an estimate of the attainable fair value for the securities. For securities that are not publicly traded, fair value is determined in good faith pursuant to procedures established by the Board of Directors of the venture capital subsidiaries. In determining the fair value of these securities, consideration is given to the financial conditions, operating results and prospects of the underlying companies, and any other factors deemed relevant. Generally, these investments are carried at cost during the first year, unless a significant event occurs that effects the long-term value of the investment. Because
F60
notes to the consolidated financial statements | ||
Continued |
of the inherent uncertainty of the valuations, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed.
Trading liabilities represent borrowings from banks in the inter-bank call money market, borrowings from banks and corporates in the course of trading operations and balances arising from repurchase transactions.
Loans
Loans are reported at the principal amount outstanding, inclusive of interest accrued and due per the contractual terms, except for certain non-readily marketable privately placed debt instruments, which are considered credit substitutes and are, therefore classified as loans but accounted for as debt securities. Loan origination fees (net of loan origination costs) are deferred and recognized as an adjustment to yield over the life of the loan. Interest is accrued on the unpaid principal balance and is included in interest income.
Loans include aggregate rentals on lease financing transactions and residual values, net of security deposits and unearned income. Lease financing transactions substantially represent direct financing leases. Loans also include the aggregate value of purchased securitized receivables, net of unearned income.
The Company identifies a commercial loan as impaired and places it on non-accrual status when it is probable that it will be unable to collect the scheduled payments of principal and interest due under the contractual terms of the loan agreement. A commercial loan is also considered to be impaired and placed on a non-accrual basis if interest or principal is greater than 180 days overdue. Delays or shortfalls in loan payments are evaluated along with other factors to determine if a loan should be classified as impaired. The decision to classify a loan as impaired is also based on an evaluation of the borrowers financial condition, collateral, liquidation value and other factors that affect the borrowers ability to pay.
The Company classifies a loan as a restructured loan where it has made concessionary modifications, that it would not otherwise consider, to the contractual terms of a loan to a borrower experiencing financial difficulties. Such loans are placed on non-accrual status.
Generally, at the time a loan is placed on non-accrual status, interest accrued and uncollected on the loan in the current fiscal year is reversed from income, and interest accrued and uncollected from the prior year is charged off against the allowance for loan losses. Thereafter, interest on non-accrual loans is recognized as interest income only to the extent that cash is received. When borrowers demonstrate over an extended period the ability to repay a loan in accordance with the contractual terms of a loan, which the Company classified as non-accrual, the loan is returned to accrual status. With respect to restructured loans, performance prior to the restructuring or significant events that coincide with the restructuring are evaluated in assessing whether the borrower can meet the rescheduled terms and may result in the loan being returned to accrual status after a performance period.
Consumer loans are generally identified as impaired not later than a predetermined number of days overdue on a contractual basis. The number of days is set at an appropriate level by loan product. The policy for suspending accruals of interest and impairment on consumer loans varies depending on the terms, security and loan loss experience characteristics of each product.
Allowance for loan losses
The allowance for loan losses represents managements estimate of probable losses inherent in the portfolio. Larger balance, non-homogenous exposures representing significant individual credit exposures are evaluated based upon the borrowers overall financial condition, resources and payment record and the realizable value of any collateral. Within the allowance of loan losses, a valuation allowance is maintained for larger-balance, non-homogenous loans that have been individually determined to be impaired. This estimate considers all available evidence including the present value of the expected future cash flows discounted at the loans contractual effective rate and the fair value of collateral.
Each portfolio of smaller-balance, homogenous loans, including consumer mortgage, installment, revolving credit and most other consumer loans, is individually evaluated for impairment. The allowance for loan losses attributed to these loans is established via a process that includes an estimate of probable losses inherent in the portfolio, based upon various statistical analysis. These include migration analysis, in which historical delinquency and credit loss experience is applied to the current ageing of the portfolio, together with an analysis that reflects current trends and conditions.
While determining the adequacy of the allowance for loan losses, management also considers overall portfolio indicators including historical credit losses, delinquent and non-performing loans, and trends in volumes and terms of loans; an evaluation of overall credit quality and the credit process, including lending policies and procedures; consideration of economic, geographical, product, and other environmental factors.
F61
notes to the consolidated financial statements | ||
Continued |
The Company also includes in the allowances, provision for credit losses on its performing portfolio based on the estimated probable losses inherent in the portfolio. The allowances on the performing portfolio are established after considering historical and projected default rates and loss severities, internal risk rating and geographic, industry and other environmental factors; and model imprecision.
The Company evaluates its impaired loan portfolio at the end of every period and loan balances which are deemed irrecoverable are charged off against related allowances for credit losses.
Transfers and servicing of financial assets
In September 2000, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of SFAS No. 125. The provisions of SFAS No. 140 relating to transfers and servicing of financial assets are effective for transactions after March 31, 2001. The Company transfers commercial and consumer loans through securitisation transactions. The transferred loans are de-recognized and gains/losses are recorded only if the transfer qualifies as a sale under SFAS No. 140. Recourse and servicing obligations and put options written are recorded as proceeds of the sale. Retained beneficial interests in the loans and servicing rights are measured by allocating the carrying value of the loans between the assets sold and the retained interest, based on the relative fair value at the date of the securitization. The fair values are determined using either financial models, quoted market prices or sales of similar assets.
Loans held-for-sale
Loans originated for sale are classified as loans held-for-sale and are accounted for at the lower of cost or fair value. Such loans are reported as other assets. Market value of such loans are determined at rates applicable to similar loans.
Derivatives instruments and hedging activities
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Certain Hedging Activities. In June 2000, the FASB issued SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activity, an Amendment of SFAS No. 133. SFAS No. 133 and SFAS No. 138 require that all derivative instruments be recorded on the balance sheet at their respective fair values. SFAS No. 133 and SFAS No. 138 are effective for all fiscal quarters of all fiscal years beginning after June 30, 2000. On April 1, 2001, the Company adopted SFAS No. 133 and SFAS No. 138 on a prospective basis.
Under SFAS No. 133, the Company may designate a derivative as either a hedge of the fair value of a recognized fixed rate asset or liability or an unrecognized firm commitment (fair value hedge), a hedge of a forecasted transaction or the variability of future cash flows of a floating rate asset or liability (cash flow hedge) or a foreign-currency fair value or cash flow hedge (foreign currency hedge). All derivatives are recorded as assets or liabilities on the balance sheet at their respective fair values with unrealized gains and losses recorded either in accumulated other comprehensive income or in the statement of income, depending on the purpose for which the derivative is held. Derivatives that do not meet the criteria for designation as a hedge under SFAS No. 133 at inception, or fail to meet the criteria thereafter, are accounted for in other assets with changes in fair value recorded in the statement of income.
Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge along with the gain or loss on the hedged asset or liability that is attributable to the hedged risk, are recorded in the statement of income as other non-interest income. To the extent of the effectiveness of a hedge, changes in the fair value of a derivative that is designated and qualifies as a cash flow hedge, are recorded in accumulated other comprehensive income, net of tax. For all hedge relationships, ineffectiveness resulting from differences between the changes in fair value or cash flows of the hedged item and changes in the fair value of the derivative are recognized in the statement of income as other non-interest income.
At the inception of a hedge transaction, the Company formally documents the hedge relationship and the risk management objective and strategy for undertaking the hedge. This process includes identification of the hedging instrument, hedged item, risk being hedged and the methodology for measuring effectiveness. In addition, the Company assesses, both at the inception of the hedge and on an ongoing quarterly basis, whether the derivative used in the hedging transaction has been highly effective in offsetting changes in fair value or cash flows of the hedged item, and whether the derivative is expected to continue to be highly effective.
The Company discontinues hedge accounting prospectively when either it is determined that the derivative is no longer highly effective in offsetting changes in the fair value or cash flows of a hedged item; the derivative expires or is sold, terminated or exercised; the derivative is de-designated because it is unlikely that a forecasted transaction will occur; or management determines that designation of the derivative as a hedging instrument is no longer appropriate.
F62
notes to the consolidated financial statements | ||
Continued |
When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flow or forecasted transaction is still expected to occur, gains and losses that were accumulated in other comprehensive income are amortized or accreted into the statement of income. Gains and losses are recognized in the statement of income immediately if the cash flow hedge was discontinued because a forecasted transaction did not occur.
The Company may occasionally enter into a contract (host contract) that contains a derivative that is embedded in the financial instrument. If applicable, an embedded derivative is separated from the host contract and can be designated as a hedge; otherwise, the derivative is recorded as a freestanding derivative.
Prior to the adoption of SFAS No. 133, derivatives used for interest rate risk management were not recorded at fair value. Rather, the net interest settlement on designated derivatives that either effectively altered the interest rate characteristics of assets and liabilities or hedged exposures to risk was treated as an adjustment to the interest income or interest expense of the related assets or liabilities. The effect of adopting SFAS No. 133 at April 1, 2001 did not result in any impact on the statement of operations.
Variable interest entities
In January 2003, the FASB issued FASB Interpretation No. (FIN) 46, Consolidation of Variable Interest Entities. FIN 46 changes the method of determining whether certain entities, including securitization entities, should be included in the Companys consolidated financial statements. An entity is subject to FIN 46 and is called a variable interest entity (VIE) if it has (1) equity that is insufficient to permit the entity to finance its activities without additional subordinated financial support from other parties, (2) equity investors that cannot make significant decisions about the entitys operations, or (3) equity that does not absorb the expected losses or receive the expected returns of the entity. A VIE is consolidated by its primary beneficiary, which is the party involved with the VIE that has a majority of the expected losses or a majority of the expected residual returns or both. The provisions of FIN 46 are to be applied immediately to VIEs created after January 31, 2003, and to VIEs in which an enterprise obtains an interest after that date. For VIEs in which an enterprise holds a variable interest that it acquired before February 1, 2003, FIN 46 applies in the first fiscal period beginning after June 15, 2003. For any VIEs that must be consolidated under FIN 46 that were created before February 1, 2003, the assets, liabilities and noncontrolling interest of the VIE would be initially measured at their carrying amounts with any difference between the net amount added to the balance sheet and any previously unrecognized interest being recognized as the cumulative effect of an accounting change. If determining the carrying amounts is not practicable, fair value at the date FIN 46 first applies may be used to measure the assets, liabilities and noncontrolling interest of the VIE. FIN 46 also mandates new disclosures about VIEs, some of which are required to be presented in financial statements issued after January 31, 2003.
There are no VIEs that require disclosure under FIN 46. Further, there are no VIEs created after January 31, 2003 that are required to be consolidated under FIN 46.
Guarantees and indemnifications
In November 2002, the FASB issued FIN 45, Guarantors Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Others, which requires that, for guarantees within the scope of FIN 45 issued or amended after December.31,.2002, a liability for the fair value of the obligation undertaken in issuing the guarantee be recognized. FIN 45 also requires additional disclosures in financial statements for periods ending after December 15, 2002. Accordingly, the required disclosures are included in Note 29 to the consolidated financial statements of the Company. The recognition and measurement provisions of FIN 45 were adopted effective January 1, 2003 and did not have a material impact on the consolidated financial statements of the Company.
Property and equipment
Property and equipment are stated at cost, less accumulated depreciation. The cost of additions, capital improvements and interest during the construction period are capitalized, while maintenance and repairs are charged to expense when incurred. Property and equipment held to be disposed off are reported as assets held for sale at the lower of carrying amount or fair value, less cost to sell.
Depreciation is provided over the estimated useful lives of the assets or lease term whichever is shorter.
Property under construction and advances paid towards acquisition of property and equipment are disclosed as capital work in progress. The interest costs incurred for funding an asset during its construction period are capitalized based on the average outstanding investment in the asset and the average cost of funds. The capitalized interest cost is included in the cost of the relevant asset and is depreciated over the estimated useful life of the asset.
F63
notes to the consolidated financial statements | ||
Continued |
Capitalized costs of computer software obtained for internal use represent costs incurred to purchase computer software from third parties and direct costs of materials and services incurred on internally developed software. The capitalized costs are amortized on a straight-line basis over the estimated useful life of the software.
Impairment of long-lived assets
Long-lived assets and certain intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Business combinations
In June 2001, the FASB issued SFAS No. 141, Business Combinations, which requires that the purchase method of accounting be used for all business combinations initiated after June.30,.2001. SFAS No. 141 also specifies the criteria that intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill, noting that any purchase price allocated to an assembled workforce may not be accounted separately.
As of April 1, 2001, the Company had an unamortized deferred credit of Rs. 1,265 million related to an excess of the fair value of assets acquired over the cost of an acquisition. As required by SFAS No. 141, in conjunction with the early adoption of SFAS No. 142, the unamortized deferred credit as of April 1, 2001, has been written-off and recognized as the effect of a change in accounting principle.
Goodwill and intangible assets
On April 1, 2001, the Company early-adopted SFAS No. 142, Goodwill and Other Intangible Assets. As required by SFAS No. 142, the Company reclassified existing goodwill and intangible assets to conform with the new criteria in SFAS No. 141 for recognition apart from goodwill. This resulted in reclassification of previously recorded intangible assets of Rs. 115.million as goodwill and a reclassification of previously recorded goodwill of Rs. 373.million as a separate unidentifiable intangible asset.
As required by SFAS No. 142, the Company identified its reporting units and assigned assets and liabilities, including goodwill to the reporting units on the date of adoption. Subsequently, the Company compared the fair value of each reporting unit to its carrying value, to determine whether goodwill is impaired at the date of adoption. This transitional impairment evaluation did not indicate an impairment loss.
Subsequent to the adoption of SFAS No. 142, the Company does not amortize goodwill but instead tests goodwill for impairment at least annually. The annual impairment test under SFAS No. 142 did not indicate an impairment loss.
Net income and basic and diluted earnings per share excluding the impact of amortization of goodwill, for all periods presented would have been as follows:
Year ended March 31, | |||||||
|
|||||||
2001(1) | 2002(2) | 2003 | |||||
Net income / (loss) (in Rs. millions) | |||||||
As reported | 6,630 | 1,547 | (7,983) | ||||
Add: Amortization of goodwill | 145 | | | ||||
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|
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Pro forma net income / (loss) | 6,775 | 1,547 | (7,983) | ||||
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Earnings / (loss) per share: Basic (in Rs.) | |||||||
As reported | 16.88 | 3.94 | (14.18) | ||||
Add: Amortization of goodwill | 0.37 | | | ||||
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Pro forma | 17.25 | 3.94 | (14.18) | ||||
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Earnings / (loss) per share: Diluted (in Rs.) | |||||||
As reported | 16.81 | 3.94 | (14.18) | ||||
Add: Amortization of goodwill | 0.37 | | | ||||
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|
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Pro forma | 17.18 | 3.94 | (14.18) | ||||
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|
(1) Restated for reverse acquisition.
(2) Restated for reverse acquisition and adoption of SFAS No. 147
F64
notes to the consolidated financial statements | ||
Continued |
Intangible assets are amortized over their estimated useful lives in proportion to the economic benefits consumed in each period.
The useful life of other intangible assets is as follow:
No. of years | |||
|
|||
Marketing-related intangibles | 5 | ||
Customer-related intangibles | 3-10 | ||
In October 2002, the FASB issued SFAS No. 147, Acquisitions of Certain Financial Institutions. SFAS No. 147 requires that business combinations involving financial institutions within its scope, be accounted for under SFAS No. 141. Previously, generally accepted accounting principles for acquisitions of financial institutions provided for recognition of the excess of the fair value of liabilities assumed over the fair value of tangible and identifiable intangible assets acquired as an unidentifiable intangible asset. Under SFAS No. 147, such excess is accounted for as goodwill. Adoption of SFAS No. 147 resulted in a reclassification of previously recorded unidentifiable intangible asset of Rs..373.million to goodwill with effect from April.1,.2001. Further, as required by SFAS No. 147, the Company reversed the amortization expense of Rs. 290 million and the related income tax benefit of Rs. 103 million, by restating the results for the year ended March 31, 2002.
Income taxes
The Company accounts for income taxes under the provisions of SFAS No. 109, Accounting for Income Taxes. SFAS No. 109 requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the amount for financial reporting and tax basis of assets and liabilities, using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of income in the period of enactment. Deferred tax assets are recognized subject to a valuation allowance based upon managements judgement as to whether realization is considered more likely than not.
Issue of shares by subsidiary/affiliate
An issuance of shares by a subsidiary/affiliate to third parties reduces the proportionate ownership interest of the Company in the investee. A change in the carrying value of the investment in a subsidiary/affiliate due to such direct sale of unissued shares by the investee is accounted for as a capital transaction, and is recognized in stockholders equity when the transaction occurs.
Trading assets and liabilities
Trading assets and liabilities include securities and derivatives and are recorded either at market value or where, market prices are not readily available, fair value, which is determined under an alternative approach. The determination of market or fair value considers various factors including stock exchange quotations, time value and volatility factors underlying derivatives, counterparty credit quality and derivative transaction cash maintenance during that period. Derivatives in a net receivable position are reported as trading assets. Similarly derivatives in a net payable position are reported as trading liabilities.
Employee benefit plans
The Company provides a variety of benefit plans to eligible employees. Contributions to defined contribution plans are charged to income in the period in which they accrue. Current service costs for defined benefit plans are accrued in the period to which they relate. Prior service costs, if any, resulting from amendments to the plans are recognized and amortized over the remaining period of service of the employees.
Stock-based compensation
The Company uses the intrinsic value based method of Accounting Principle Board (APB) Opinion No..25, Accounting for Stock Issued to Employees, to account for its employee stock-based compensation plans. Compensation cost for fixed and variable stock based awards is measured by the excess, if any, of the fair market price of the underlying stock over the exercise price. Compensation cost for fixed awards is measured at the grant date, while compensation cost for variable awards is estimated until the number of shares an individual is entitled to receive and the exercise price are known (measurement date).
In December 2002, FASB issued SFAS No. 148 Accounting for Stock Based Compensation-transition and disclosures, an amendment of FASB No. 123. SFAS No. 148 amends SFAS No. 123, Accounting for Stock Based Compensation,
F65
notes to the consolidated financial statements | ||
Continued |
to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock based employee compensation and the effect of the method used on reported results. The disclosure provisions of SFAS No. 148 are applicable for fiscal periods beginning after December 15, 2002. Had compensation cost been determined in a manner consistent with the fair value approach described in SFAS No. 123, the Companys net income and earnings per share as reported would have changed to the amounts indicated below:
Year ended March 31, | |||||||
|
|||||||
2001(1) | 2002(2) | 2003 | |||||
Net income/(loss) (in Rs. millions) | Rs. | Rs. | Rs. | ||||
As reported | 6,630 | 1,547 | (7,983) | ||||
Add: Stock based employee compensation | |||||||
expense included in reported net income, | |||||||
net of tax effects | 37 | 26 | 7 | ||||
Less: Stock based employee compensation | |||||||
expense determined under fair value based | |||||||
method, net of tax effects | (128) | (58) | (358) | ||||
|
|
|
|||||
Pro forma net income / (loss) | 6,539 | 1,515 | (8,334) | ||||
|
|
|
|||||
Earnings / (loss) per share: Basic (in Rs.) | |||||||
As reported | 16.88 | 3.94 | (14.18) | ||||
Pro forma | 16.65 | 3.86 | (14.80) | ||||
Earnings / (loss) per share: Diluted (in Rs.) | |||||||
As reported | 16.81 | 3.94 | (14.18) | ||||
Pro forma | 16.59 | 3.86 | (14.80) | ||||
(1) Restated for reverse acquisition.
(2) Restated for reverse acquisition and adoption of SFAS No. 147.
The fair value of the options is estimated on the date of the grant using the Black-Scholes options pricing model, with the following assumptions:
2001 | 2002 | 2003 | |||||
|
|
|
|||||
Dividend yield | 5.9% | 5.5% | 1.7% | ||||
Expected life | 10 years | 10 years | 10 years | ||||
Risk free interest rate | 10.4% | 7.4% | 8.9% | ||||
Volatility | 30% | 55% | 54% | ||||
Dividends
Dividends on common stock and the related dividend tax are recognized on approval by the Board of Directors.
Earnings / (Loss) per share
Basic earnings / (loss) per share is computed by dividing net income / (loss) by the weighted average number of common stock outstanding during the period. Diluted earnings / (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted.
Reclassifications
Certain other reclassifications have been made in the financial statements of prior years to conform to classifications used in the current year. These changes had no impact on previously reported results of operations or stockholders equity.
F66
notes to the consolidated financial statements | ||
Continued |
2. | Dilution of ownership interest in the acquiree |
Until March 2000, the Company held a 74.2% controlling interest in the acquiree. In March.2000, the acquiree issued 15.9 million American Depository Shares (ADS) to third parties. As a result of the issuance, the proportionate ownership interest of the Company in the acquiree reduced from 74.2% to 62.2%.
The offering price per share exceeded the Companys carrying amount per share in the acquiree, resulting in an increase in the carrying value of the Companys investment in the acquiree by Rs. 4,114.million. This change in the carrying value was recognized in the statement of stockholders equity as a capital transaction.
In March.2001, the acquiree acquired Bank of Madura Limited, a banking company, through issuance of stock. The acquisition was recorded by the purchase method. As a result of the issuance, the ownership interest of the Company in the acquiree was reduced from 62.2% to 55.6%. The issuance price exceeded the Companys carrying amount per share in the acquiree resulting in an increase in the carrying value of the Companys investment in the acquiree by Rs. 1,242.million. This change in the carrying value, net of the related tax effect of Rs. 140.million, has been recognized in the statement of stockholders equity as a capital transaction.
Subsequently, during March.2001, the Company sold a 9.2% interest in the acquiree to institutional investors for a consideration of Rs. 3,499 million. The gain on sale of Rs. 1,996.million is included in the statement of income. This reduced the Companys interest in the acquiree to 46.4%.
In view of the Companys ownership interest in the acquiree having been reduced to below majority level, the Company determined that consolidation of the acquiree was not appropriate and accounted for its ownership interest under the equity method beginning April 1, 2000, the beginning of the fiscal year in which the ownership interest was less than majority.
During the year ended March 31, 2002, the Company further reduced its ownership interest to 46%. This resulted in a gain of Rs. 57 million, which is included in the statement of income.
3. | Acquisitions |
Reverse acquisition
Effective April 1, 2002, the acquiree and the Company consummated a transaction whereby shareholders of the Company were issued shares of the acquiree in the ratio of 1:2. The transaction has been treated as a reverse acquisition, with the acquiree as the surviving legal entity but the Company as the accounting acquirer.
On the acquisition date, the Company held a 46% ownership interest in the acquiree. Accordingly, the acquisition of the balance 54% ownership interest has been accounted for as a step-acquisition. The operations of the acquiree have been consolidated in the Companys financial statements effective April 1, 2002.
As a result of the acquisition, the Company became a universal banking company offering the entire spectrum of financial services. The acquisition is expected to reduce the cost of funds for the Company through access to the extensive branch network and deposit base of the acquiree. Further, the acquisition is expected to benefit the Company through greater opportunities to generate fee-based income, participation in the payment networks and ability to provide transaction banking services. Subsequent to the acquisition, the operations of the Company will be governed by the Banking Regulation Act, 1949.
The components of the purchase price and allocation are as follows:
(Rs. in millions) | |||
Fair value of common stock issued on reverse acquisition | 12,028 | ||
Direct acquisition costs | 1,627 | ||
Fair value of stock options assumed on reverse acquisition | 409 | ||
|
|||
Total | 14,064 | ||
|
|||
The fair value of common stock issued on reverse acquisition was based on the average prices of the equity shares for the two trading days before and after October 25, 2002, the date, the terms of the acquisition were agreed to and announced.
The total purchase price has been allocated to the acquired assets and assumed liabilities as of the date of acquisition based on managements estimates and independent appraisals as follows:
F67
notes to the consolidated financial statements | ||
Continued |
(Rs. in millions) | |||
Assets | |||
Cash and cash equivalents | 53,183 | ||
Investments | 113,725 | ||
Loans | 39,102 | ||
Property and equipment | 2,609 | ||
Intangible assets | 5,470 | ||
Other assets | 11,093 | ||
|
|||
Total assets acquired | 225,182 | ||
|
|||
Liabilities | |||
Deposits | 176,018 | ||
Borrowings | 16,174 | ||
Other liabilities | 19,745 | ||
|
|||
Total liabilities assumed | 211,937 | ||
|
|||
Net tangible and intangible assets | 13,245 | ||
Goodwill | 819 | ||
|
|||
Total | 14,064 | ||
|
|||
The goodwill recognized above is not deductible for tax purposes.
The intangible assets relate to customer and deposit relationships and would be amortized over a period of 10 years. Consequent to the acquisition, the 46% ownership interest held by the Company in the acquiree was recorded as treasury stock at its historical carrying value. In September 2002, the treasury stock was sold to institutional investors for Rs. 13,154 million. The difference between the sale proceeds and the carrying value, net of related tax effects of Rs. 599 million, was recognized in the statement of stockholders equity as a capital transaction.
Step-acquisition of Tricolour Infotech Services Limited
In September 2002, the Company acquired the remaining 50% ownership interest in Tricolor Infotech International Inc., Mauritius for a cash consideration of Rs. 110.million. The total purchase price has been allocated to the acquired assets and assumed liabilities based on management estimates as follows:
(Rs. in millions) | |||
Net tangible assets | 16 | ||
Marketing-related intangibles | 76 | ||
Goodwill | 18 | ||
|
|||
Total | 110 | ||
|
|||
The goodwill recognized above is not deductible for tax purposes.
Acquisition of Customer Asset India Private Limited
In April 2002, the Company acquired a 100% ownership interest in Customer Asset India Private Limited, a company engaged in the business of providing contact center services through its offshore contact center at Bangalore, for a cash consideration aggregating Rs. 959.million. The acquisition would enable the Company to enter the IT enabled services market. The total purchase price has been allocated to the acquired assets and assumed liabilities based on management estimates as follows:
(Rs. in millions) | |||
Net tangible assets | 177 | ||
Customer-related intangibles | 165 | ||
Goodwill | 617 | ||
|
|||
Total | 959 | ||
|
|||
The goodwill recognized above is not deductible for tax purposes.
F68
notes to the consolidated financial statements | ||
Continued |
Pro forma information (unaudited)
Unaudited pro forma results of the operations for the years ended March 31, 2002 and 2003 as if the acquisitions had been made at the beginning of the periods is given below. The pro forma results include estimates and assumptions which management believes are reasonable. However, these do not reflect any benefits from economies or synergies, which might be achieved from combining the operations. The pro forma consolidated results of operations include adjustments to give effect to amortization of acquired intangible assets other than goodwill. The pro forma information is not necessarily indicative of the operating results that would have occurred had the purchase been made at the beginning of the periods presented.
Year endedMarch 31, | |||||
|
|
||||
2002 | 2003 | ||||
Revenues (Rs. in millions) | 87,274 | 111,421 | |||
Net income / (loss) (Rs. in millions) | 1,231 | (8,017) | |||
EPS (Basic and Diluted) (in Rs.) | 3.13 | (14.24) | |||
4. | Sale of stock of ICICI Infotech Services Limited |
During the year ended March.31,.2001, the Company diluted its interest in ICICI Infotech Services Limited to 92% through sale of an 8% interest to a strategic investor for a consideration of Rs. 576.million. The gain on sale of Rs..511.million is included in the statement of operations.
5. | Cash and cash equivalents |
Cash and cash equivalents as of March 31, 2003, includes deposits with Reserve Bank of India of Rs. 45,506 million (2002: Nil) (including Rs. 39,805 million (2002: Nil) in accordance with the guidelines governing minimum cash reserve requirements) and interest-bearing deposits with other banks of Rs. 6,919 million (2002: Rs. 35,508.million). The balance maintained with the Reserve Bank of India towards cash reserve requirements are subject to withdrawal and usage restrictions.
6. | Trading assets |
A listing of the trading assets is set out below:
(Rs. in millions) | |||||
Year ended March 31, | |||||
|
|
||||
2002 | 2003 | ||||
Government of India securities | 15,602 | 26,658 | |||
Securities purchased under agreements to resell | 21,399 | 5,399 | |||
Corporate debt securities | 4,627 | 6,704 | |||
Equity securities | 742 | 187 | |||
Fair value of derivative and foreign exchange contracts | 6 | 686 | |||
|
|
||||
Total | 42,376 | 39,634 | |||
|
|
||||
As of March 31, 2003, trading assets include Government of India (GOI) securities amounting to Rs. 8,050.million (2002: Rs. 11,866.million), which are pledged for the purpose of collateralizing short-term borrowings.
F69
notes to the consolidated financial statements | ||
Continued |
7. | Securities |
The portfolio of securities is set out below:
(Rs. in millions) | |||||||||||||||||
As of March 31, 2002 | As of March 31, 2003 | ||||||||||||||||
|
|||||||||||||||||
Amortized | Gross | Gross | Fair | Amortized | Gross | Gross | Fair | ||||||||||
cost | unrealized | unrealized | value | cost | unrealized | unrealized | value | ||||||||||
gain | loss | gain | loss | ||||||||||||||
Available for sale | |||||||||||||||||
Corporate debt securities | 4,446 | 502 | (513) | 4,435 | 10,636 | 389 | (79) | 10,946 | |||||||||
GOI securities | 26,662 | 438 | | 27,100 | 240,187 | 4,403 | (459) | 244,131 | |||||||||
|
|
|
|
|
|
|
|
||||||||||
Total debt securities | 31,108 | 940 | (513) | 31,535 | 250,823 | 4,792 | (538) | 255,077 | |||||||||
Equity securities | 19,181 | 365 | (3,223) | 16,322 | 13,609 | 745 | (1,932) | 12,422 | |||||||||
|
|
|
|
|
|
|
|
||||||||||
Total securities | |||||||||||||||||
available for sale | 50,289 | 1,305 | (3,736) | 47,857 | 264,432 | 5,537 | (2,470) | 267,499 | |||||||||
|
|
|
|
|
|
|
|
||||||||||
Non-readily marketable | |||||||||||||||||
equity securities(1) | 8,268 | 9,418 | |||||||||||||||
|
|
||||||||||||||||
Venture capital investments(2) | 3,921 | 3,704 | |||||||||||||||
|
|
||||||||||||||||
(1) Primarily represents securities acquired as a part of project financing activities or conversion of loans in debt restructurings.
(2) Represents venture capital investments held by venture capital subsidiaries of the Company.
During the year ended March 31, 2003, as part of its ongoing evaluation of its securities portfolio, the Company recorded an impairment charge of Rs..2,098.million (2002: Rs..3,480.million, 2001: Rs..1,835.million) for other than temporary decline in value of available for sale and non-readily marketable equity securities.
Privately placed corporate debt securities reported as loans (credit substitutes).
The portfolio of credit substitutes is set out below:
(Rs. in millions) | |||||||||||||||||
As of March 31, 2002 | As of March 31, 2003 | ||||||||||||||||
|
|
||||||||||||||||
Amortized | Gross | Gross | Fair | Amortized | Gross | Gross | Fair | ||||||||||
cost | unrealized | unrealized | value | cost unrealized | unrealized | value | |||||||||||
gain | loss | gain | loss | ||||||||||||||
Available for sale | 59,707 | 1,077 | (502) | 60,282 | 61,295 | 2,539 | (1,118) | 62,716 | |||||||||
During the year ended March 31, 2002, the Company sold debt securities classified as held to maturity. The debt securities were sold for Rs..640 million resulting in a realized gain of Rs..102 million. As the securities were sold for reasons other than those specified in SFAS No. 115, all remaining held to maturity securities were reclassified as available for sale. Subsequent to the sale, the Company no longer classifies debt securities as held to maturity.
Income from securities available for sale
A listing of income from securities available for sale is set out below:
(Rs. in millions) | |||||||
Year ended March 31, | |||||||
|
|||||||
2001 | 2002 | 2003 | |||||
Interest | 123 | 1,027 | 16,633 | ||||
Dividends | 345 | 267 | 389 | ||||
|
|
|
|||||
Total | 468 | 1,294 | 17,022 | ||||
|
|
|
|||||
Gross realized gain | 474 | 1,238 | 6,845 | ||||
Gross realized loss | (348) | (7) | (5,022) | ||||
|
|
|
|||||
Total | 126 | 1,231 | 1,823 | ||||
|
|
|
|||||
F70
notes to the consolidated financial statements | ||
Continued |
Income from credit substitutes available for sale | |||||
A listing of income from credit substitutes available for sale is set out below: | |||||
(Rs. in millions) | |||||
Year ended March 31, | |||||
|
|||||
2002 | 2003 | ||||
Interest | 2,872 | 8,406 | |||
Dividends | 45 | 381 | |||
|
|
||||
Total | 2,917 | 8,787 | |||
|
|
||||
Gross realized gain | 282 | 1,200 | |||
Gross realized loss | | (75) | |||
|
|
||||
Total | 282 | 1,125 | |||
|
|
||||
Maturity profile of debt securities | |||||
A listing of each category of available for sale debt securities as of March.31, 2003, by maturity is set out below: |
(Rs. in millions) | |||||
|
|||||
Available for sale | |||||
|
|||||
Amortized Cost | Fair value | ||||
Corporate debt securities | |||||
Less than one year | 285 | 267 | |||
One to five years | 8,436 | 8,719 | |||
Five to ten years | 1,862 | 1,900 | |||
Greater than ten years | 53 | 60 | |||
|
|
||||
Total Corporate debt securities | 10,636 | 10,946 | |||
|
|
||||
GOI securities | |||||
Less than one year | 76,238 | 76,216 | |||
One to five years | 54,976 | 55,922 | |||
Five to ten years | 54,170 | 54,614 | |||
Greater than ten years | 54,803 | 57,379 | |||
|
|
||||
Total GOI securities | 240,187 | 244,131 | |||
|
|
||||
Total debt securities | 250,893 | 255,077 | |||
|
|
||||
Credit substitutes | |||||
Less than one year | 14,584 | 14,618 | |||
One to five years | 32,984 | 34,683 | |||
Five to ten years | 12,760 | 12,448 | |||
Greater than ten years | 967 | 967 | |||
|
|
||||
Total credit substitutes | 61,295 | 62,716 | |||
|
|
||||
8. | Repurchase transactions | ||||
The Company has undertaken repurchase and reverse repurchase transactions in GOI securities. The average level of repurchase transactions outstanding during the year ended March 31, 2003, was Rs. 7002.million (2002: Rs. 1,743.million). The average level of reverse repurchase transactions outstanding during the year ended March 31, 2003, was Rs. 4,483.million (2002:.Rs. 1,347.million). As of March 31, 2003, outstanding repurchase and reverse repurchase transactions were Rs. 3,000 million (2002: Rs. 595 million) and Rs. 5,399 million (2002: Rs. 21,399.million) respectively. |
F71
notes to the consolidated financial statements | ||
Continued |
8. | Investments in affiliates |
The acquiree
For the year ended March 31, 2002, the Company accounted for its 46% (2001: 46.4%) interest in the acquiree using the equity method. The carrying value of the investment in the acquiree as of March 31, 2002, was Rs. 8,204 million (2001: Rs. 7,562 million). The Companys equity in the income of the acquiree for the year ended March 31, 2002 was Rs. 929 million (2001:.Rs..811 million). During the year ended March 31, 2002, the Company received dividends of Rs. 403 million (2001: Rs. 184 million) from the acquiree.
The summarized balance sheets and statements of income of the acquiree are set out below:
(Rs. in millions) | |||||
Balance sheet | As of March 31, | ||||
|
|||||
2001 | 2002 | ||||
Cash and cash equivalents | 47,306 | 89,371 | |||
Trading assets | 18,725 | 26,075 | |||
Securities | 35,731 | 180,052 | |||
Loans | 93,030 | 72,474 | |||
Other assets | 25,746 | 36,833 | |||
|
|
||||
Total assets | 220,538 | 404,805 | |||
|
|
||||
Deposits | 164,254 | 325,221 | |||
Trading liabilities | 5,958 | 1,237 | |||
Long-term debt | 2,421 | 5,740 | |||
Other liabilities | 31,598 | 54,457 | |||
Stockholders equity | 16,307 | 18,150 | |||
|
|
||||
Total liabilities and stockholders equity | 220,538 | 404,805 | |||
|
|
||||
(Rs. in millions) | |||||
Statement of income | Year ended March 31, | ||||
|
|
||||
2001 | 2002 | ||||
Interest income | 12,406 | 20,837 | |||
Interest expense | (8,408) | (15,116) | |||
|
|
||||
Net interest income | 3,998 | 5,721 | |||
Provision for loan losses | (1,082) | (1,722) | |||
Non-interest income | 1,754 | 5,213 | |||
Non-interest expense | (3,104) | (6,260) | |||
Income taxes | (258) | (931) | |||
Cumulative effect of accounting change | | 16 | |||
|
|
||||
Net income | 1,308 | 2,037 | |||
|
|
Insurance companies
The Company accounts for its 74% ownership interest in ICICI Prudential Life Insurance Limited (Prulife) and ICICI Lombard General Insurance Company Limited (Lombard) by the equity method of accounting because of substantive participative rights held by the minority shareholders.
The carrying value of the investment in these companies as of March 31, 2003, was Rs. 2,230.million (2002: Rs. 1,496 million). The Companys equity in the loss of these affiliates for the year ended March 31, 2003 was Rs. 971 million (2002: Rs. 681 million, 2001:.Rs. 118.million).
F72
notes to the consolidated financial statements | ||
Continued |
The summarized balance-sheets and statements of operations of these entities as of and for the year ended March 31, 2002 is set out below:
(Rs. in millions) | |||||
Balance sheet | As of March 31, 2002 | ||||
|
|
||||
Prulife | Lombard | ||||
Cash and cash equivalents | 108 | 186 | |||
Securities | 1,924 | 1,088 | |||
Other assets | 757 | 296 | |||
|
|
||||
Total assets | 2,789 | 1,570 | |||
|
|
||||
Liabilities | 1,776 | 561 | |||
Stockholders equity | 1,013 | 1,009 | |||
|
|
||||
Total liabilities and stockholders equity | 2,789 | 1,570 | |||
|
|
||||
(Rs. in millions) | |||||
Statement of income | Year ended March 31, 2002 | ||||
|
|
||||
Prulife | Lombard | ||||
Interest income | 124 | 56 | |||
Interest expense | | | |||
|
|
||||
Net interest income | 124 | 56 | |||
Non-interest income | 1,291 | 55 | |||
Non-interest expense | (2,238) | (227) | |||
Income tax (expense)/benefit | (11) | 30 | |||
|
|
||||
Net income/(loss) | (834) | ( 86) | |||
|
|
Others
The other affiliates of the Company are Prudential ICICI Asset Management Company Limited (Pru-ICICI), Prudential ICICI Trust Limited (Pru-Trust), TCW/ICICI Investment Partners LLC (TCW) and Semantik Solutions Gmbh, Germany. The carrying value of the investment in such affiliates as of March 31, 2003, was Rs. 385.million (2002:.Rs. 386.million). The Companys equity in the income of such affiliates for the year ended March 31, 2003, was Rs. 13 million (2002:.Rs. 46 million, 2001:.Rs. 42 million).
10. | Loans |
A listing of loans by category is set out below:
(Rs. in millions) | |||||
Year ended March 31, | |||||
|
|
||||
2002 | 2003 | ||||
Project and corporate finance (1) (2) | 416,386 | 387,870 | |||
Working capital finance (including working capital term loans) | 42,225 | 74,422 | |||
Lease financing | 49,865 | 26,927 | |||
Consumer loans and credit card receivables | 73,013 | 188,286 | |||
Other | 10,346 | 18,959 | |||
|
|
||||
Gross loans | 591,835 | 696,464 | |||
Unearned income | (20,013) | (8,902) | |||
Security deposits | (11,574) | (2,922) | |||
|
|
||||
Loans, net of unearned income and security deposits . | 560,248 | 684,640 | |||
Allowances for loan losses | (36,647) | (54,219) | |||
|
|
||||
Loans, net | 523,601 | 630,421 | |||
|
|
||||
(1) | Non-readily marketable privately placed debt instruments are classified as loans to reflect the substance of such transactions as substitutes for direct lending (credit substitutes). | |
(2) | Includes Rs. 62,716 million (2002: Rs. 60,282 million) of credit substitutes classified as loans. |
F73
notes to the consolidated financial statements | ||
Continued |
Project and corporate finance loans are generally secured by property, plant and equipment and other tangible assets. Generally, the working capital loans are secured by a first lien on current assets, principally comprising inventory and receivables. Additionally, in certain cases the Company may obtain additional security for working capital loans through a first or second lien on property and equipment, pledge of financial assets like marketable securities and corporate/personal guarantees.
Lease financing
Contractual maturities of the Companys investment in lease financing and its components, which are included in loans are set out below:
(Rs. in millions) | |||
As of March 31, 2003 | |||
|
|||
Gross finance receivables for the year ending March.31, | |||
2004 | 5,900 | ||
2005 | 4,159 | ||
2006 | 3,531 | ||
2007 | 2,925 | ||
2008 | 2,793 | ||
Thereafter | 7,619 | ||
|
|||
26,927 | |||
Unearned income | (6,213) | ||
Security deposits | (2,852) | ||
|
|||
Investment in lease financing | 17,862 | ||
|
|||
Maturity profile of loans
A maturity profile of gross loans, other than investment in lease financing is set out below:
(Rs. in millions) | |||||
As of March 31, | |||||
2002 | 2003 | ||||
Less than one year | 143,309 | 147,707 | |||
One to five years | 237,025 | 328,692 | |||
Greater than five years | 161,636 | 193,138 | |||
Total | 541,970 | 669,537 | |||
Interest and fees on loans
A listing of interest and fees on loans (net of unearned income) is set out below:
(Rs. in millions) | |||||||
|
|||||||
As of March 31, | |||||||
|
|||||||
2001 | 2002 | 2003 | |||||
Project and corporate finance | 60,900 | 56,032 | 45,307 | ||||
Working capital finance (including working capital term loans) | 5,892 | 6,418 | 8,241 | ||||
Lease financing | 4,948 | 4,977 | 2,484 | ||||
Consumer loans and credit card receivables | 2,088 | 6,593 | 15,372 | ||||
Other | 1,444 | 1,217 | 3,676 | ||||
|
|
|
|||||
Total | 75,272 | 75,237 | 75,080 | ||||
|
|
|
|||||
F74
notes to the consolidated financial statements | ||
Continued |
Restructured loans
The Company classifies a loan as a restructured loan where it has made concessionary modifications, that it would not otherwise consider, to the contractual terms of a loan to a borrower experiencing financial difficulties. As of March 31, 2003, the Company had committed to lend Rs. 2,822 million (2002: Rs. 18,616 million), to borrowers who are parties to troubled debt restructurings.
Impaired loans, including restructured loans
A listing of restructured loans is set out below:
(Rs. in millions) | |||||
As of March 31, | |||||
|
|
||||
2002 | 2003 | ||||
Project and corporate finance | 84,048 | 135,421 | |||
Working capital finance (including working capital term loans) | 5,283 | 11,084 | |||
Other | 5,757 | 886 | |||
|
|
||||
Restructured loans | 95,088 | 147,391 | |||
Allowance for loan losses | (17,722) | (24,732) | |||
|
|
||||
Restructured loans, net | 77,366 | 122,659 | |||
|
|
||||
Restructured loans: | |||||
With a valuation allowance | 95,088 | 147,391 | |||
Without a valuation allowance | | | |||
|
|
||||
Restructured loans | 95,088 | 147,391 | |||
|
|
||||
A listing of other impaired loans is set out below:
(Rs. in millions) | |||||
As of March 31, | |||||
|
|||||
2002 | 2003 | ||||
Project and corporate finance | 48,093 | 67,906 | |||
Working capital finance (including working capital term loans) | 1,699 | 11,907 | |||
Lease financing | 731 | 1,550 | |||
Consumer loans and credit card receivables | 190 | 1,752 | |||
Other | 41 | 41 | |||
|
|
||||
Other impaired loans | 50,754 | 83,156 | |||
Allowance for loan losses | (17,567) | (27,837) | |||
|
|||||
Other impaired loans, net | 33,187 | 55,319 | |||
|
|
||||
Other impaired loans: | |||||
With a valuation allowance | 50,754 | 83,087 | |||
Without a valuation allowance | | 69 | |||
|
|
||||
Other impaired loans | 50,754 | 83,156 | |||
|
|
||||
During the year ended March 31, 2003, interest income of Rs. 2,358 million (2002:Rs. 3,257 million, 2001: Rs. 1,989 million) was recognized on impaired loans on a cash basis. Gross impaired loans (including restructured loans) averaged Rs. 188,195 million during the year ended March 31, 2003 (2002: Rs. 115,543 million).
Concentration of credit risk
Concentration of credit risk exists when changes in economic, industry or geographic factors similarly affect groups of counterparties whose aggregate credit exposure is material in relation to Companys total credit exposure. The Companys portfolio of financial instruments is broadly diversified along industry, product and geographic lines within India.
F75
notes to the consolidated financial statements | ||
Continued |
11. | Allowance for loan losses |
Changes in the allowance for loan losses
Movements in the allowance for loan losses are set out below:
(Rs. in millions) | |||||||
|
|||||||
As of March 31, | |||||||
|
|||||||
2001 | 2002 | 2003 | |||||
Allowance for loan losses at the beginning of the year | 34,085 | 33,035 | 36,647 | ||||
Effect of reverse acquisition on allowance for loan losses | | | 1,297 | ||||
Effect of de-consolidation of subsidiary on allowance for loan losses | (747) | | | ||||
Provisions for loan losses, net of releases of provisions as a | |||||||
result of cash collections | 9,892 | 9,743 | 19,649 | ||||
|
|
|
|||||
43,230 | 42,778 | 57,593 | |||||
Loans charged-off | (10,195) | (6,131) | (3,374) | ||||
|
|
|
|||||
Allowance for loan losses at the end of the year | 33,035 | 36,647 | 54,219 | ||||
|
|
|
|||||
12. | Securitization activity |
The Company primarily securitizes commercial loans through pass-through securitizations. After the securitization, the Company generally continues to maintain customer account relationships and services loans transferred to the securitization trust. Generally, the securitizations are with or without recourse and the Company does not provide any credit enhancement. In a few cases, the Company may enter into derivative transactions such as written put options and interest rate swaps with the transferees. Generally, the Company does not retain any beneficial interests in the assets sold.
During the year ended March 31, 2003, the Company securitized loans and credit substitutes with a carrying value of Rs. 51,780 million (2002: Rs. 40,851 million), which resulted in gains of Rs. 2,070 million (2002: Rs. 1,079 million, 2001: Rs. 434 million). The gains are reported as a component of gain on sale of loans and credit substitutes.
Transfers that do not meet the criteria for a sale under SFAS No. 140, are recorded as secured borrowings with a pledge of collateral. As of March 31, 2003, the Company recorded secured borrowings of Nil (2002: Rs. 5,787 million) that arise on securitization transaction involving trusts that are not considered as qualifying special purpose entities under the guidance provided by SFAS No. 140. Such secured borrowings are reported as a component of other borrowings.
As discussed above, the Company has written put options, which require the Company to purchase, upon request of the holders, securities issued in certain securitization transactions. The put options seek to provide liquidity to holders of such instruments. If exercised, the Company will be obligated to purchase the securities at the predetermined exercise price.
As of March 31, 2003, the Company sold loans and credit substitutes with an aggregate put option exercise price of Rs. 24,404 million (2002: Rs. 13,108 million). Subsequent to their initial issuance, such options are recorded at fair values with changes reported in the statement of operations.
13. | Derivative instruments and hedging activities |
The Company manages its exposures to market rate movements by modifying its mix of assets and liabilities, either directly or through the use of derivative financial products including interest rate swaps, cross currency swaps, equity index futures, equity index options and forward exchange contracts.
All such freestanding derivatives, whether held for trading or non-trading purposes, are carried at their fair value as either assets or liabilities and related gains and losses are included in other non-interest income. The Company has not identified any significant derivative features embedded in other contracts that are not clearly and closely related to the host contract and meet the definition of a derivative.
Fair values for derivatives are based on quoted market prices, which take into account current market and contractual prices of the underlying instrument as well as time value underlying the positions.
F76
notes to the consolidated financial statements | ||
Continued |
All the designated hedges entered into by the Company qualify as fair value hedges under SFAS No.133. There are no cash flow hedges or hedges of net investments in foreign operations. For fair value hedges, changes in the fair value of the hedged asset or liability due to the risk being hedged are recognized in the statement of operations along with changes in the fair value of the derivative. The Company assesses the effectiveness of the hedge instrument at inception and continually on a quarterly basis. The ineffectiveness, to the extent to which offsetting gains or loss are not achieved, is recorded through the statement of operations.
The table below summarizes certain information relating to the Companys hedging activities:
(Rs. in millions) | |||||
As of March 31, | |||||
|
|
||||
2002 | 2003 | ||||
Fair value hedges | 1,161 | 1,836 | |||
Hedge ineffectiveness recognized in earnings | 77 | 128 | |||
14. | Property and equipment |
A listing of property and equipment by asset category is set out below:
(Rs. in millions) | |||||
As of March 31, | |||||
|
|
||||
2002 | 2003 | ||||
Land | 1,336 | 1,535 | |||
Buildings | 7,208 | 11,194 | |||
Equipment and furniture | 5,304 | 4,068 | |||
Capital work-in-progress | 469 | 1,077 | |||
Others | 423 | 8,593 | |||
|
|
||||
Gross value of property and equipment | 14,740 | 26,467 | |||
Accumulated depreciation | (2,163) | (5,252) | |||
|
|
||||
Property and equipment, net | 12,577 | 21,215 | |||
|
|
||||
As of March 31, 2003, land and buildings include certain assets of Rs. 622 million (2002:Rs. 397 million), which have not yet been registered in the Companys name pending regulatory transfer approvals.
15. | Assets held for sale |
As of March 31, 2003, assets held for sale represent certain assets of Rs. 2,306 million (2002:Rs. 2,029 million) acquired through foreclosure of loans.
16. | Goodwill and intangible assets, net |
A listing of goodwill and intangible assets by category is set out below:
(Rs. in millions) | |||||
As of March 31, | |||||
|
|
||||
2002 | 2003 | ||||
Goodwill | 2,304 | 4,841 | |||
Accumulated amortization | (54) | (54) | |||
|
|
||||
Goodwill, net | 2,250 | 4,787 | |||
Customer-related intangibles | | 5,635 | |||
Accumulated amortization | | (590) | |||
|
|
||||
Customer related intangibles, net | 5,045 | ||||
Other intangibles | | 76 | |||
Accumulated amortization | | (3) | |||
|
|
||||
Other intangibles, net | | 73 | |||
|
|
||||
Goodwill and intangible assets, net | 2,250 | 9,905 | |||
|
|
||||
F77 |
notes to the consolidated financial statements | ||
Continued |
The following table presents the changes in goodwill during the year ended March 31, 2003.
(Rs. in millions) | |||
Balance as of March 31, 2002 | 2,250 | ||
Goodwill relating to acquisitions consummated during the period | 1,454 | ||
Equity method goodwill reclassified on reverse acquisition of acquiree | 1,083 | ||
|
|||
Balance as of March 31, 2003 | 4,787 | ||
|
|||
No goodwill impairment loss has been recorded during the year ended March 31, 2002 and March 31, 2003. Goodwill as of March 31, 2003 has been allocated to the following segments:
(Rs. in millions) | |||
Segment | |||
Commercial Banking | 2,275 | ||
ICICI Infotech | 1,895 | ||
ICICI OneSource | 617 | ||
|
|||
Total | 4,787 | ||
|
|||
Amortization of intangible assets |
The estimated amortization schedule for intangible assets, on a straight line basis, for the next five years is set out below:
(Rs. in millions) | |||
Year ended March 31, | |||
|
|||
2004 | 630 | ||
2005 | 617 | ||
2006 | 574 | ||
2007 | 562 | ||
2008 | 562 | ||
|
|||
Total | 2,945 | ||
|
|||
17. | Other assets | ||
Other assets consist of the following: |
(Rs. in millions) | |||||
As of March 31, | |||||
|
|
||||
2002 | 2003 | ||||
Debtors | 1,398 | 4,748 | |||
Staff advances | 948 | 2,273 | |||
Advance taxes | 16,566 | 28,273 | |||
Security deposits | 1,004 | 2,789 | |||
Advance for purchases of securities | 3,339 | 15,415 | |||
Prepaid expenses | 164 | 522 | |||
Derivatives | 896 | | |||
Recoverable from Indian Government(1) | 1,111 | | |||
Others(2) | 1,935 | 4,926 | |||
|
|
||||
Total | 27,361 | 58,946 | |||
|
|
||||
(1) | Recoverable from Indian Government represents foreign exchange fluctuations on specific foreign currency long-term debt, guaranteed by and recoverable from the Indian Government. | ||
(2) | Others include loans held for sale of Rs. 1,387 million (2002: Nil). |
F78
notes to the consolidated financial statements | ||
Continued |
18. | Deposits |
Deposits include demand deposits, which are non-interest-bearing, and savings and time deposits, which are interest bearing. A listing of deposits is set out below:
(Rs. in millions) | |||||
|
|||||
As of March 31, | |||||
|
|
||||
2002 | 2003 | ||||
Interest bearing | |||||
Savings deposits | | 37,932 | |||
Time deposits | 7,380 | 418,119 | |||
|
|
||||
7,380 | 456,051 | ||||
|
|
||||
Non-interest bearing | |||||
Demand deposits | | 35,239 | |||
|
|
||||
Total | 7,380 | 491,290 | |||
|
|
||||
Contractual maturities of deposits as of March 31, 2003 are set out below:
(Rs. in millions) | |||
Deposits maturing during the year ending March 31, | |||
2004 | 334,351 | ||
2005 | 37,410 | ||
2006 | 25,055 | ||
2007 | 6,697 | ||
2008 | 6,798 | ||
Thereafter | 7,808 | ||
|
|||
Total deposits | 418,119 | ||
|
|||
As of March 31, 2003, the aggregate of deposits with individual balances greater than Rs. 5 million was Rs. 267,297 million (2002: Rs. 1,922 million).
19. | Short-term borrowings |
Short-term borrowings represent non-trading borrowings with an original maturity of one year or less. | |
20. | Long-term debt and redeemable preferred stock |
Long-term debt
Long-term debt represents debt with an original maturity of greater than one year. Maturity distribution is based on contractual maturities or earlier dates at which the debt is callable at the option of the holder. A significant portion of the long-term debt bears a fixed rate of interest. Interest rates on floating-rate debt are generally linked to the London Inter-Bank Offer Rate or similar money market rates. The segregation between fixed-rate and floating-rate obligations is based on the contractual terms.
F79
notes to the consolidated financial statements | ||
Continued |
A listing of long-term debt as of March 31, 2003, by maturity and interest rate profile is set out below:
(Rs. in millions) | |||||||
Fixed-rate | Floating-rate | ||||||
obligations | obligations | Total | |||||
|
|
|
|||||
Long-term debt maturing during the year ending March 31, | |||||||
2004 | 77,994 | 8,269 | 86,263 | ||||
2005 | 67,022 | 2,977 | 69,999 | ||||
2006 | 85,660 | 6,200 | 91,860 | ||||
2007 | 20,190 | 5,143 | 25,333 | ||||
2008 | 26,136 | 1,907 | 28,043 | ||||
Thereafter | 88,020 | 13,126 | 101,146 | ||||
|
|
|
|||||
Total | 365,022 | 37,622 | 402,644 | ||||
Less: Unamortized debt issue cost | 1,832 | ||||||
|
|||||||
Total | 400,812 | ||||||
|
|||||||
All long-term debt is unsecured. Debt aggregating Rs. 35,151 million 2002:Rs. 40,439 million) is guaranteed by the Government of India (GOI).
Long-term debt is denominated in various currencies. As of March 31, 2003, long-term debt comprises Indian rupee debt of Rs. 350,633 million (2002: Rs. 438,529 million) and foreign currency debt of Rs. 50,179 million (2002: Rs. 72,894 million).
Indian Rupee debt
A listing of major category of Indian Rupee debt is set out below:
(Rs. in millions) | |||||||||||||||||
As of March 31, | |||||||||||||||||
|
|||||||||||||||||
2002 | 2003 | ||||||||||||||||
|
|
||||||||||||||||
Category | Weighted | Weighted | |||||||||||||||
average | Average | average | Average | ||||||||||||||
interest | Residual | interest | Residual | ||||||||||||||
Amount | rate | Range | maturity | Amount | rate | Range | maturity | ||||||||||
|
|
||||||||||||||||
Bonds issued to | |||||||||||||||||
institutional/individual | |||||||||||||||||
investors(1) | 413,388 | 11.9% | 8.4-16.5% | 3.4 years | 309,488 | 11.71% | 7-16.40% | 3.26 years | |||||||||
Bonds eligible for statutory | |||||||||||||||||
reserve requirements(2) | 18,240 | 11.3% | 7.8-12% | 6.8 years | 14,815 | 11.87% | 11.50-12% | 7.22 years | |||||||||
Borrowings from GOI(3) | 6,936 | 10.3% | 11-16% | 4.9 years | 6,137 | 10.13% | 11-13% | 4.44 years | |||||||||
Refinance from financial | |||||||||||||||||
institutions | 20,193 | 7.35% | 6.5-17% | 3.64 years | |||||||||||||
|
|
|
|||||||||||||||
Total | 438,564 | 11.9% | 3.5 years | 350,633 | 11.28% | 3.46 years | |||||||||||
|
|
|
|
|
|||||||||||||
(1) | Includes application money received on bonds outstanding at the end of the year. | |
(2) | Banks in India are required to mandatorily maintain a specified percentage of certain liabilities as cash or in approved securities. These bonds issued by the Company are approved securities under the rules. | |
(3) | Includes interest-free borrowing from the GOI aggregating Rs. 296 million (2002: Rs. 255 million). The borrowing was initially recorded at its fair value of Rs. 100 million based on the prevailing interest rate of 16% for borrowings of a similar term and risk. Interest is being imputed for each reporting period using this rate. |
F80
notes to the consolidated financial statements | ||
Continued |
Foreign currency debt
A listing of major category of foreign currency debt is set out below:
(Rs. in millions) | |||||||||||||||||
As of March 31, | |||||||||||||||||
|
|||||||||||||||||
2002 | 2003 | ||||||||||||||||
|
|
||||||||||||||||
Category | Weighted | Weighted | |||||||||||||||
average | Average | average | Average | ||||||||||||||
interest | Residual | interest | Residual | ||||||||||||||
Amount | rate | Range | maturity | Amount | rate | Range | maturity | ||||||||||
|
|
||||||||||||||||
Borrowings from | |||||||||||||||||
international | |||||||||||||||||
development | |||||||||||||||||
agencies (1) (2) (3) | 25,224 | 3.0% | 0-6.8% | 13.6 years | 25,417 | 4.14% | 0-8.5% | 9.50 years | |||||||||
Other borrowings from | |||||||||||||||||
international markets | 47,670 | 3.8% | 2-9.1% | 2.1 years | 24,762 | 3.37% | 0-9.15% | 2.52 years | |||||||||
|
|
|
|
|
|
||||||||||||
Total | 72,894 | 3.5% | 6.08 years | 50,179 | 3.69% | 6.05 years | |||||||||||
|
|
|
|
|
|
||||||||||||
(1) | These borrowings have been raised under specific lines of credit from international development agencies. The borrowings have lender-imposed restrictions that limit the use of the funds for specified purposes, which include lending to specified sectors. |
(2) | As of March 31, 2003, under these lines of credit, the Company has an unutilized option to borrow Rs. 6,265 million (2002:Rs. 5,349 million) as per an agreed schedule over a period of 5 years at various interest rates. |
(3) | Exchange rate fluctuations on certain borrowings are guaranteed by the GOI. |
Redeemable preferred stock
The Company issued preferred stock with a face value of Rs. 3,500 million during the year ended March 31, 1998 under the scheme of business combination with ITC Classic Finance Limited. This preferred stock bears a dividend yield of 0.001% and is redeemable at face value after 20 years. The preferred stock was initially recorded at its fair value of Rs. 466 million. Subsequently, interest is being imputed for each reporting period. The imputed interest rate of 10.6% was determined based on the then prevailing interest rate for securities of similar maturity. The carrying amount of this redeemable preferred stock as of March 31, 2003 is Rs. 853 million (2002: Rs. 772 million).
Banks in India are not allowed to issue preferred stock. However, the Company has been currently exempted from the restriction, which prohibits issue of preference shares by banks.
21. | Other liabilities |
Interest accrued
Other liabilities as of March 31, 2003, include Rs. 16,276 million (2002: Rs. 21,435 million) of interest accrued but not due on interest bearing liabilities.
Borrowings from Kreditanstalt fur Wiederaufbau
The Company has been borrowings from Kreditanstalt fur Wiederaufbau (KfW), an international development agency, under specific lines of credit. The terms of the borrowings provide for limitations on usage, whereby funds can be used only for specified purposes. The borrowings are guaranteed by the GOI.
With respect to certain borrowings, the terms of the borrowing agreement provide that a portion of the interest payable on the borrowing shall be paid to the GOI instead of the lender. KfW and the GOI have entered into an agreement whereby the interest paid to the GOI is repaid to the Company either in the form of a grant or a loan. While the loan is repayable as per a specified schedule, the grants do not have a repayment schedule. The interest amounts received from the GOI bear limitations on usage and are required to be advanced as loans/contributions for specified purposes. Similarly, with respect to certain other borrowings from KfW, the terms of the borrowing agreement provide that a portion of the interest payable on the borrowings shall be retained by the Company and used to be advanced as loans/contributions for specified purposes.
F81
notes to the consolidated financial statements | ||
Continued |
The Company periodically advances loans/contributions for specified purposes out of these funds and reports such utilizations to the GOI/KfW. However, no time schedule has been specified for the usage of the funds. In the event that the funds are not utilized for specified purposes, the GOI/KfW have the right to require repayment of the grant/ retained interest. Additionally, KfW can modify the scope of the specified purposes. The Company retains the income derived from the loans made out of the funds. Similarly, it bears the risks of default on the loans.
The interest repaid by the GOI in the form of grants and the interest retained under the agreement with KfW do not represent contributions as they specify donor-imposed conditions, the breach of which, would enable the donor to demand repayment of the grants/retained interest. Accordingly, the grants/retained interest have been reported as liabilities.
Other liabilities as of March 31, 2003, include grants of Rs. 2,052 million (2002:Rs. 2,689 million) and retained interest of Rs. 496 million (2002: Rs. 439 million).
22. | Common stock |
The Company presently has only one class of common stock. In the event of liquidation of the affairs of the Company, all preferential amounts, if any, shall be discharged by the Company. The remaining assets of the Company, after such discharge, shall be distributed to the holders of common stock in proportion to the common stock held by shareholders.
The Company has issued American Depository Shares (ADS) representing underlying common stock. The common stock represented by the ADS is similar to other common stock, except for voting rights. While every holder of common stock, as reflected in the records of the Company, has one vote in respect of each share held, the ADS holders have no voting rights due to a condition contained in the approval of the offering from the Ministry of Finance of India. Under the depository agreement, the depository of the ADS will vote as directed by the Board of Directors of the Company.
As discussed in Note 3, the Company consummated the reverse acquisition with the acquiree effective April 1, 2002, whereby shareholders of the Company were issued common shares of the acquiree in the ratio of 1:2. The effect of the reverse acquisition on the capital structure (including outstanding stock options) of the Company has been retroactively adjusted in the financial statements. On consummation of the reverse acquisition, adjustments were made to the value of the common stock and the additional paid in capital.
23. | Retained earnings and dividends |
Retained earnings at March 31, 2003 computed as per generally accepted accounting principles of India include profits aggregating to Rs. 5,514 million which are not distributable as dividends under the Banking Regulation Act, 1949. These relate to requirements regarding earmarking a part of the profits under banking laws in India. Utilization of these balances is subject to approval of the Board of Directors and needs to be reported to Reserve Bank of India. Statutes governing the operations of the Company mandate that dividends be declared out of distributable profits only after the transfer of at least 25% of net income each year, computed in accordance with current banking regulations, to a statutory reserve. Additionally, the remittance of dividends outside India is governed by Indian statutes on foreign exchange transactions.
Retained earnings as of March 31, 2002, include profits aggregating to Rs. 12,153 million (2001: Rs. 11,875 million), which are not distributable as dividends under Indian company law. These relate to profits on redemption of preferred stock and requirements regarding earmarking a part of profits under banking laws.
Retained earnings as of March 31, 2003, include reserves of Rs. 10,940 million (2002:Rs. 10,866 million) earmarked under Indian tax laws to avail tax benefits and which are not distributable as dividends. Any transfer of balances from such earmarked reserves would result in withdrawal of the tax exemption on the transferred amounts.
F82
notes to the consolidated financial statements | ||
Continued |
24. | Earnings per share |
A computation of the earnings per share is set out below:
(Rs. in millions, except earnings per share data) | |||||||||||||
Year ended March 31, | |||||||||||||
|
|||||||||||||
2001 | 2002 | 2003 | |||||||||||
|
|
|
|||||||||||
Fully | Fully | Fully | |||||||||||
Basic | Diluted | Basic | diluted | Basic | diluted | ||||||||
|
|
|
|||||||||||
Earnings | |||||||||||||
Net income before extraordinary items and | |||||||||||||
cumulative effect of accounting change | |||||||||||||
(before dilutive impact) | 6,630 | 6,630 | 282 | 282 | (7,983) | (7,983) | |||||||
Contingent issuances of subsidiaries/affiliates | | (25) | | | | | |||||||
|
|
|
|
|
|
||||||||
Net income before cumulative effect of accounting | |||||||||||||
change (adjusted for full dilution) | 6,630 | 6,605 | 282 | 282 | (7,983) | (7,983) | |||||||
Cumulative effect of accounting change, net of tax | | 1,265 | 1,265 | | | ||||||||
|
|
|
|
|
|
||||||||
Net income available to common stockholders | |||||||||||||
(adjusted for full dilution) | 6,630 | 6,605 | 1,547 | 1,547 | (7,983) | (7,983) | |||||||
|
|
|
|
|
|
||||||||
Common stock | |||||||||||||
Weighted-average common stock outstanding | 393 | 393 | 393 | 393 | 563 | 563 | |||||||
Dilutive effect of convertible debt instruments | | | | | | | |||||||
Dilutive effect of employee stock options | | | | | | | |||||||
|
|
|
|
|
|
||||||||
Total | 393 | 393 | 393 | 393 | 563 | 563 | |||||||
|
|
|
|
|
|
||||||||
Earnings per share | |||||||||||||
Net income before extraordinary items and cumulative | |||||||||||||
effect of accounting change | 16.88 | 16.81 | 0.72 | 0.72 | (14.18) | (14.18) | |||||||
Cumulative effect of accounting change | | | 3.22 | 3.22 | | | |||||||
|
|
|
|
|
|
||||||||
Net income | 16.88 | 16.81 | 3.94 | 3.94 | (14.18) | (14.18) | |||||||
|
|
|
|
|
|
||||||||
Options to purchase 7,015,800 equity shares and 12,610,975 equity shares granted to employees at a weighted average exercise price of Rs. 81.30.and Rs. 171.10 were outstanding during the year ended March 31, 2002 and 2003, respectively, but were not included in the computation of diluted earnings per share because the exercise price of the options was greater than the average market price of the equity shares during the period. During the year ended March 31, 2003, the Company has reported a net loss and accordingly all outstanding options are anti-dilutive.
25. | Segmental disclosures and related information |
Segmental disclosures
SFAS.No. 131, Disclosure about Segments of an Enterprise and Related Information, establishes standards for the reporting of information about operating segments. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and in assessing performance. As discussed in Note 3, the Company consummated the reverse acquisition with the acquiree effective April 1, 2002. Subsequent to the reverse acquisition, the Company changed the structure of its internal organisation, which changed the composition of its operating segments. The Companys operations have been classified into the following segments: Commercial Banking segment, Investment Banking segment and Others. Segment data for previous periods have been reclassified on a comparable basis.
The Commercial Banking segment provides medium-term and long-term project and infrastructure financing, securitization, factoring, lease financing, working capital finance and foreign exchange services to clients. Further, it provides deposit and loan products to retail customers. The Investment Banking segment deals in the debt, equity and money markets and provides corporate advisory products such as mergers and acquisition advice, loan syndication advice and issue management services.
F83
notes to the consolidated financial statements | ||
Continued |
Others consist of various operating segments that do not meet the requirements to be reported as on individual reportable segment as defined in SFAS No. 131.
The CODM evaluates the Companys performance and allocates resources based on performance indicators (components of profit and loss) of each of the segments. Further, the CODM specifically reviews assets of the personal financial services division, which is a part of commercial banking segment.
The profit and loss of reportable segments is set out below:
(Rs. in millions) | |||||||||||||
Commercial Banking | Investment Banking | ||||||||||||
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Year ended March 31, | Year ended March 31, | ||||||||||||
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2001 | 2002 | 2003 | 2001 | 2002 | 2003 | ||||||||
Income from external customers | |||||||||||||
Interest income | 85,169 | 91,445 | 76,498 | 7,328 | 8,239 | 21,595 | |||||||
Non - interest income | 8,401 | 9,747 | 4,771 | 1,824 | 1,826 | 6,792 | |||||||
Income from other operating segments | |||||||||||||
Interest income | 1,413 | 3,796 | 8,533 | 8,823 | 11,007 | 189 | |||||||
Non - interest income | 658 | 1,040 | 384 | 236 | 219 | 251 | |||||||
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Total income | 95,641 | 106,028 | 90,186 | 18,211 | 21,291 | 28,827 | |||||||
Interest expense | 72,111 | 81,867 | 69,462 | 14,327 | 17,454 | 23,916 | |||||||
Depreciation | 948 | 1,244 | 2,008 | 67 | 89 | 231 | |||||||
Provision for loan losses | 10,962 | 11,458 | 19,645 | 13 | 8 | 4 | |||||||
Other expenses | 6,731 | 10,321 | 10,343 | 1,240 | 1,781 | 2,921 | |||||||
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Income/(loss) before taxes | 4,889 | 1,138 | (11,272) | 2,564 | 1,959 | 1,755 | |||||||
Income tax (expense)/benefit | (347) | (728) | 3,420 | 24 | (659) | (529) | |||||||
Cumulative effect of accounting changes, net of tax | | 1,281 | | | | | |||||||
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Net income/(loss) | 4,542 | 1,691 | (7,852) | 2,588 | 1,300 | 1,226 | |||||||
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A listing of certain assets of reportable segments is set out below:
(Rs. in millions) | |||||||||||||||||||||
Commercial | Investment | Eliminations | |||||||||||||||||||
Banking | Banking | Others | of the acquiree | Total | |||||||||||||||||
As of March 31, | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | |||||||||||
Property and | |||||||||||||||||||||
equipment | 13,157 | 16,048 | 2,152 | 2,754 | 2,099 | 2,413 | (4,831) | | 12,577 | 21,215 | |||||||||||
Investment in | |||||||||||||||||||||
equity affiliates | 15 | | | 252 | 1,867 | 2,363 | | | 1,882 | 2,615 | |||||||||||
Inter segment transactions are generally based on transfer pricing measures as determined by management. Income, expenses, assets and liabilities are either specifically identifiable with individual segments or have been allocated to segments on a systematic basis. Corporate overheads and assets have also been allocated to segments on a systematic basis.
F84
notes to the consolidated financial statements | ||
Continued |
A reconciliation between the segment income and consolidated totals of the Company is set out below:
(Rs. in millions) | |||||||||||||||||||
Total | Income/(loss) before taxes | Net income/ | |||||||||||||||||
income | and accounting changes | (loss) | |||||||||||||||||
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Year ended March 31, | Year ended March 31, | Year ended March 31, | |||||||||||||||||
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2001 | 2002 | 2003 | 2001 | 2002 | 2003 | 2001 | 2002 | 2003 | |||||||||||
Commercial banking | 95,641 | 106,028 | 90,186 | 4,889 | 1,138 | (11,272) | 4,542 | 1,691 | (7,852) | ||||||||||
Investment banking | 18,211 | 21,291 | 28,827 | 2,564 | 1,959 | 1,755 | 2,588 | 1,300 | 1,226 | ||||||||||
Others | 1,659 | 2,789 | 2,874 | 116 | (549) | (1,527) | (7) | (343) | (1,357) | ||||||||||
Eliminations of the | |||||||||||||||||||
acquiree | (15,219) | (29,308) | | (750) | (2,015) | | (493) | (1,101) | |||||||||||
Other reconciling | |||||||||||||||||||
adjustments | (10,945) | (13,785) | (10,531) | | | | | | |||||||||||
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Consolidated total | 89,347 | 87,015 | 111,681 | 6,819 | 533 | (11,044) | 6,630 | 1,547 | (7,983) | ||||||||||
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A reconciliation between the segments and consolidated total assets of the Company is set out below: | |||||||||||||||||||
(Rs. in millions) | |||||||||||||||||||
As of March 31, | |||||||||||||||||||
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2002 | 2003 | ||||||||||||||||||
Commercial Banking(1) | 858,039 | 767,343 | |||||||||||||||||
Investment Banking | 268,726 | 398,574 | |||||||||||||||||
Others | 7,418 | 9,850 | |||||||||||||||||
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Total segment assets | 1,134,183 | 1,175,767 | |||||||||||||||||
Unallocable assets | 15,397 | 16,826 | |||||||||||||||||
Eliminations | (406,218) | (12,330) | |||||||||||||||||
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Consolidated total assets | 743,362 | 1,180,263 | |||||||||||||||||
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(1) | Commercial banking includes retail assets of Personal financial services division of Rs. 172,208 million (March 2002: Rs. 75,072 million), which are reviewed separately by the CODM. |
Geographic distribution
The business operations of the Company are largely concentrated in India. Activities outside India are restricted to resource mobilization in the international markets and operations of certain software development and services subsidiaries in the United States.
Major customers
The Company provides banking and financial services to a wide base of customers. There is no major customer, which contributes more than 10% of total income.
26. | Employee benefits |
Gratuity
In accordance with Indian regulations, the Company provides for gratuity, a defined benefit retirement plan covering all employees. The plan provides a lump sum payment to vested employees at retirement or termination of employment based on the respective employees salary and the years of employment with the Company. The gratuity benefit provided by the Company to its employees is equal to or greater than the statutory minimum.
In respect of the parent company, the gratuity benefit is provided to the employee either through a fund administered by a Board of Trustees and managed by Life Insurance Corporation of India (LIC) or through a fund administered and
F85
notes to the consolidated financial statements | ||
Continued |
managed by a Board of Trustees. The Company is responsible for settling the gratuity obligation through contributions to the fund. The plan is fully funded.
In respect of the remaining entities within the group, the gratuity benefit is provided through annual contributions to a fund administered and managed by the LIC. Under this scheme, the settlement obligation remains with the Company, although the LIC administers the scheme and determines the contribution premium required to be paid by the Company.
The following table sets forth the funded status of the plans and the amounts recognized in the financial statements:
(Rs. in millions) | |||||
As of March 31, | |||||
|
|||||
2002 | 2003 | ||||
Change in benefit obligations | |||||
Projected benefit obligations at beginning of the year | 207 | 263 | |||
Divestitures | |||||
Obligations assumed on acquisition | | 393 | |||
Service cost | 29 | 69 | |||
Interest cost | 25 | 64 | |||
Expected benefits payments | (14) | (18) | |||
Unrecognized prior service cost | | 59 | |||
Actuarial (gain)/loss on obligations | 17 | 63 | |||
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||||
Projected benefit obligations at the end of the year | 264 | 893 | |||
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||||
Change in plan assets | |||||
Fair value of plan assets at beginning of the year | 213 | 248 | |||
Fair value of plan assets acquired on acquisition | | 402 | |||
Expected return on plan assets | 26 | 70 | |||
Employer contributions | 29 | 163 | |||
Actual benefits paid | (16) | (32) | |||
Actuarial (gain)/loss | (5) | 22 | |||
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Plan assets at the end of the year | 247 | 873 | |||
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Funded status | (17) | (20) | |||
Unrecognized actuarial loss | 86 | 136 | |||
Unrecognized transitional obligation | (19) | (17) | |||
Unrecognized prior service cost | 9 | | |||
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||||
Net prepaid gratuity cost | 59 | 99 | |||
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||||
The components of the net gratuity cost are set out below:
(Rs. in millions) | |||||||
Year ended March 31, | |||||||
|
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2001 | 2002 | 2003 | |||||
Service cost | 12 | 29 | 69 | ||||
Interest cost | 16 | 25 | 64 | ||||
Expected return on assets | (16) | (29) | (70) | ||||
Amortization of transition asset/liability | (1) | (1) | 1 | ||||
Amortization of prior service cost | 1 | 1 | 1 | ||||
Actuarial (gain)/loss | | 2 | 2 | ||||
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Net gratuity cost | 12 | 27 | 67 | ||||
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F86
notes to the consolidated financial statements | ||
Continued |
The actuarial assumptions used in accounting for the gratuity plan are given below:
As of March 31, | |||||
|
|||||
2002 | 2003 | ||||
Discount rate | 10% | 8% | |||
Rate of increase in the compensation levels | 9% | 7% | |||
Rate of return on plan assets | 9.5% | 7.5% | |||
As of March 31, 2003, of the total plan assets, Rs. 46 million (2002: Rs. 3 million) has been invested in debt securities of the Company.
Pension
The Company provides for pension, a deferred retirement plan covering certain employees. The plan provides for a pension payment on a monthly basis to these employees on their retirement based on the respective employees salary and years of employment with the Company. Employees covered by the pension plan are not eligible for benefits under the provident fund plan, a defined contribution plan. The pension plan is the continuation of the acquirees plan and hence there are no comparatives for the current year.
The pension plan is funded through periodic contributions to a fund set-up by the Company and administrated by a Board of Trustees. Such contributions are actuarially determined.
The following table sets forth the funded status of the plan and the amounts recognized in the financial statements.
(Rs. in millions) | |||
As of March 31, 2003 | |||
|
|||
Change in benefit obligations | |||
Projected benefit obligations at beginning of the year | 913 | ||
Service cost | 22 | ||
Interest cost | 89 | ||
Expected benefits payments | (42) | ||
Actuarial (gain)/loss on obligations | (129) | ||
|
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Projected benefit obligations at the end of the year. | 853 | ||
|
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Change in plan assets | |||
Fair value of plan assets at beginning of the year | 914 | ||
Expected return on plan assets | 86 | ||
Employer contributions | 16 | ||
(Gain)/loss on plan assets | 166 | ||
Benefits paid | (26) | ||
|
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Plan assets at the end of the year | 1,156 | ||
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Net prepaid benefit | 303 | ||
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The components of the net pension cost are set out below:
(Rs. in millions) | |||
Year ended March 31, 2003 | |||
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Service cost | 22 | ||
Interest cost | 89 | ||
Expected return on assets | (86) | ||
Actuarial (gain)/loss | | ||
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Net pension cost | 25 | ||
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F87
notes to the consolidated financial statements | ||
Continued |
The assumptions used in accounting for the pension plan are given below:
(Rs. in millions) | |||
As of March 31, 2003 | |||
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Discount rate | 8% | ||
Rate of increase in the compensation levels | 7% | ||
Rate of return on plan assets | 7.5% | ||
Superannuation
The permanent employees of the Company are entitled to receive retirement benefits under the superannuation scheme operated by the Company. Superannuation is a defined contribution plan under which the Company contributes annually a sum equivalent to 15% of the employees eligible annual salary to LIC, the manager of the fund, which undertakes to pay the lump sum and annuity payments pursuant to the scheme. The Company contributed Rs. 51 million, Rs. 50 million and Rs. 97 million to the employees superannuation plan for the years ended March 31, 2001, 2002 and 2003 respectively.
Provident fund
In accordance with Indian regulations, employees of the Company (excluding those covered under the pension scheme) are entitled to receive benefits under the provident fund, a defined contribution plan, in which, both the employee and the Company contribute monthly at a determined rate. These contributions are made to a fund set up by the Company and administered by a Board of Trustees. Further, in the event the return on the fund is lower than 11% (current guaranteed rate of return to the employees), such difference is contributed by the Company and charged to income. The contribution to the employees provident fund amounted to Rs. 55 million, Rs. 89 million and Rs. 106 million in years ended March 31, 2001, 2002 and 2003 respectively.
27. | Employee Stock Option Plan |
In August 1999, the Company approved an Employee Stock Option Plan (ICICI Plan). Under the ICICI Plan, the Company is authorized to issue up to 39.27 million equity shares to eligible employees. Eligible employees are granted an option to purchase shares subject to vesting. The options vest in a graded manner over 3 years with 20%, 30% and 50% of the options vesting at the end of each year. The options can be exercised within 10 years from the date of the grant.
Compensation expense under the ICICI Plan for the year ended March 31, 2003 is Rs. 7 million (2002: Rs. 26 million, 2001: Rs. 37 million).
As a result of the reverse acquisition, all outstanding options of the Company were exchanged for options of the acquiree in the ratio of 1:2 with an adjustment to the exercise price in the same ratio. This transaction is similar to an equity restructuring. In accordance with FIN 44, Accounting for Certain Transactions involving Stock Compensation, the above transaction had no accounting consequence.
Under the terms of the reverse acquisition, the Company assumed the employee options outstanding under the acquirees option plan. As the intrinsic value of all the assumed options was negative on the date of consummation, no amount has been allocated to deferred compensation under FIN 44.
Stock option activity
Stock option activity under the above stock option plans is set out below:
(Rs. in millions) | |||||||||
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Year ended March 31, 2001 | |||||||||
ICICI Bank Limited | |||||||||
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Option shares | Range of exercise | Weighted average | Weighted average | ||||||
outstanding | prices and grant | exercise price and | remaining contractual | ||||||
date fair values | grant date fair values | life (months) | |||||||
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Outstanding at the beginning of the | |||||||||
year | 1,161,875 | 171.0 | 171.0 | 112 | |||||
Granted during the year | 1,461,250 | 266.8 | 266.8 | 108 | |||||
Forfeited during the year | (60,200) | 171.0 | 171.0 | | |||||
Exercised during the year | (16,250) | 171.0 | 171.0 | | |||||
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Outstanding at the end of the year | 2,546,675 | 171.0-266.8 | 226.0 | 109 | |||||
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Exercisable at the end of the year | 231,175 | 171.0 | 171.0 | | |||||
F88
notes to the consolidated financial statements | ||
Continued |
(Rs. in millions) | |||||||||
Year ended March 31, 2002 | |||||||||
ICICI Bank Limited | |||||||||
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Option shares | Range of exercise | Weighted average | Weighted average | ||||||
outstanding | prices and grant | exercise price and | remaining contractual | ||||||
date fair values | grant date fair values | life (months) | |||||||
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Outstanding at the beginning of | |||||||||
the year | 2,546,675 | 171.0-266.8 | 226.0 | 109 | |||||
Granted during the year | 4,887,500 | 105.0-164.0 | 134.4 | 116 | |||||
Forfeited during the year | (417,675) | 164.0-266.8 | 218.4 | | |||||
Exercised during the year | (700) | 171.0 | 171.0 | | |||||
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Outstanding at the end of the | |||||||||
year | 7,015,800 | 105.0-266.8 | 162.6 | 114 | |||||
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Exercisable at the end of the | |||||||||
year | 74,300 | 171.0-266.8 | 205.6 | | |||||
(Rs. in millions) | |||||||||
Year ended March 31, 2003 | |||||||||
ICICI Bank Limited | |||||||||
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Option shares | Range of exercise | Weighted average | Weighted average | ||||||
outstanding | prices and grant | exercise price and | remaining contractual | ||||||
date fair values | grant date fair values | life (months) | |||||||
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Outstanding at the beginning of | |||||||||
the year | 7,015,800 | 105.0-266.8 | 162.6 | 114 | |||||
Acquisitions | 6,327,825 | 120.4-171.9 | 146.0 | 110 | |||||
Forfeited during the year | (730,350) | 120.4-266.8 | 154.6 | ||||||
Exercised during the year | (3,000) | 105.0 | 105.0 | ||||||
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Outstanding at the end of the | |||||||||
year | 12,610,275 | 105.0-266.8 | 154.7 | 98 | |||||
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Exercisable at the end of the | |||||||||
year | 5,222,317 | 52.5-266.8 | 169.9 | | |||||
ICICI Infotech
In April 2000, ICICI Infotech approved an Employee Stock Option Plan (Infotech Plan). Under the Infotech Plan, ICICI Infotech is authorized to issue up to 12 million equity shares to its employees and employees of the parent company. Eligible employees are granted an option to purchase shares subject to vesting conditions. The options vest in a graded manner over 3 years with 20%, 30% and 50% of the options vesting at the end of each year. The options can be exercised within 10 years from the date of the grant.
During the years ended March 31, 2001, 2002 and 2003, the Company has not recorded any compensation cost as the exercise price was equal to the fair value of the underlying equity shares on the grant date. As shares of ICICI Infotech are not quoted on exchanges, the fair value represents managements best estimates considering all available factors.
Stock option activity under the above stock option plan is set out below:
(Rs. in millions) | |||||||||
Year ended March 31, 2001 | |||||||||
ICICI Infotech | |||||||||
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Option shares | Range of exercise | Weighted average | Weighted average | ||||||
outstanding | prices and grant | exercise price and | remaining contractual | ||||||
date fair values | grant date fair values | life (months) | |||||||
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Outstanding at the beginning of | |||||||||
the year | | | | | |||||
Granted during the year | 2,344,800 | 37.5 | 37.5 | 108 | |||||
Forfeited during the year | (103,400) | 37.5 | | | |||||
Exercised during the year | | | | | |||||
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Outstanding at the end of the | |||||||||
year | 2,241,400 | 37.5 | 37.5 | 108 | |||||
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Exercisable at the end of the | |||||||||
year | | | | | |||||
F89 |
notes to the consolidated financial statements | ||
Continued |
(Rs. in millions) | |||||||||
Year ended March 31, 2002 | |||||||||
ICICI Infotech | |||||||||
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Option shares | Range of exercise | Weighted average | Weighted average | ||||||
outstanding | prices and grant | exercise price and | remaining contractual | ||||||
date fair values | grant date fair values | life (months) | |||||||
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Outstanding at the beginning of | |||||||||
the year | 2,241,400 | 37.5 | 37.5 | 108 | |||||
Granted during the year | 1,974,800 | 68.0 | 68.0 | 99 | |||||
Forfeited during the year | (342,960) | 37.5-68.0 | 42.0 | | |||||
Exercised during the year | (10,220) | 37.5 | 37.5 | | |||||
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Outstanding at the end of the | |||||||||
year | 3,863,020 | 37.5-68.0 | 52.7 | 104 | |||||
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Exercisable at the end of the | |||||||||
year | 369,448 | 37.5 | 37.5 | | |||||
(Rs. in millions) | |||||||||
Year ended March 31, 2003 | |||||||||
ICICI Infotech | |||||||||
|
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Option shares | Range of exercise | Weighted average | Weighted average | ||||||
outstanding | prices and grant | exercise price and | remaining contractual | ||||||
date fair values | grant date fair values | life (months) | |||||||
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Outstanding at the beginning of | |||||||||
the year | 3,863,020 | 37.5-68.0 | 52.7 | 104 | |||||
Granted during the year | 783,500 | 68.0-100.0 | 97.1 | 108 | |||||
Forfeited during the year | (435,360) | 37.5-100.0 | 59.1 | | |||||
Exercised during the year | (10,200) | 37.5-68.0 | 55.7 | | |||||
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Outstanding at the end of the | |||||||||
year | 4,200,960 | 37.5-100.0 | 60.3 | 75 | |||||
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Exercisable at the end of the | |||||||||
year | 1,235,070 | 37.5-100.0 | 46.2 | 87 | |||||
ICICI Venture
In July 2000, ICICI Venture, a consolidated subsidiary, approved an Employee Stock Option Plan (Venture Plan). As of March 31, 2001, 78,900 options with an exercise price of Rs. 835 per share were outstanding. The Company did not record compensation cost, as the exercise price was equal to the fair value of the underlying equity shares on the grant date. During the year ended March 31, 2002, the Venture Plan was discontinued and all the options outstanding were voluntarily forfeited by the employees. The Company does not intend to replace such cancelled options.
ICICI OneSource Limited
In September 2002, ICICI OneSource, a consolidated subsidiary, approved an Employee Stock Options Plan (OneSource plan). Under the OneSource Plan, ICICI OneSource is authorized to issue equity shares up to 10% of the share capital to the employees. Eligible employees are granted an option to purchase shares subject to vesting conditions. The options vest in a graded manner over 4 years with 25% at the end of the first year and 12.5% of the options vesting at the end of each subsequent six month period. The options can be exercised within 10 years from the date of the grant. Stock option activity under the above stock option plan is set out below:
(Rs. in millions) | |||||||||
Year ended March 31, 2003 | |||||||||
ICICI OneSource Limited | |||||||||
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Option shares | Range of exercise | Weighted average | Weighted average | ||||||
outstanding | prices and grant | exercise price and | remaining contractual | ||||||
date fair values | grant date fair values | life (months) | |||||||
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Outstanding at the beginning of | |||||||||
the year | | | | | |||||
Granted during the year | 4,250,000 | 11.3 | 11.3 | 113 | |||||
Forfeited during the year | (395,000) | 11.3 | 11.3 | | |||||
Exercised during the year | | | | | |||||
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Outstanding at the end of the | |||||||||
year | 3,855,000 | 11.3 | 11.3 | 113 | |||||
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Exercisable at the end of the | |||||||||
year | | | | | |||||
F90
notes to the consolidated financial statements | ||
Continued |
The Company has not recorded any compensation cost, as the exercise price was equal to the fair value of the underlying equity shares on the grant date. As shares of ICICI OneSource Limited are not quoted on exchanges, the fair value represents managements best estimates considering all available factors.
28. | Income taxes |
Components of deferred tax balances
The tax effects of temporary differences are reflected through a deferred tax.asset/liability, which is included in the balance sheet of the Company.
The components of the deferred tax balances are set out below:
(Rs. in millions) | |||||
As of March 31, | |||||
|
|||||
2002 | 2003 | ||||
Deferred tax assets | |||||
Allowance for loan losses | 12,263 | 16,228 | |||
Available for sale securities | 2,141 | 1,044 | |||
Investments in trading securities | 176 | 62 | |||
Unearned income | 1,264 | 693 | |||
Capital loss carry forward | 31 | 23 | |||
Business loss carry forward | 175 | 219 | |||
Deposits | | 94 | |||
Other | 676 | 574 | |||
|
|
||||
16,726 | 18,937 | ||||
Valuation allowance | (226) | (524) | |||
|
|
||||
Total deferred tax asset | 16,500 | 18,413 | |||
|
|
||||
Deferred tax liabilities | |||||
Property and equipment | (9,416) | (9,216) | |||
Undistributed earnings of subsidiary and affiliates | (875) | (294) | |||
Intangibles | | (1,857) | |||
Investment in trading securities | | (39) | |||
Long term debt | | (666) | |||
Available for sale securities | | (20) | |||
Others | (58) | (358) | |||
|
|
||||
Total deferred tax liability | (10,349) | (12,450) | |||
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|
||||
Net deferred tax asset | 6,151 | 5,963 | |||
|
|
||||
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax asset is dependent on the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversal of the projected future taxable income, and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable incomes over the periods in which the deferred tax assets are deductible, management believes that it is more likely than not that the Company will realize the benefits of those deductible differences. The amount of deferred tax assets considered realizable, however could be reduced in the near term if estimates of future taxable income are reduced.
The Company would require taxable income of Rs. 21,266 million in the future periods to be able to fully realize the benefit of net deferred asset recognized in these consolidated financial statements.
F91
notes to the consolidated financial statements | ||
Continued |
The Company had a valuation allowance of Rs. 97 million as at April 1, 2001. The net change in the total valuation allowance for the years ended March 31, 2002 and March 31, 2003 was an increase of Rs. 129 and Rs. 298 million respectively. The majority of the valuation allowance as of March 31, 2002 related to business loss carried forward and capital loss carried forward. As at March 31, 2003, included in the above, the Company has recorded a valuation allowance of Rs. 280 million pertaining to an excess of the amount for financial reporting over the tax basis carried forward pertaining to investment in equity affiliates.
As at March 31, 2003, the Company has business loss carry forward of Rs. 505 million, with expiration dates as follows: March 31, 2009 Rs. 108 million, March 31, 2010 Rs. 43 million. Further, business loss carry forward pertaining to the Companys US subsidiary was Rs. 321 million which expires in 2022 and Australian subsidiary was Rs. 33 million which has no expiration date. The Companys capital loss carried forward of Rs. 110 million expires in March 31, 2006.
Reconciliation of tax rates
The Indian statutory tax rate is 35% plus a surcharge. During each of the years presented, legislation was enacted in the first few months of the fiscal year that changed the amount of the surcharge for that fiscal year and future years. The surcharge was changed to 13%, 2% and 5% during the years ended March 31, 2001, 2002 and 2003, respectively, and resulted in a total statutory tax rate of 39.55%, 35.70% and 36.75% for the years ended March 31, 2001, 2002 and 2003, respectively.
The following is the reconciliation of expected income taxes at statutory income tax rate to income tax expense/ benefit as reported:
(Rs. in millions) | |||||||
Year ended March 31, | |||||||
|
|||||||
2001 | 2002 | 2003 | |||||
Income/(loss) before income taxes | 6,819 | 533 | (11,044) | ||||
Statutory tax rate | 39.55% | 35.70% | 36.75% | ||||
Income tax expense/(benefit) at the statutory tax rate | 2,697 | 190 | (4,059) | ||||
Increases/(reductions) in taxes on account of: | |||||||
Special tax deductions available to financial institutions | (542) | (333) | (38) | ||||
Exempt interest and dividend income | (525) | (800) | (558) | ||||
Income charged at rates other than statutory tax rate | (927) | 280 | 916 | ||||
Changes in the statutory tax rate | (192) | 360 | (109) | ||||
Expenses disallowed for tax purposes | 179 | 109 | 486 | ||||
Tax on undistributed earnings of subsidiary | 227 | 234 | 62 | ||||
Change in valuation allowance | 97 | 129 | 298 | ||||
Tax adjustments in respect of prior year tax assessments | | 175 | (31) | ||||
Tax adjustment on account of change in tax status of subsidiary | | | (97) | ||||
Other | (825) | (93) | 69 | ||||
Income tax expense/(benefit) reported | 189 | 251 | (3,061) | ||||
|
|
|
|||||
F92
notes to the consolidated financial statements | ||
Continued |
Components of income tax expense from continuing operations
The components of income tax expense/(benefit) from continuing operations are set out below:
(Rs. in millions) | |||||||
Year ended March 31, | |||||||
|
|||||||
2001 | 2002 | 2003 | |||||
Current | 4,458 | 3,474 | 1,287 | ||||
Deferred | (4,269) | (3,223) | (4,348) | ||||
|
|
|
|||||
Income tax expense/(benefit) reported | 189 | 251 | (3,061) | ||||
|
|
|
|||||
Only an insignificant amount of the Companys income/(loss) before income taxes and income tax expense/(benefit) was from outside India.
Allocation of income taxes
The total income tax expense/(benefit) was recorded as follows:
(Rs. in millions) | |||||||
Year ended March 31, | |||||||
|
|||||||
2001 | 2002 | 2003 | |||||
Income/(loss) from continuing operations | 189 | 251 | (3,061) | ||||
Unrealized gain/(loss) on securities available for sale | (481) | 890 | 1,461 | ||||
Additional paid in capital | 605 | | 599 | ||||
|
|
|
|||||
Income tax expense/(benefit) reported | 313 | 1,141 | (1,001) | ||||
|
|
|
|||||
29. | Commitments and contingencies |
Loan commitments
The Company has outstanding undrawn commitments to provide loans and financing to customers. These loan commitments aggregated Rs. 48,759 million as of March 31, 2003 (2002: Rs. 68,217 million). The interest rate on these commitments is dependent on the lending rates on the date of the loan disbursement. Further, the commitments have fixed expiration dates and are contingent upon the borrowers ability to maintain specific credit standards.
Guarantees
As a part of its project financing and commercial banking activities, the Company has issued guarantees to enhance the credit standing of its customers. These generally represent irrevocable assurances that the Company will make payments in the event that the customer fails to fulfill its financial or performance obligations. Financial guarantees are obligations to pay a third party beneficiary where a customer fails to make payment towards a specified financial obligation. Performance guarantees are obligations to pay a third party beneficiary where a customer fails to perform a non-financial contractual obligation. The guarantees are generally for a period not exceeding 10 years.
The credit risk associated with these products, as well as the operating risks, are similar to those relating to other types of financial instruments.
The current carrying amount of the liability for the Companys obligations under the guarantee amounted to Rs. 346 million (2002: Nil).
F93
notes to the consolidated financial statements | ||
Continued |
Details of guarantees outstanding are set out below: | |||||||||||
(Rs. in millions) | |||||||||||
Nature of guarantee | Maximum potential amount of future payments under guarantee | ||||||||||
|
|||||||||||
Less than 1 year | 1-3 years | 3-5 years | Over 5 years | Total | |||||||
Financial guarantees | 5,755 | 4,598 | 118 | 17,753 | 28,224 | ||||||
Performance guarantees | 3,260 | 2,111 | 786 | 10,462 | 16,619 | ||||||
|
|
|
|
|
|||||||
Total | 9,015 | 6,709 | 904 | 28,215 | 44,843 | ||||||
|
|
|
|
|
|||||||
Capital commitments
The Company is obligated under a number of capital contracts. Capital contracts are job orders of a capital nature which have been committed. As of the balance sheet date, work had not been completed to this extent. Estimated amounts of contracts remaining to be executed on capital account aggregated Rs. 264 million as of March 31, 2003 (2002: Rs. 756 million).
Tax contingencies
Various tax-related legal proceedings are pending against the Company. Potential liabilities, if any, have been adequately provided for, and the Company does not estimate any incremental liability in respect of these proceedings.
Litigation
Various litigation and claims against the Company and its subsidiaries are in process and pending. Based upon a review of open matters with legal counsel, management believes that the outcome of such matters will not have a material effect upon the Companys consolidated financial position, results of operations or cashflows.
Operating lease commitments
The Company has commitments under long-term operating leases principally for premises and automated teller machines. The following is a summary of future minimum lease rental commitments as of March 31, 2003, for non-cancelable leases:
(Rs. in millions) | |||
Lease rental commitments for the year ending March 31, | |||
2004 | 237 | ||
2005 | 231 | ||
2006 | 223 | ||
2007 | 208 | ||
2008 | 174 | ||
Thereafter | 320 | ||
|
|||
Total minimum lease commitments | 1,393 | ||
|
|||
30. | Related party transactions |
The Company has transactions with its affiliates and directors/employees. The following represent the significant transactions between the Company and such related parties:
Insurance services
During the year ended March 31, 2003 the Company paid insurance premium to Lombard amounting to Rs. 224 million (2002: Rs. 26 million, 2001: Nil).
Lease of premises and facilities
During the year ended March 31, 2003, the Company received for lease of premises, facilities and other administrative costs from Prulife, Rs. 84 million (2002: Rs. 54 million. 2001: Rs. 22 million), from Pru-ICICI, Rs. 6 million (2002: Rs. 5 million, 2001: Rs. 3 million) and from Lombard, Rs. 82 million (2002: Rs. 50 million, 2001: Nil).
F94
notes to the consolidated financial statements | ||
Continued |
During the year ended March 31, 2002, the Company received rentals for lease of premises, facilities and other equipment from the acquiree, Rs. 256 million (2001:Rs.193 million). Similarly, during the year ended March 31, 2002, the Company paid rentals to the acquiree for lease of premises, Rs. 11 million (2001: Nil).
Secondment of employees
During the year ended March 31, 2003, the Company received from Prulife for seconded employees, Rs. 3 million (2002: Nil, 2001: Nil) and from Lombard, Rs. 10 million (2002:Rs. 5 million, 2001: Nil).
During the year ended March 31, 2002, the Company received from the acquiree for seconded employees, Rs.55 million (2001: Rs. 4 million) during the year ended March 31, 2002, Similarly, the Company paid to the acquiree for employees seconded to the Company, Rs. 8 million (2001: Rs. 5 million).
Asset management services
During the year ended March 31, 2003, the Company provided asset management services to TCW and earned fees of Rs. 24 million (2002: Rs. 21 million, 2001: Rs. 31 million).
Deposits and borrowings
During the year ended March 31, 2003, the Company paid interest on bonds/deposits/call borrowings to its affiliated companies, Rs. 12 million (2002: Rs. 268 million, 2001:Rs.202 million).
Banking services
The Company utilized banking services of the acquiree. During the year ended March 31, 2002, non-interest expense of the Company relating to such services, amounted to Rs. 32 million (2001: Rs. 72 million).
Derivative transactions
During the year ended March 31, 2002, the Company entered into interest rate swap contracts and cross currency swap contracts with the acquiree aggregating Rs. 10,310 million and Nil (2001: Rs. 3,350 million and Rs. 1,331 million) respectively. Contracts aggregating Rs. 8,760 million and Rs. 2,272 million (2001: Rs. 2,900 million and Rs. 4,352 million) were outstanding as of March 31, 2002, for interest rate swaps and currency swaps respectively. Net interest income in respect of these swaps amounted to Rs. 275 million (2001:Rs. 189 million) during the year ended March 31, 2002.
Similarly, the Company entered into forward foreign exchange contracts with the acquiree aggregating Rs. 22,466 million (2001: Rs. 47,863 million) during the year ended March 31,.2002. Contracts aggregating Rs. 251 million (2001: Rs. 2,262 million) were outstanding as of March 31, 2002.
Reverse repurchase transactions
During the year ended March 31,.2002, the Company has entered into reverse repurchase transactions with the acquiree amounting to Rs. 52,792 million (2001: Nil). As of March 31,.2002, the Company had reverse repurchase transactions outstanding with the acquiree of Rs. 21,399 million (2001: Nil).
Software development services
During the year ended March 31, 2002, the Company provided software development services to Tricolor and Pru-ICICI and earned fees of Rs. 19 million (2001: Rs. 8 million).
During the year ended March 31, 2002, the Company developed software and provided software and hardware support services to the acquiree, and earned fees of Rs. 124 million (2001:Rs. 73 million).
Back-office support services
During the year ended March 31, 2002, the Company set up a common technology infrastructure platform and the acquiree was charged towards communication expenses, backbone infrastructure expenses and data centre costs, Rs. 182 million (2001: Rs. 94 million).
F95
notes to the consolidated financial statements | ||
Continued |
During the year ended March 31, 2002, the Company provided telephone banking call-centre services and transaction processing services for the credit card operations of the acquiree, and earned fees of Rs. 149 million (2001: Rs. 99 million).
Transfer of financial assets
During the year ended March 31, 2002, the Company transferred loans in pass-through securitization transactions, where the beneficial interests were purchased by the acquiree, of Rs. 11,152 million (2001:Rs. 438 million). Gains of Rs. 98 million (2001: Rs. 50 million) was recorded on the sale. Subsequently, due to a change in the status of the qualifying special purpose entity used in the transactions, the Company regained control of the assets sold. As at March 31, 2002, obligations of Rs. 3,526 million (2001: Nil) relating to such repurchases are reflected as a component of the other borrowings.
Share transfer activities
During the year ended March 31, 2002, the Company provided share transfer services and dematerialization services to the acquiree and earned fees of Rs. 3 million (2001:Rs. 8 million).
Other transactions
During the year ended March 31, 2002, the Company undertook a corporate brand advertising campaign, out of which an amount of Rs. 29 million (2001: Rs. 15 million) has been recovered from the acquiree.
Employee loans
The Company has advanced housing, vehicle and general purpose loans to employees, bearing interest ranging from 2.5% to 6%. The tenure of these loans range from 5 years to 25 years. The loans are generally secured by the assets acquired by the employees. Employee loan balances outstanding as of March 31, 2003, of Rs. 2,273 million (2002: Rs. 949 million) are included in other assets.
Related party balances
The following balances payable to/receivable from related parties are included in the balance sheet:
(Rs. in millions) | |||||
As of March 31, | |||||
|
|||||
2002 | 2003 | ||||
Cash and cash equivalents | 4,360 | | |||
Loans | 209 | 22 | |||
Other assets | 1,269 | 2,549 | |||
Deposits | | 440 | |||
Other liabilities | 24 | 3 | |||
31. | Estimated fair value of financial instruments |
The Companys financial instruments include financial assets and liabilities recorded on the balance sheet, as well as off-balance sheet instruments such as foreign exchange and derivative contracts.
Fair value estimates are generally subjective in nature, and are made as of a specific point in time based on the characteristics of the financial instruments and relevant market information. Where available, quoted market prices are used. In other cases, fair values are based on estimates using present value or other valuation techniques. These techniques involve uncertainties and are significantly affected by the assumptions used and judgments made regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows, future expected loss experience and other factors. Changes in assumptions could significantly affect these estimates and the resulting fair values. Derived fair value estimates cannot necessarily be substantiated by comparison to independent markets and, in many cases, could not be realized in an immediate sale of the instruments.
F96
notes to the consolidated financial statements | ||
Continued |
Fair value estimates are based on existing financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Disclosure of fair values is not required for certain items such as investment accounted for under the equity method of accounting, obligations for pension and other post-retirement benefits, income tax assets and liabilities, property and equipment, prepaid expenses, core deposit intangibles and the value of customer relationships associated with certain types of consumer loans, particularly the credit card portfolio, and other intangible assets. Accordingly, the aggregate fair value amount presented do not purport to represent, and should not be considered representative of, the underlying market or franchise value of the Company. In addition, because of differences in methodologies and assumptions used to estimate fair values, the Companys fair values should not be compared to those of other financial institutions.
The following describes the methods and assumptions used by the Company in estimating the fair values of financial instruments:
Cash and cash equivalents
The carrying amounts reported in the balance sheet approximate fair values because maturities are less than three months.
Trading assets and liabilities
Trading account assets and liabilities are carried at fair value in the balance sheet. Values for trading securities are generally based on quoted, or other independent, market prices. Values for interest rate and foreign exchange products are based on quoted, or other independent, market prices, or are estimated using pricing models or discounted cash flows.
Securities
Fair values are based primarily on quoted, or other independent, market prices. For certain debt and equity investments that do not trade on established exchanges, and for which markets do not exist, estimates of fair value are based upon managements review of the investees financial results, condition and prospects.
Loans
The fair values of certain commercial and consumer loans are estimated by discounting the contractual cash flows using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. The carrying value of certain other loans approximates fair value due to the short-term and/or repricing characteristics of these loans. For impaired loans, the impairment is considered while arriving at the fair value.
Deposits
The carrying amount of deposits with no stated maturity is considered to be equal to their fair value. Fair value of fixed-rate time deposits is estimated by discounting contractual cash flows using interest rates currently offered on the deposit products. Fair value for variable-rate time deposits approximates their carrying value. Fair value estimates for deposits do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of alternative forms of funding (core deposit intangibles).
Long-term debt, short-term borrowings and redeemable preferred stock
The fair value of the Companys debt, including short-term borrowings, is estimated based on quoted market prices for the issues for which there is a market, or by discounting cash flows based on current rate available to the Company for similar types of borrowing arrangements.
F97
A listing of the fair values by category of financial assets and financial liabilities is set out below:
(Rs. in millions) | |||||||||
As of March 31, 2002 | As of March 31, 2003 | ||||||||
|
|||||||||
Carrying | Estimated | Carrying | Estimated | ||||||
value | fair value | value | fair value | ||||||
|
|
|
|
||||||
Financial assets | |||||||||
Trading account assets | 42,376 | 42,376 | 39,634 | 39,634 | |||||
Securities (Note 1) | 60,046 | 60,046 | 280,621 | 280,621 | |||||
Loans (Note 2) | 523,601 | 527,167 | 630,421 | 641,048 | |||||
Other financial assets (Note 3) | 46,259 | 46,259 | 115,705 | 115,705 | |||||
|
|
|
|
||||||
Total | 672,282 | 675,848 | 1,066,381 | 1,077,008 | |||||
|
|
|
|
||||||
Financial liabilities | |||||||||
Interest-bearing deposits | 7,380 | 7,609 | 456,051 | 454,251 | |||||
Non-interest-bearing deposits | | | 35,239 | 35,239 | |||||
Trading account liabilities | 17,105 | 17,105 | 26,086 | 26,086 | |||||
Short-term borrowings | 70,804 | 70,954 | 42,095 | 42,017 | |||||
Long-term debt | 511,458 | 540,649 | 400,812 | 426,928 | |||||
Redeemable preferred stock | 772 | 980 | 853 | 1,035 | |||||
Other financial liabilities (Note 4) | 4,783 | 4,783 | 43,252 | 43,252 | |||||
|
|
|
|
||||||
Total | 612,302 | 642,080 | 1,004,388 | 1,028,808 | |||||
|
|
|
|
||||||
Note 1: | Includes non-readily marketable equity securities of Rs. 9,418 million (2002: Rs. 8,268 million) for which there are no readily determinable fair values. | ||
Note 2: | The carrying value of loans is net of the allowance for loan losses, security deposits and unearned income. | ||
Note 3: | Includes cash and cash equivalents and customers acceptance liability for which the carrying value is a reasonable estimate of fair value. | ||
Note 4: | Represents acceptances outstanding, for which the carrying value is a reasonable estimate of fair value. |
32. | Regulatory matters |
Subsequent to the reverse acquisition of the acquiree, the Company is a banking company within the meaning of the Indian Banking Regulation Act, 1949, registered with and subject to examination by the Reserve Bank of India.
Statutory liquidity requirements
In accordance with the Banking Regulation Act, 1949, the Company is required to maintain a specified percentage of its net demand and time liabilities by way of liquid unencumbered assets like cash, gold and approved securities. The amount of securities required to be maintained at March 31, 2003 was Rs. 230,644 million (2002: Nil).
Capital adequacy requirements
The Company is subject to the capital adequacy requirements set by the Reserve Bank of India, which stipulate a minimum ratio of capital to risk adjusted assets and off-balance sheet items of 9% to be maintained. The capital adequacy ratio of the Company calculated in accordance with the Reserve Bank of India guidelines at March 31, 2003, was 11.10%.
For and on behalf of the Board | |||
K.V. KAMATH | KALPANA MORPARIA | ||
Managing Director & Chief Executive Officer | Executive Director | ||
JYOTIN MEHTA | N. S. KANNAN | ||
General Manager & Company Secretary | Chief Financial Officer & Treasurer | ||
G. VENKATAKRISHNAN | BALAJI SWAMINATHAN | ||
General Manager | Senior General Manager | ||
Corporate Accounts & Taxation |
F98
REGISTERED OFFICE
Landmark
Race Course Circle, Vadodara 390 007
CORPORATE OFFICE
ICICI
Bank Towers
Bandra-Kurla
Complex, Mumbai 400 051
STATUTORY AUDITORS
N.
M. Raiji & Co.
Chartered Accountants
Universal Insurance Building,
Pherozeshah Mehta Road, Mumbai 400 001
S.
R. Batliboi & Co.
Chartered Accountants
Express Towers, 6th Floor,
Nariman Point, Mumbai 400 021
REGISTRAR AND TRANSFER AGENTS
ICICI
Infotech Limited
Maratha Mandir Annexe
Dr. Anand Rao Nair Road,
Mumbai Central, Mumbai 400 008
Contents | |||
Tenth Annual Report of ICICI Securities Limited | 2 | ||
(a) | Consolidated Financial Statements of ICICI Securities Limited and | ||
its Subsidiaries | 17 | ||
(b) | Eighth Annual Report of ICICI Brokerage Services Limited | 25 | |
(c) | Third Annual Report of ICICI Securities Holdings, Inc. | 32 | |
(d) | Third Annual Report of ICICI Securities, Inc. | 37 | |
Fifteenth Annual Report of ICICI Venture Funds Management Company Limited | 41 | ||
Seventh Annual Report of ICICI International Limited | 51 | ||
Third Annual Report of ICICI Prudential Life Insurance Company Limited | 55 | ||
Third Annual Report of ICICI Lombard General Insurance Company Limited | 73 | ||
Fourth Annual Report of ICICI Home Finance Company Limited | 88 | ||
Third Annual Report of ICICI Investment Management Company Limited | 98 | ||
Fourth Annual Report of ICICI Trusteeship Services Limited | 103 |
1
ICICI SECURITIES LIMITED |
10TH ANNUAL REPORT AND ACCOUNTS 2002-2003 |
Directors | Auditors | Registered Office |
K.V. Kamath, Chairman | N.M. Raiji & Co. | 41/44, Minoo Desai Marg |
Lalita D. Gupte | Chartered Accountants | Colaba, Mumbai 400 005 |
Kalpana Morparia | ||
S. Mukherji | ||
Nachiket Mor | ||
Ramni Nirula, Managing Director & CEO |
to the members |
Your Directors have pleasure in presenting the Tenth Annual Report of ICICI Securities Limited (the Company), with the audited Statement of Accounts for the year ended March 31, 2003.
CHANGE
OF NAME
Pursuant to the resolution passed
by the members at the Extraordinary General Meeting held on March 21, 2003, the Registrar of
Companies accorded approval for the change in name of the Company from ICICI Securities and Finance Company
Limited to ICICI Securities Limited effective April
7, 2003.
FINANCIAL RESULTS | (Rupees million) | |||
2002-2003 | 2001-2002 | |||
Gross Income | 3053.19 | 3788.05 | ||
Profit before Interest, Depreciation & Tax | 2380.05 | 3161.54 | ||
Depreciation | 15.31 | 13.44 | ||
Interest | 871.15 | 1271.93 | ||
Profit before Tax | 1493.59 | 1876.17 | ||
Provision for Tax | 464.15 | 597.26 | ||
Profit after Tax | 1029.44 | 1278.91 |
The profit after tax for the year ended March 31, 2003 was Rs. 1029.44 million. After taking into account the balance of Rs. 140.92 million brought forward from the previous year, the profit available for appropriation is Rs. 1170.36 million of which Rs. 102.94 million and Rs. 205.89 million have been transferred to General Reserve and Special Reserve respectively.
BUSINESS ENVIRONMENT
In 2002-2003, domestic economy proved to be resilient in the face of sluggish global economy and a poor monsoon. While the fall in agricultural output has resulted in 2002-2003 growth declining to 4.4% as per the Central Statistical Organisations estimates, the figure masks strong performance by industry (5.8% growth) and the continued good performance by services (7.0% growth). During the year under review, inflation rose, propelled by increase in prices of oil and manufactured goods.
Interest rates exhibited volatility during the year, as markets coped with conflicting fortunes of domestic and global economies. Although markets suffered losses earlier due to the Indo-Pak tensions and doubts about monetary stance, sentiment improved from the second quarter onwards. Monsoon failure and doubts about global economic revival contributed to an uninterrupted rally in the third quarter and the beginning of calendar 2003 before a sharp reversal was triggered by the U.S.-Iraq conflict.
During the year, the Reserve Bank of India (RBI) continued to maintain its soft rate stance and cut the bank rate by 25 basis points (bps) and repo rate by 100 bps to cope with the monsoon failure and to support industrial recovery. Also, RBI maintained comfortable liquidity throughout the year by way of a 75 bps reduction in Cash Reserve Ratio. The RBI was helped to a large extent by the strong foreign exchange inflows (RBIs foreign currency assets increased by US$20bn to US$71bn in 2002-2003) on the back of US dollar weakness in the global markets and the strong performance on the current account. Globally, monetary easing cycle continued with the U.S. Federal Reserve cutting rates by 50 bps and European Central Bank following suit with a 75 bps cut. Apart from a weak spell during the Indo-Pak tensions in May last year, the rupee remained stable and capitalising on US dollar depreciation in the global markets, gained against the US dollar. During the year, the rupee appreciated by 2.65% even as the RBI mopped up the US dollar to temper the pace of appreciation.
Although bond markets encountered volatility through the year and changed direction a few times, the 10-year benchmark yield finished the year 115 bps lower. The I-Sec Sovereign Bond Index (i-BEX) clocked principal returns of 5.9% and total returns of 15.0% in 2002-2003. Although the past year did not see the introduction of any new products, fixed income markets can look forward to new products like STRIPS, exchange-traded interest rate derivatives and credit derivatives in the year ahead.
In the primary market, although funds raised through equity issues grew marginally by 2% during the year 2002-2003, overall fund-raising activity dropped 31% from Rs. 64.23 billion in 2001-2002 to Rs. 44.54 billion in 2002-2003. Further, contrary to expectations, the Governments disinvestment program progressed slowly during the year, with the disinvestments of the Shipping Corporation of India Limited, National Aluminium Company Limited, Maruti Udyog Limited, Hindustan Organics Company Limited, National Fertilizers Limited and Madras Fertilizers Limited yet to be completed. However, with the beginning of the disinvestment process for Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited due in the fiscal year 2003-2004, this activity is poised to regain the momentum. Also, Mergers & Acquisitions (M&A) activity remained buoyant, with deals totalling Rs. 391 billion completed during 2002-2003, an increase of 45% over Rs. 270 billion completed in 2001-2002. Given this, the number of deals in the second half of 2002-2003 suggests a relatively sustained level of future activity in the M&A market.
OVERALL PERFORMANCE
The Company continued to deliver remarkable performance, in line with its forefront position in the industry. During the year, the Companys net worth increased from Rs. 3.19 billion in 2001-2002 to Rs. 3.51 billion in 2002-2003, an increase of 10.03% and after-tax return on net worth was 30.72%.
DIVISION-WISE PERFORMANCE Fixed Income
During the period under review, the Company continued to maintain its leadership position in all segments of the domestic fixed income markets. In the Primary Dealership business, the Company surpassed its bidding and success targets committed to the RBI. In the non-SLR business, the Company saw its turnover increase by nearly 2.4 times to over Rs. 100 billion, confirming its status as one of the leading players in this market. The Company also improved upon its profitability in the non-SLR business during the year. In the interest rate swaps market, the Company almost tripled its volumes in 2002-2003 and achieved a market share of about 15%. This performance is remarkable for a non-banking entity in a market dominated by banks.
Investment Banking
The Investment Banking operations of the Company, which is represented by industry and product groups, seeks to combine client-focused investment bankers with execution and industry expertise. Investment banking activities, mainly financial advisory and capital markets advisory, witnessed strong and sustainable growth in its revenues during the year. Financial advisory activities included advisory assignments with respect to M&A, divestitures, corporate defense activities, restructurings and spin-offs. Capital market activities included public offerings and private placements of equity and debt securities.
In the recent INDATA compilation of league tables, the Company was ranked 3rd in terms of deal value for 2002 as against 4th in 2001. The recent rankings published by Bloomberg for the first quarter of 2003 places the Company as No.1 advisor for M&As in India, with closure of 4 deals aggregating to US$142.47 million.
Financial (M & A) Advisory
During the period under review, the Company strengthened its M&A Advisory business with its strong team of senior M&A bankers, providing greater focus and exceptional quality to its clients. The Company was actively engaged in advising clients in the telecom, cement, media, oil and gas, engineering, auto ancillary, information technology, fertilizers and pharmaceutical sectors.
During 2002-2003, the notable deals completed by the Company includes the sale of promoters equity stake in Hughes Tele.Com Limited, advising a large telecom company engaged in long-distance services on investing into a basic telecom services company, managing open offers of equity shares of IBP Limited and Indian Petrochemicals Company Limited on behalf of Indian Oil Corporation Limited and Reliance Industries Limited respectively. The Company, in its first cross-border transaction, also advised a major auto components company on the acquisition of a company based in the U.S.
The Company has also recently forayed into debt restructuring advisory. It has successfully advised a major cement company on restructuring its debt portfolio. With the enactment of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the formation of Independent Asset Reconstruction Companies, this business is expected to grow substantially.
2
directors report | ||
Continued |
Capital Markets
Despite marginal growth of 2% in the primary equity markets over the previous year, the Company raised Rs. 6.7 billion through initial public offerings (IPOs) as against Rs. 1.64 billion in the previous year. The capital market transactions successfully completed by the Company during the year included IPOs of two public sector banks, rights issue of a large corporate house, and managing of the buyback scheme for shares of OCL India Limited and Tube Investments of India Limited. On the private equity front, the Company also advised Hindustan Coca Cola Holdings Limited on the divestment of its holdings through a private placement of shares.
The year 2002-2003 also witnessed several prestigious assignments for the Company, including an IPO for Maruti Udyog Limited and National Aluminium Company Limited. The existing pipeline, along with the possibility of revival of primary markets, is likely to see an increase in IPO activity in the current year.
In Debt Capital segment, the Company assisted a number of companies to raise money and maintained its premier position despite a fall in overall market mobilisations. The Company acted as lead arranger for several private placements of bonds, notably those for Hindalco Limited, Steel Authority of India Limited, Larsen & Toubro (L&T) Limited and Sardar Sarovar Nigam Limited. The Company concluded landmark deals like raising funds through rating contingent bonds for L&T and managing the first sub-8% corporate bonds issued by Hindalco Limited.
Equity Research
An independent and analytical research department remains a major factor to augment service to both corporate and institutional clients of the Company and its subsidiaries. The Company continued to invest in research in order to ensure that its services are on par with international benchmarks. The Equity Research teams well-structured ideas as well as strategy and theme reports across sectors have been well received and appreciated by major domestic and international clients. In addition, the quality of interaction with both domestic and overseas institutional investors was significantly enhanced through regular servicing and periodic road-shows.
Risk Management
As a financial services company, the Company is committed to ensuring that effective risk management policies and practices are incorporated as fundamental aspects of all its business operations. The Corporate Risk Management Group of the Company has a comprehensive risk management policy in place, addressing areas such as market risk, credit risk and operation risk. This policy seeks to minimise the risks generated by the activities of the Company. The group continuously develops and enhances its risk management and control procedures in order to better identify and monitor risks and to proactively take appropriate actions to mitigate the same. The Company has also constituted a Risk Management Committee comprising the Managing Director & CEO and Senior Executives from cross-functional areas. The Committee is responsible for managing the liquidity and interest rate risk profile of both assets and liabilities of the Company.
SUBSIDIARY COMPANIES
The Company has one subsidiary in India, namely ICICI Brokerage Services Limited. As required under Section 212 of the Companies Act, 1956, the audited statements of accounts for the year 2002-2003, together with the Reports of the Directors and Auditors for the year ended March 31, 2003 of ICICI Brokerage Services Limited are attached herewith.
In addition, the Company also has two subsidiaries, namely, ICICI Securities Holdings, Inc. and ICICI Securities, Inc. in the U.S.A. The audited statements of accounts for the year 2002-2003 as prepared under the Companies Act, 1956, together with the Reports of the Directors and Auditors for the year ended March 31, 2003 of these subsidiaries are attached herewith as required under Section 212 of the Companies Act, 1956.
DIVIDEND
During the year, the Company declared four interim dividends aggregating 35%. Your Directors are pleased to recommend the aggregate of interim dividend of 35%, as total dividend for the year.
CHANGE OF OWNERSHIP
Pursuant to the merger of ICICI Limited with ICICI Bank Limited, ICICI Bank Limited holds 99.92% of the share capital of the Company and consequently now ICICI Bank Limited is the holding company.
PUBLIC DEPOSITS
During the year, the Company has not accepted any deposit under Section 58A of the Companies Act, 1956.
DIRECTORS
Devdatt Shah resigned as Managing Director & CEO of the Company with effect from December 31, 2002. The Board places on record their appreciation for the valuable advice and guidance given by him during his tenure on the Board. Ramni Nirula was appointed as the Managing Director & CEO of the Company with effect from January 1, 2003 in accordance with Section 269, Schedule XIII and other relevant provisions of the Companies Act, 1956. The members approved the appointment of Ramni Nirula as Managing Director & CEO at the Extraordinary General Meeting of the Company held on March 21, 2003.
Nachiket Mor was appointed as an Additional Director of the Company with effect from April 17, 2003. In terms of Section 260 of the Companies Act, 1956, he holds office as an Additional Director only upto the forthcoming Annual General Meeting of the Company and being eligible offers himself for appointment as a Director.
In terms of the provisions of the Articles of Association of the Company, Kalpana Morparia will retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offers herself for re-appointment.
AUDITORS
The Auditors, M/s. N.M. Raiji & Co., Chartered Accountants, Mumbai, will retire at the ensuing Annual General Meeting. The Board at its Meeting held on April 17, 2003 has proposed their re-appointment as Auditors to audit the accounts of the Company for the financial year ending on March 31, 2004. You are requested to consider their re-appointment.
FOREIGN EXCHANGE EARNING AND EXPENDITURE
During 2002-2003, expenditure in foreign currencies amounted to Rs. 14.20 million and earnings in foreign currencies amounted to Rs. 36.85 million.
PERSONNEL AND OTHER MATTERS
As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the annexure to the Directors Report.
Since the Company does not own any manufacturing facility, the disclosure of information relating to conservation of energy and technology absorption to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given.
CORPORATE PHILOSOPHY AND COMPLIANCE
The Company firmly believes that corporate governance and compliance practices are of paramount importance in order to maintain the trust and confidence of the stakeholders, clients, the good reputation of the Company and the unquestioned integrity of all personnel involved in the Company. To ensure transparency, fairness and objectivity in an organisations functioning, the Company has proactively adopted best practices with regard to corporate governance and compliance, which are ahead of regulatory requirements. The Companys policy on compliance with external regulatory requirements is backed by stringent internal policies and principles to ensure, inter alia, priority to clients interest over proprietary interest, maintenance of confidentiality of client information and prevention of insider trading.
AUDIT COMMITTEE
Consequent to the resignation of Devdatt Shah as Managing Director & CEO, he ceased to be a member of the Audit Committee. Ramni Nirula, Managing Director & CEO, has been inducted on the Audit Committee with effect from July 25, 2002. During the year, the Committee met to review the half-yearly and annual accounts, to discuss the audit findings and recommendations of the internal and statutory auditors and to review the internal control systems of the Company.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors confirm :
1. |
that in preparation
of the annual accounts, the applicable accounting standards had been followed
along with proper explanation relating to material departures; |
2. |
that the
Directors had selected such accounting policies and applied them consistently
and made judgements and estimates that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company at the
end of the financial year and of the profit of the Company for that period; |
3. |
that the
Directors had taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act,
1956 for safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities; and |
4. |
that the
Directors had prepared the annual accounts on a going concern basis. |
ACKNOWLEDGEMENTS
Your Directors thank the clients for the confidence reposed in the Company, which has enabled the Company to reach new heights.
Your Directors also thank the Companys bankers, lenders, the Government of India, the Securities and Exchange Board of India, the Reserve Bank of India and other statutory authorities for their continued support to the Company.
Your Directors express their gratitude for the unstinted support and guidance received from its shareholders, ICICI Bank Limited and other group companies.
Your Directors also express their sincere thanks and appreciation to all the employees for their commendable teamwork, professionalism and contribution during the year.
For and on behalf of the Board
Mumbai, April 17, 2003 | K.V. KAMATH |
Chairman | |
3
auditors report | |||
to the members of ICICI Securities Limited |
We have audited the attached Balance Sheet of ICICI SECURITIES LIMITED as at March 31, 2003 and the Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
We report that :
(1) |
As
required by the Manufacturing and Other Companies (Auditors
Report) Order, 1988 issued by the Company Law Board in terms of Section
227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement
on the matters specified in paragraphs 4 and 5 of the said Order to
the extent applicable to the Company. |
|
(2) |
Further
to our comments in the Annexure referred to in paragraph (1) above
: |
|
(a) |
we
have obtained all the information and explanations which, to the best
of our knowledge and belief, were necessary for the purpose of our
audit; |
|
(b) |
in
our opinion, proper books of account as required by law have been
kept by the Company so far as appears from our examination of the
books; |
(c) | the Balance Sheet and Profit and Loss Account dealt with by this Report are in agreement with the books of account of the Company; | ||
(d) |
in
our opinion, the Balance Sheet and Profit and Loss Account dealt with by
this report are in compliance with the Accounting Standards referred to
in Section 211(3C) of the Companies Act, 1956 and are in agreement with
the books of account; |
||
(e) |
on
the basis of written representations received from the Directors, we report
that none of the Directors is disqualified as on March 31, 2003 from being
appointed as a Director u/s 274(1)(g) of the Companies Act, 1956. |
||
(f) |
In
our opinion and to the best of our information and according to the explanations
given to us, the said accounts read with the notes thereon, give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view : |
||
(i) |
in
the case of the Balance Sheet, of the state of affairs of the Company as
at March 31, 2003; |
||
(ii) |
in
the case of the Profit and Loss Account, of the Profit of the Company for
the year ended on that date; and |
||
(iii) |
in
the case of Cash Flow Statement, of the cash flows for the year ended on
that date. |
For
N. M. RAIJI & CO.
Chartered
Accountants
4
annexure | ||
to the auditors report |
1. |
The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. Fixed Assets have been physically verified by the management during the year. No material discrepancies were noticed on such verification. | |
2. | None of the fixed assets have been revalued during the year. | |
3. | The securities held as stock-in-trade are kept with the custodian and depository participants. Statements from them have been obtained on a regular basis. | |
4. | No material discrepancies have been noticed on physical reconciliation of stock with the custodian and depository participants as compared to the book stock. | |
5. | In our opinion, the valuation of stock-in-trade is fair and proper in accordance with the normally accepted accounting principles and is on the same basis as in the preceding year. | |
6. | The Company has taken loans from the Companies listed in the register maintained under Section 301 of the Companies Act, 1956. The rate of interest and other terms and conditions of such loans are, prima facie, not prejudicial to the interest of the Company. The Company has not taken any loans, secured or unsecured, from companies under the same management as defined under Section 370(1B) of the Companies Act, 1956. | |
7. | The Company has not granted loans to the Companies listed in the register maintained under Section 301 of the Companies Act, 1956. The Company has not granted any loans, secured or unsecured, to the companies under the same management as defined under Section 370(1B) of the Companies Act, 1956. | |
8. | The parties to whom loans or advances in the nature of loans have been given by the Company are generally repaying the principal amounts as stipulated and are regular in the payment of interest. | |
9. | The Company has an adequate internal control procedure commensurate with the size of the Company and the nature of its business in respect of purchase of assets and purchase and sale of securities. | |
10. | In our opinion, and according to the information and explanations given to us, services provided and purchase and sale of securities in pursuance of contracts or arrangements listed in the register maintained under Section 301 of the Companies Act, 1956 and aggregating during the year to Rs. 50,000 or more in respect of each party, have been made at prices which are reasonable, having regard to the prevailing market prices for such services/securities and nature of transactions. | |
11. | The Company being a Non-Banking Financial Company (NBFC), Section 58A of the Companies Act, 1956 is not applicable to the Company. In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by Reserve Bank of India for NBFCs. | |
12. | In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business. | |
13. | As per the records of the Company, during the year provident fund dues have been regularly deposited with the appropriate authorities. As informed to us, the Employees State Insurance Act is not applicable to the Company. | |
14. | As per the records of the Company and according to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty and excise duty were outstanding as at March 31, 2003 for a period of more than six months from the date they became payable. | |
15. | During the course of our examination of the books of account and according to the information and explanations given to us, no personal expenses of employees or directors have been charged to revenue account, other than those payable under contractual obligations or in accordance with generally accepted business practice. | |
16. | The Company is not an industrial company and hence the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 is not applicable to the Company. | |
17. | In respect of services activities : | |
(a) | the system of allocating man-hours utilized to the relative jobs, is not yet formalized; | |
(b) | there is a reasonable system of authorization at proper levels and adequate system of internal control commensurate with the size of the Company and nature of its business. | |
18. | In respect of the loans and advances granted on the basis of security by way of pledge of shares, debentures and other securities, the Company has maintained adequate documents and records. | |
19. |
Proper records have been maintained for the transactions relating to trading in shares, securities, debentures and other investments and entries therein have been made generally on a timely basis. Investments are held in the name of the Company. Securities held by the Company as Stock-in-trade are generally sent for transfer in the name of the Company unless they are held with the intention of selling prior to transfer. All securities are held in the name of the Company. |
For
N. M. RAIJI & CO.
Chartered Accountants
J.
M. GANDHI
Partner
5
balance sheet | |||
as at March 31, 2003 |
Schedule | (Rs. in 000s) | March
31, 2002 |
||||||||
SOURCES OF FUNDS | ||||||||||
1 | Shareholders Funds | |||||||||
A. | Share Capital | A | 2,030,030 | 2,030,030 | ||||||
B. | Reserves & Surplus | B | 1,480,780 | 1,161,850 | ||||||
|
|
|||||||||
3,510,810 | 3,191,880 | |||||||||
2 | Loan Funds | |||||||||
A. | Secured Loans | C | 8,000,000 | 11,258,300 | ||||||
B. | Unsecured Loans | D | 10,398,620 | 6,077,220 | ||||||
|
||||||||||
21,909,430 | 20,527,400 | |||||||||
|
||||||||||
APPLICATION OF FUNDS | ||||||||||
1 | Fixed Assets | E | ||||||||
Gross Block | 213,110 | 218,540 | ||||||||
Less : Depreciation | 105,350 | 111,390 | ||||||||
|
|
|||||||||
Net Block | 107,760 | 107,150 | ||||||||
2 | Investments | F | 1,873,950 | 526,430 | ||||||
3 | Deferred Tax Asset | 3,050 | 7,200 | |||||||
4 | Current Assets, | |||||||||
Loans & Advances | ||||||||||
A. | Current Assets | |||||||||
(a) | Interest Accrued | G | 467,350 | 679,620 | ||||||
(b) | Securities held as | |||||||||
Stock-in-Trade | H | 19,001,130 | 18,859,430 | |||||||
(c) | Sundry Debtors | I | 170,190 | 26,490 | ||||||
(d) | Cash & Bank Balances | J | 23,380 | 13,420 | ||||||
B. | Loans & Advances | K | 2,813,070 | 2,293,990 | ||||||
|
|
|||||||||
22,475,120 | 21,872,950 | |||||||||
Less : Current Liabilities and | ||||||||||
Provisions : | L | |||||||||
A. | Current Liabilities | 400,490 | 295,740 | |||||||
B. | Provisions | 2,149,960 | 1,690,590 | |||||||
|
|
|||||||||
NET CURRENT ASSETS | 19,924,670 | 19,886,620 | ||||||||
|
||||||||||
21,909,430 | 20,527,400 | |||||||||
|
||||||||||
Notes forming part of the | ||||||||||
Accounts and Accounting Policies | T |
profit and loss account | |||
for the year ended March 31, 2003 |
Schedule | (Rs. in 000s) | March
31, 2002 |
|||||||
Income from Operations | |||||||||
(a) | Income from Services | M | 144,280 | 100,120 | |||||
(b) | Interest Income | N | 1,298,880 | 1,669,060 | |||||
(c) | Profit / (Loss) on Securities | O | 1,231,760 | 1,650,070 | |||||
(d) | Other Income | P | 378,270 | 368,800 | |||||
|
|
||||||||
3,053,190 | 3,788,050 | ||||||||
Less : Operating Expenditure | |||||||||
(a) | Financial Charges and | ||||||||
Operating Expenses | Q | 933,570 | 1,349,200 | ||||||
|
|||||||||
2,119,620 | 2,438,850 | ||||||||
Expenditure | |||||||||
Less : Administrative Expenditure | |||||||||
(a) | Payments to and Provisions | ||||||||
for Employees | R | 231,230 | 231,870 | ||||||
(b) | Establishment and | ||||||||
Other Expenses | S | 379,490 | 317,370 | ||||||
(c) | Depreciation | 15,310 | 13,440 | ||||||
|
|
||||||||
626,030 | 562,680 | ||||||||
|
|||||||||
Profit before Taxation | 1,493,590 | 1,876,170 | |||||||
Less : Provision for Taxation | 460,000 | 617,680 | |||||||
Deferred Tax Adjustment | 4,150 | (20,420 | ) | ||||||
|
|||||||||
Profit After Taxation | 1,029,440 | 1,278,910 | |||||||
Brought forward from previous years | 140,920 | 51,030 | |||||||
|
|||||||||
Amount available for appropriations | 1,170,360 | 1,329,940 | |||||||
Transfer to Special Reserve | 205,890 | 255,780 | |||||||
Transfer to General Reserve | 102,940 | 127,890 | |||||||
Interim Dividend (Current Year | |||||||||
subject to tax) | 710,510 | 730,810 | |||||||
Tax on Dividend | | 74,540 | |||||||
|
|||||||||
Balance carried to Balance Sheet | 151,020 | 140,920 | |||||||
|
|||||||||
Notes forming part of the | T | ||||||||
Accounts and Accounting Policies |
Per our Report attached | For and on behalf of the Board | |||
For N. M. RAIJI & CO. | ||||
Chartered Accountants | K.V. KAMATH | |||
Chairman | ||||
J. M. GANDHI | LALITA D. GUPTE | |||
Partner | Director | |||
ABHIJEET GUIN | POYNI BHATT | RAMNI NIRULA | ||
Vice President & | Senior Vice President & | Managing Director & | ||
Mumbai, April 17, 2003 | Head - Financials | Company Secretary | CEO |
6
schedules | ||
forming part of the Accounts |
(Rs. in 000s) | March 31, 2002 | ||||||||||
A. | SHARE CAPITAL | ||||||||||
Authorized : | |||||||||||
500,000,000 Equity Shares of Rs.10 each | 5,000,000 | 5,000,000 | |||||||||
|
|
||||||||||
Issued, Subscribed and Paid Up : | |||||||||||
203,002,800 Equity Shares of Rs.10 each | 2,030,030 | 2,030,030 | |||||||||
|
|
||||||||||
Notes : | |||||||||||
1. Of the above, 202,833,200 (Previous year - 202,833,200) Equity Shares of Rs.10 each are held by ICICI Bank Limited - (the Holding Company) and its nominees. | |||||||||||
B. | RESERVES AND SURPLUS | (Rs. in 000s) | |||||||||
|
|
|
|
|
|
||||||
Balance as on April 1, 2002 | Additions/ Transfers during the year |
Deductions/
Transfers during the year |
Balance as on March 31, 2003 |
Balance
as on March 31, 2002 |
|||||||
|
|
|
|
|
|
||||||
Share Premium Account | 112,800 | | | 112,800 | 112,800 | ||||||
General Reserve | 389,000 | 102,940 | | 491,940 | 389,000 | ||||||
Special Reserve (maintained under Section | 519,130 | 205,890 | | 725,020 | 519,130 | ||||||
45 IC of the RBI Act, 1935) | |||||||||||
Profit and Loss Account | 140,920 | 151,020 | 140,920 | ||||||||
|
|
|
|||||||||
Total | 1,161,850 | 1,480,780 | 1,161,850 | ||||||||
|
|
|
|
|
|
||||||
C. | SECURED LOANS | (Rs. in 000 | s) | March 31, 2002 | |||||||
Borrowings from Reserve Bank of India | |||||||||||
(Secured by Government Securities of face | |||||||||||
value Rs. 8,050,000 thousand; Previous year Rs. 11,271,500 thousand) | 8,000,000 | 10,663,900 | |||||||||
Repo Borrowings from banks | |||||||||||
(Secured by Underlying Security) | | 594,400 | |||||||||
|
|
||||||||||
Total | 8,000,000 | 11,258,300 | |||||||||
|
|
||||||||||
D. | UNSECURED LOANS | ||||||||||
Short Term Loans | | 1,368,500 | |||||||||
Subordinated Bonds issued as Tier III Capital | 750,000 | 500,000 | |||||||||
Inter-Corporate Borrowings | 380,700 | 625,000 | |||||||||
Money at Call and Short Notice | |||||||||||
From Banks | 3,440,000 | 830,000 | |||||||||
From Others | 1,386,700 | 10,000 | |||||||||
Commercial Paper Borrowings | 2,270,720 | 1,527,580 | |||||||||
7.00% Debentures 2003 | 110,000 | | |||||||||
(Redeemable at par by April 2003) | |||||||||||
Floating Rate Debenture | 500,000 | | |||||||||
(Redeemable at par by April 2003) | |||||||||||
Floating Rate Debenture 2003 | 295,000 | | |||||||||
(Redeemable at par by May 2003) | |||||||||||
Floating Rate Debenture 2003 | 340,500 | | |||||||||
(Redeemable at par by June 2003) | |||||||||||
6.05% Debentures 2003 | 100,000 | | |||||||||
(Redeemable at par by April 2003) | |||||||||||
6.10% Debentures 2003 | 250,000 | | |||||||||
(Redeemable at par by April 2003) | |||||||||||
6.00% Debentures 2003 | 200,000 | | |||||||||
(Redeemable at par by June 2003) | |||||||||||
7.55% Debentures 2003 | 295,000 | | |||||||||
(Redeemable at par by May 2003) | |||||||||||
6.25% Debentures 2003 | 70,000 | | |||||||||
(Redeemable at par by April 2003) | |||||||||||
7.75% Debentures 2003 | 10,000 | | |||||||||
(Redeemable at par by April 2003) | |||||||||||
Floating Rate Debenture | | 768,000 | |||||||||
(Redeemable at par by May 2002) | |||||||||||
8.50% Debentures 2002 | | 100,000 | |||||||||
(Redeemable at par by April 2002) | |||||||||||
7.95% Debentures 2002 | | 5,640 | |||||||||
(Redeemable at par by April 2002) | |||||||||||
8.15% Debentures 2002 | | 45,000 | |||||||||
(Redeemable at par by April 2002) | |||||||||||
7.86% Debentures 2002 | | 250,000 | |||||||||
(Redeemable at par by April 2002) | |||||||||||
8.45% Debentures 2002 | | 47,500 | |||||||||
(Redeemable at par by April 2002) | |||||||||||
Total | 10,398,620 | 6,077,220 | |||||||||
|
|
Unsecured loans include an amount of Rs 500,000 thousand (Previous year Rs. 500,000 thousand) from ICICI Bank Limited - the Holding company.
7
schedules | |||
forming part of the Accounts | Continued |
E. FIXED ASSETS | (Rs. in 000s) | ||||||||||||||||
|
|||||||||||||||||
Gross Block (at Cost) | Accumulated Depreciation | Net Block | |||||||||||||||
|
|
||||||||||||||||
April 1, | Additions | Sale/Adj. | March 31, | Additions | Sale/Adj. | March 31, | March 31, | March 31, | |||||||||
2002 | 2003 | 2003 | 2003 | 2002 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freehold Land | 57,230 | | | 57,230 | | | | 57,230 | 57,230 | ||||||||
Building | 10,050 | | | 10,050 | 390 | | 2,710 | 7,340 | 7,730 | ||||||||
Improvements To Leasehold Property | 20,500 | | | 20,500 | 2,490 | | 18,010 | 2,490 | 4,980 | ||||||||
Plant & Machinery / Electrical Installation | 5,980 | | 30 | 5,950 | 360 | | 3,820 | 2,130 | 2,520 | ||||||||
Office Equipment | 27,610 | 5,080 | 1,300 | 31,390 | 2,680 | 840 | 15,250 | 16,140 | 14,200 | ||||||||
Computers & Software | 73,310 | 11,900 | 18,470 | 66,740 | 7,790 | 17,990 | 51,330 | 15,410 | 11,780 | ||||||||
Furniture & Fixtures | 21,030 | 580 | 1,860 | 19,750 | 1,430 | 1,540 | 13,090 | 6,660 | 7,830 | ||||||||
Vehicles | 2,760 | | 1,260 | 1,500 | 150 | 950 | 1,140 | 360 | 810 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total | 218,470 | 17,560 | 22,920 | 213,110 | 15,290 | 21,320 | 105,350 | 107,760 | 107,080 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Work-in-Progress | | | | | | | | | 70 | ||||||||
|
|||||||||||||||||
Net Block | 218,470 | 17,560 | 22,920 | 213,110 | 15,290 | 21,320 | 105,350 | 107,760 | 107,150 | ||||||||
|
|||||||||||||||||
Previous Year | 222,210 | 13,280 | 17,020 | 218,540 | 13,440 | 11,200 | 111,390 | 107,150 | |||||||||
|
F. INVESTMENTS - LONG TERM (At Cost, Quoted unless otherwise stated) |
|||||||
(Rs. in 000s) | |||||||
|
|||||||
Name of the Company | Quantity
in thousands |
Face
Value per unit (Rs.) |
March
31, 2003 |
March
31, 2002 |
|||
|
|||||||
In Equity Shares of Subsidiary Company | |||||||
- Unquoted and fully paid up | |||||||
ICICI Brokerage Services Limited | 4,500.7 (4,500.7) | 10.00 | 45,007 | 45,007 | |||
ICICI Securities Holdings Inc. | 1,600.0 (1,100.0) | * | 75,023 | 50,613 | |||
Bonds/Units | |||||||
Birla Bond Plus | 232.3 (Nil) | 10.00 | 250,000 | | |||
Birla Bond Plus | 231.9 (Nil) | 10.00 | 250,000 | | |||
HDFC Short Term Plan | 236.8 (Nil) | 10.00 | 250,000 | | |||
JM Short Term Fund | 291.3 (Nil) | 10.00 | 300,480 | | |||
JM Short Term Fund | 243.5 (Nil) | 10.00 | 253,440 | | |||
Kotak Mahindra | 193.5 (Nil) | 10.00 | 200,000 | | |||
Prudential ICICI Short Term Plan | 229.3 (Nil) | 10.00 | 250,000 | | |||
ICICI Bank Limited 2002 | Nil (500.0) | 100.00 | | 430,810 | |||
|
|
||||||
TOTAL | 1,873,950 | 526,430 | |||||
|
|
Notes : | |
1. |
The
aggregate cost and market value of the quoted Investments as at March
31, 2003 is Rs. 1,753,920 thousand and Rs. 1,807,500 thousand respectively
(Previous year - Rs. 430,810 thousand and Rs. 430,800 thousand respectively). |
2. |
The
aggregate cost of unquoted Investments as at March 31, 2003 is Rs.
120,030 thousand (Previous year - Rs. 95,620 thousand). |
* |
Face
Value of US Dollar 1.00 per unit. |
G. | INTEREST ACCRUED | (Rs. in 000s) | March 31, 2002 | ||
On Investments | | 40,330 | |||
On Stock-in-Trade | 442,380 | 611,330 | |||
On Loans and Advances | 24,970 | 27,960 | |||
|
|||||
Total | 467,350 | 679,620 | |||
|
|
8
schedules | ||
forming part of the Accounts | Continued |
Total
Face Value (in Rupees thousands) |
(Rs. in 000s) | March
31, 2002 |
H. | SECURITIES HELD AS STOCK-IN-TRADE | ||||||
(at lower of cost or market value) | |||||||
(Quoted unless otherwise stated) | |||||||
Government of India Securities & Deemed | |||||||
Government of India Securities | |||||||
6.96% | Oil Co. Bonds 2009 | 250,000 (Nil) | 251,870 | | |||
7.27% | Government of India 2013 | 300,000 (Nil) | 317,080 | | |||
7.40% | Government of India 2012 | 315,000 (Nil) | 336,420 | | |||
7.46% | Government of India 2017 | 400,000 (Nil) | 426,000 | | |||
7.55% | Government of India 2010 | 300,000 (Nil) | 319,500 | | |||
8.07% | Government of India 2017 | 311,800 (Nil) | 349,840 | | |||
8.25% | Government of India 2005 | 30 (30) | 30 | 30 | |||
8.35% | Government of India 2022 | 510,700 (Nil) | 582,700 | | |||
9.39% | Government of India 2011 | 300,000 (926,500) | 355,800 | 1,027,030 | |||
9.40% | Government of India 2012 | 700,000 (150,000) | 836,150 | 167,100 | |||
9.81% | Government of India 2013 | 200,000 (1,300,000) | 249,600 | 1,483,950 | |||
9.85% | Government of India 2015 | 300,000 (1,335,000) | 380,850 | 1,538,590 | |||
9.90% | Government of India 2005 | Nil (150,000) | | 162,450 | |||
10.03% | Government of India 2019 | 650,000 (Nil) | 843,700 | | |||
10.18% | Government of India 2026 | Nil (175,000) | | 206,760 | |||
10.25% | Government of India 2021 | 100,000 (197,600) | 133,100 | 233,460 | |||
10.71% | Government of India 2016 | Nil (600,000) | | 727,800 | |||
11.00% | Government of India 2002 | Nil (100) | | 100 | |||
11.00% | Government of India 2006 | 300,000 (130,900) | 342,600 | 150,210 | |||
11.03% | Government of India 2012 | 150,000 (Nil) | 195,600 | | |||
11.10% | Government of India 2003 | Nil (2,209,780) | | 2,305,910 | |||
11.15% | Government of India 2002 | Nil (800) | | 810 | |||
11.19% | Government of India 2005 | 200,000 (50,000) | 222,100 | 56,430 | |||
11.40% | Government of India 2008 | 2,300,000 (800,000) | 2,838,660 | 967,200 | |||
11.50% | Government of India 2011 | 400,000 (2,150,000) | 530,800 | 2,690,730 | |||
11.50% | Government of India 2007 | 400,000 (Nil) | 475,180 | | |||
11.78% | Government of India 2003 | Nil (39,300) | | 41,850 | |||
11.99% | Government of India 2009 | 2,750,000 (1,050,000) | 3,508,690 | 1,302,000 | |||
12.50% | Government of India 2004 | 202,550 (960,000) | 214,910 | 1,060,800 | |||
13.80% | Government of India 2002 | Nil (24,810) | | 25,080 | |||
6.60% | Government of Jammu and Kashmir 2013 | 30,000 (Nil) | 29,150 | | |||
7.80% | Government of Andhra Pradesh 2012 | 10,000 (Nil) | 10,500 | | |||
7.80% | Government of Maharashtra 2012 | 10,000 (Nil) | 10,500 | | |||
8.30% | Government of Kerala 2012 | 15,400 (Nil) | 16,700 | | |||
12.50% | Government of Maharashtra 2004 | 10,350 (Nil) | 10,970 | | |||
|
|
||||||
13,789,000 | 14,148,290 | ||||||
|
|
||||||
Treasury Bills | |||||||
364 | Day Treasury Bills 11-07-2003 | 50,000 (Nil) | 47,560 | | |||
364 | Day Treasury Bills 12-12-2003 | 100,000 (Nil) | 95,690 | | |||
364 | Day Treasury Bills 20-02-2004 | 400,000 (Nil) | 379,960 | | |||
364 | Day Treasury Bills 05-03-2004 | 100,000 (Nil) | 94,690 | | |||
364 | Day Treasury Bills 19-03-2004 | 600,000 (Nil) | 566,640 | | |||
|
|
||||||
1,184,540 | | ||||||
|
|
||||||
Zero Coupon Bonds | |||||||
Power Finance Corp. Limited 2022 | 30,900 (Nil) | 6,480 | | ||||
|
|
||||||
6,480 | | ||||||
|
|
||||||
Fixed Rate Bonds | |||||||
6.05% | Exim Bank of India 2007 | 200,000 (Nil) | 196,000 | | |||
6.20% | Exim Bank of India 2008 | 50,000 (Nil) | 47,920 | | |||
6.30% | Exim Bank of India 2007 | 100,000 (Nil) | 96,390 | | |||
6.90% | Union Bank of India 2010 | 321,000 (Nil) | 313,930 | | |||
7.50% | Power Finance Corp. Limited 2009 | 50,000 (Nil) | 50,700 | | |||
7.85% | Powergrid Corp. Limited 2005 | 150,000 (Nil) | 152,770 | | |||
8.05% | National Thermal Power | ||||||
Corp. Limited 2006 - 2007 | 450,000 (Nil) | 465,470 | |
Total
Face Value (in Rupees thousands) |
(Rs. in 000s) | March
31, 2002 |
8.63% | Powergrid Corp. Limited 2010 - 2016 | 260,000 (Nil) | 278,190 | | |||
8.85% | Bharat Heavy Electricals Limited 2008 | 350,000 (Nil) | 371,350 | | |||
8.90% | Neyveli Lignite Corp. Limited 2009 | Nil (100,000) | | 98,420 | |||
9.00% | Power Finance Corp. Limited 2009 | 50,000 (Nil) | 54,200 | | |||
9.20% | Powergrid Corp. Limited 2006 | Nil (50,000) | | 49,760 | |||
9.25% | Power Finance Corp. Limited 2012 | Nil (334,700) | | 331,340 | |||
9.70% | Canara Bank 2007 | Nil (5,000) | | 5,030 | |||
9.70% | Powergrid Corp. Limited 2006 - 2017 | Nil (600,000) | | 584,960 | |||
9.90% | Bharat Petroleum Corp. Limited 2008 150,000 (150,000) | 162,670 | 152,880 | ||||
9.95% | Bharat Petroleum Corp. Limited 2008 100,000 (200,000) | 108,550 | 204,160 | ||||
10.00% | Housing Urban Development | ||||||
Corp. 2012 | Nil (90,000) | | 87,300 | ||||
10.00% | National Thermal | ||||||
Power Corp. Limited 2007 - 2009 | Nil (103,200) | | 103,200 | ||||
10.00% | Steel Authority Of India Limited 2003 | Nil (80,000) | | 79,900 | |||
10.40% | Bharat Sanchar Nigam Limited 2006 | Nil (50,000) | | 51,080 | |||
10.80% | Infrastructure Development 2006 | Nil (50,000) | | 52,440 | |||
11.55% | State Bank Of India 2006 | Nil (100,000) | | 106,880 | |||
11.75% | ICICI Bank Limited 2002 | Nil (5,100) | | 4,460 | |||
12.00% | Bharat Petroleum Corpopration Limited 2006 | Nil (150,000) | | 159,940 | |||
13.75% | ICICI Bank Limited 2003 | 50,000 (50,000) | 52,220 | 52,780 | |||
13.75% | ICICI Bank Limited 2003 | Nil (50,000) | | 52,460 | |||
14.50% | National Aluminium Co. Limited 2005 | 150,000 (Nil) | 110,620 | | |||
16.00% I | CICI Bank Limited 2003 | Nil (150,000) | | 166,510 | |||
16.00% | ICICI Bank Limited 2003 | Nil (50,000) | | 55,600 | |||
|
|
||||||
2,460,980 | 2,399,100 | ||||||
|
|
||||||
Debentures | |||||||
5.95% | Indogulf Corp. Limited 2008 | 50,000 (Nil) | 47,870 | | |||
6.00% | Housing Development | ||||||
Finance Corp. Limited 2005 | 100,000 (Nil) | 97,550 | | ||||
6.10% | Housing Development | ||||||
Finance Corp. Limited 2008 | 250,000 (Nil) | 240,000 | | ||||
6.20% | Reliance Industries Limited 2007 | 350,000 (Nil) | 336,870 | | |||
6.30% | Housing Development | ||||||
Finance Corp. Limited 2007 | 200,000 (Nil) | 193,500 | | ||||
6.45% | Reliance Industries Limited 2012 | 100,000 (Nil) | 91,200 | | |||
7.05% | Housing Development | ||||||
Finance Corp. Limited 2007 | 50,000 (Nil) | 49,680 | | ||||
7.10% | LIC Housing Finance Corp. Limited 2009 | 50,000 (Nil) | 48,880 | | |||
7.95% | Hindalco Industries Limited 2009 | 50,000 (Nil) | 51,700 | | |||
8.34% | BSES Limited 2007 | Nil (250,000) | | 242,800 | |||
8.65% | Reliance Industries Limited 2007 | 50,000 (Nil) | 52,380 | | |||
8.80% | Housing Development | ||||||
Finance Corp. Limited 2006 | 50,000 (Nil) | 52,780 | | ||||
8.85% | Grasim Industries Limited 2008 | Nil (150,000) | | 147,090 | |||
9.00% | LIC Housing Finance Corp. Limited 2007 | Nil (50,000) | | 49,020 | |||
9.25% | LIC Housing Finance Corp. Limited 2009 | Nil (50,000) | | 48,340 | |||
9.60% | Gujarat Ambuja Cements Limited 2008 | Nil (100,000) | | 98,340 | |||
9.60% | Reliance Industries Limited 2006 | Nil (50,000) | | 49,940 | |||
9.70% | Grasim Industries Limited 2008 | Nil (100,000) | | 101,080 | |||
9.75% | Hindalco Industries Limited 2008 | Nil (250,000) | | 254,770 | |||
9.75% | ICICI Bank Limited 2007 | Nil (100,000) | | 98,020 | |||
9.90% | Reliance Industries Limited 2006 | Nil (50,000) | | 50,530 | |||
10.10% | Grasim Industries Limited 2006 | Nil (50,000) | | 51,200 | |||
10.75% | Grasim Industries Limited 2005 | Nil (50,000) | | 52,210 | |||
11.22% | Hindalco Industries Limited 2008 | Nil (250,000) | | 265,930 | |||
11.75% | Great Eastern Shipping | ||||||
Co. Limited 2002-2006 | Nil (50,000) | | 50,250 | ||||
12.70% | Reliance Industries Limited 2007 | 100,000 (Nil) | 122,260 | | |||
13.00% | Reliance Petrochemicals Limited 2004 | Nil (50,000) | | 53,810 | |||
13.20% | Indian Rayon and Industries Limited 2003 | Nil (50,000) | | 53,120 | |||
13.50% | Prism Cement Limited 2004 | 3,105 (1,553) | 90 | 870 | |||
|
|
||||||
1,384,760 | 1,667,320 | ||||||
|
|
9
schedules | |||
forming part of the Accounts | Continued |
Total
Face Value (in Rupees thousands) |
(Rs. in 000s) | March
31, 2002 |
Debentures (Unquoted) | |||||||
10.00% | Rama Newsprint & Papers Limited 2004 | Nil (90,835) | | 79,080 | |||
12.50% | Arvind Mills Limited 2000 | Nil (4,092) | | 3,690 | |||
15.00% | Pal Peugot Limited 2004 | 16,160 (16,160) | 12,170 | 12,170 | |||
17.50% | Grapco Granites Limited 1998 | 20,000 (20,000) | 18,250 | 18,250 | |||
17.50% | Grapco Granites Limited 2000 | 15,000 (15,000) | 13,100 | 13,100 | |||
17.50% | Grapco Mining Limited 1995 | 10,000 (10,000) | 9,310 | 9,310 | |||
18.00% | Parasrampuria Synthetics Limited 1999 | 20,000 (20,000) | 17,620 | 17,620 | |||
19.50% | Grapco Granites Limited 1998 | 20,000 (20,000) | 18,920 | 18,920 | |||
20.00% | Das Lagerwey 1996 | 30,000 (30,000) | 30,000 | 30,000 | |||
20.00% | Veena Textiles Limited 1996 | 15,000 (15,000) | 14,300 | 14,300 | |||
22.00% | GTV Spinners Limited 1996 | 4,529 (4,529) | 4,480 | 4,480 | |||
|
|
||||||
138,150 | 220,920 | ||||||
|
|
||||||
Equity | |||||||
Balaji Telefilms Limited | 3 (Nil) | 80 | | ||||
Bharat Forge Limited | 1,500 (1,500) | 29,700 | 16,020 | ||||
Bharat Forge Utilities Limited | 750 (750) | | | ||||
Bhushan Steel Limited | 7,828 (7,828) | 18,980 | 12,130 | ||||
Biochem Synergy Limited | 635 (635) | | | ||||
CRISIL | 1 (Nil) | 30 | | ||||
Dabur India Limited | 76 (Nil) | 270 | | ||||
Eveready Industries India Limited | 5,059 (5,059) | 5,200 | 5,520 | ||||
Hughes Tele.Com (India) Limited | Nil (121,782) | | 85,250 | ||||
India Containers Limited | 934 (934) | | | ||||
Indian Seamless Metaltube Limited | 1,000 (1,000) | 800 | 1,040 | ||||
Inland Printers Limited | 7,992 (7,992) | | | ||||
Jocil Ind Limited | 2,371 (2,371) | | | ||||
Kallam Spinning Mills Limited | 4,634 (4,634) | | | ||||
Nucent Finance Limited | 1 | (1) | | | |||
Parakaram Tehcnofab Limited | 1,910 (1,910) | | | ||||
Parasrampuria Synthetics Limited | 2,151 (2,151) | 10 | 10 | ||||
Rama Newsprint Limited | 10 (10) | | | ||||
Shri Renuga Textiles Limited | 1,000 (1,000) | | | ||||
South Indian Bank Limited | 3,081 (3,081) | 10,990 | 13,250 | ||||
Sun Pharmaceutical Industries Limited | 27 (19) | 90 | 90 | ||||
Sunshield Chemicals Limited | 2(2) | | | ||||
Tata Investment Corp. Limited | 768 (768) | 5,830 | 6,590 | ||||
Unipon Industries Limited | 2,177 (2,177) | | | ||||
Usha Beltron Limited | 625 (625) | 3,140 | 3,340 | ||||
Usha Martin Infotech Limited | 625 (625) | 250 | 1,250 | ||||
Vickers System Limited | 1(1) | | | ||||
|
|
||||||
75,370 | 144,490 | ||||||
|
|
||||||
Units | |||||||
HDFC Liquid Fund Dividend Option | Nil (500,017) | | 500,230 | ||||
J M Income Fund Growth Option | 4,133 (Nil) | 100,000 | | ||||
|
|
||||||
100,000 | 500,230 | ||||||
|
|
||||||
Total | 19,139,280 | 19,080,350 | |||||
Less : Provision against Non-performing | |||||||
Assets / Bad debts written off | 138,150 | 220,920 | |||||
|
|
||||||
Grand Total | 19,001,130 | 18,859,430 | |||||
|
|
Notes
: |
|
1. |
Certain
Debentures which have defaulted for payment on maturity date have
been written off. However, the same have been continued to be disclosed
as Stock-in-trade to reflect existence of the claim on the Issuer/Seller. |
2. |
The
aggregate carrying value and market value of quoted securities as
at March 31, 2003 is Rs. 18,901,130 thousand and Rs. 18,917,590 thousand
respectively. (Previous year - Rs. 18,359,190 thousand and Rs. 18,369,490
thousand respectively). |
(Rs. in 000s) | March
31, 2002 |
I. | SUNDRY DEBTORS (Unsecured) | ||||
(A) | Receivables outstanding for a period | ||||
exceeding six months | |||||
Considered Doubtful | 2,130 | 3,240 | |||
(B) | Other Receivables considered good | ||||
Fees Receivable | 13,610 | 15,170 | |||
Trade Receivables | 156,580 | 11,320 | |||
|
|
||||
172,320 | 29,730 | ||||
Less : Provision for Doubtful Debts | 2,130 | 3,240 | |||
|
|
||||
Total | 170,190 | 26,490 | |||
|
|
||||
J. | CASH AND BANK BALANCES | ||||
Cash & Cheques on hand | 100 | 90 | |||
In Current Accounts with Scheduled Banks | 12,240 | 3,550 | |||
In Current Accounts with Reserve Bank of India | 10,040 | 9,780 | |||
Fixed Deposits with Scheduled Banks | 1,000 | | |||
|
|
||||
Total | 23,380 | 13,420 | |||
|
|
||||
K. | LOANS AND ADVANCES | ||||
(Unsecured
and considered good unless otherwise stated) |
|||||
Advances : | |||||
(Recoverable
in cash or in kind or for value to be received) |
|||||
Advance Income & Other Tax | 2,134,890 | 1,809,110 | |||
Security Deposit for Leased Premises | 122,470 | 227,980 | |||
Other Advances and Deposits * | 55,700 | 59,490 | |||
Application Money for Securities | 500,010 | 200,000 | |||
|
|
||||
2,813,070 | 2,296,580 | ||||
Provision for Doubtful Advances | | 2,590 | |||
|
|
||||
Total (B) | 2,813,070 | 2,293,990 | |||
|
|
||||
*Advances include an amount of Rs. 1,550 thousand respectively receivable from Subsidiary Companies (Previous year - Rs. 4,410 thousand). | |||||
L. | CURRENT LIABILITIES AND PROVISIONS | ||||
(A) | Current Liabilities | ||||
Interest Accrued but not due | 32,500 | 77,320 | |||
Sundry Creditors | 100,080 | 61,450 | |||
Sundry Creditors For Expenses | 118,850 | 46,510 | |||
Other Liabilities | 148,440 | 110,300 | |||
Unclaimed Dividends | 620 | 160 | |||
|
|
||||
Total (A) | 400,490 | 295,740 | |||
|
|
||||
(B) | Provisions : | ||||
Income And Other Taxes | 2,140,940 | 1,680,840 | |||
Retirement Benefits | 9,020 | 9,750 | |||
|
|
||||
Total (B) | 2,149,960 | 1,690,590 | |||
|
|
||||
M. | INCOME FROM SERVICES | 20,560 | 9,300 | ||
Issue Management Fees | |||||
Financial Advisory Services | 57,210 | 21,210 | |||
Syndication Fees | 36,490 | 41,840 | |||
Underwriting Commission | 3,100 | 2,530 | |||
Brokerage And Commission | 26,920 | 25,240 | |||
Total | 144,280 | 100,120 | |||
10
schedules | ||
forming part of the Accounts | Continued |
(Rs. in '000s) | March
31, 2002 |
N. | INTEREST INCOME | |||||
Interest on Securities Held as Stock in Trade | 1,123,470 | 1,325,540 | ||||
Income on Discounted Instruments | ||||||
Investments | 25,510 | 104,830 | ||||
Stock In Trade | 102,060 | 55,760 | ||||
Interest on Repo and Call Lendings | 13,550 | 85,320 | ||||
Interest on Inter-Corporate Deposits | | 41,230 | ||||
Interest on Deposits for Leased Premises | 28,190 | 41,750 | ||||
Interest on Income - Tax Refund | | 3,160 | ||||
Interest on Other Loans and Advances | 6,100 | 11,470 | ||||
|
|
|||||
Total | 1,298,880 | 1,669,060 | ||||
|
|
|||||
O. | PROFIT/(LOSS) ON SECURITIES | |||||
Profit on Sale of Investments | 1,090 | 2,520 | ||||
Profit on Stock In Trade | ||||||
Sale of Securities | 543,688,710 | 546,669,210 | ||||
Less : Purchases | 542,545,670 | 552,583,210 | ||||
|
|
|||||
1,143,040 | (5,914,000 | |||||
Add/Less : Increase/(Decrease) | ||||||
In Closing Stock | 58,940 | 7,526,890 | ||||
|
||||||
Profit on Stock In Trade | 1,201,980 | 1,612,890 | ||||
Net Gain/(Loss) from Swaps/ FRAs | 28,690 | 34,660 | ||||
|
|
|||||
Total | 1,231,760 | 1,650,070 | ||||
|
|
|||||
P. | OTHER INCOME | |||||
Dividend Income from | ||||||
Mutual Funds / Companies | 350,310 | 335,450 | ||||
Recovery against Bad Debts Written Off | 27,500 | 31,920 | ||||
Miscellaneous Income | 460 | 1,430 | ||||
|
|
|||||
Total | 378,270 | 368,800 | ||||
|
|
|||||
Q. | FINANCIAL CHARGES AND OPERATING EXPENSES | |||||
Interest on Fixed Loans and Debentures | 408,590 | 799,250 | ||||
Interest on Borrowings from | ||||||
Reserve Bank of India | 34,540 | 111,340 | ||||
Interest on Repo and Call Borrowings | 428,020 | 361,340 | ||||
Procurement Expenses | 12,520 | 32,450 | ||||
Rating Agency Fees | 3,120 | 3,680 | ||||
Brokerage and Stamp Duty | 31,080 | 29,560 | ||||
Bank Charges | 2,750 | 2,610 | ||||
Transaction Charges | 7,770 | 460 | ||||
Custodial Services | 1,700 | 750 | ||||
Doubtful Debts Written Off/Provided | 13,000 | 10,600 | ||||
Less : Opening Provision | 9,520 | 2,840 | ||||
|
||||||
3,480 | 7,760 | |||||
|
|
|||||
Total | 933,570 | 1,349,200 | ||||
|
|
|||||
R. | PAYMENTS TO AND PROVISIONS FOR EMPLOYEES | |||||
Salaries, Wages and Incentive | 214,630 | 218,940 | ||||
Contribution to Provident and otherFunds | 9,340 | 6,810 | ||||
Staff Welfare Expenses | 7,260 | 6,120 | ||||
|
|
|||||
Total | 231,230 | 231,870 | ||||
|
|
|||||
S. | ESTABLISHMENT AND OTHER EXPENSES: | |||||
Rent and Amenities | 223,990 | 147,250 | ||||
Insurance | 2,120 | 1,050 | ||||
Travelling, Conveyance and Motor CarExpenses | 33,070 | 29,000 | ||||
Business Promotion Expenses | 22,510 | 3,440 | ||||
Repairs, Maintenance and Upkeep | 18,930 | 18,740 | ||||
Rates and Taxes | 440 | 570 | ||||
Electricity Expenses | 9,180 | 8,900 | ||||
Loss on Sale of Fixed Assets | 1,070 | 5,450 | ||||
Communication Expenses | 10,920 | 12,760 | ||||
Printing and Stationery | 6,040 | 5,270 | ||||
Deferred Revenue Expenditure Written Off | | 43,460 | ||||
Subscription and Periodicals | 16,780 | 10,960 | ||||
Professional Fees | 4,560 | 9,030 | ||||
Advertisement Expenses | 30 | 3,230 | ||||
Auditors Remuneration | 760 | 690 | ||||
Miscellaneous Expenses | 29,090 | 17,570 | ||||
|
|
|||||
Total | 379,490 | 317,370 | ||||
|
|
T. | NOTES FORMING PART OF THE ACCOUNTS AND ACCOUNTING POLICIES: | ||
1. | Significant Accounting Policies: | ||
(i) | Method
of Accounting The accounts are prepared in accordance with accounting principles generally accepted in India. The Company follows accrual method of accounting. |
||
(ii) | Revenue
Recognition In case of non-fund based activities such as issue management, loan syndication, financial advisory services etc., the revenue is recognized based on the stage of completion of assignments and the bills raised for the recovery of fees. Interest income is accounted on an accrual basis except that no interest income is recognized on Non-Performing / Doubtful assets, considering prudential norms for income recognition issued by Reserve Bank of India for Non-Banking Financial Companies. Interest income on such assets is recognised when the amount is received and appropriated towards interest. |
||
(iii) | Stock-in-trade and Investments | ||
(a) | The securities acquired with the intention of short-term holding and trading positions are considered as stock-in-trade and shown as current assets. Other securities acquired with the intention of long-term holding are considered as Investments. | ||
(b) | In respect of investments, brokerage and stamp duty payable are considered to arrive at the cost. However, in respect of securities held as stock-in-trade, brokerage and stamp duty are written off as revenue expenditure. Commission earned in respect of securities held as stock-in-trade and investments acquired from the primary market and on devolvement are adjusted from the cost of acquisition. | ||
(c) | The securities held as stock-in-trade under current assets are valued at cost or market/fair value, whichever is lower. In case of investments transferred to Stock-in-trade, carrying amount on the date of transfer is considered as cost. In case of unquoted shares fair value is taken at break-up value of shares as per the latest audited balance sheet of the concerned company. In case of debt instruments, fair value is worked out on the basis of yield to maturity rate selected considering quotes where available and credit profile of the issuer. | ||
(d) | The Investments are shown in balance sheet at cost. In case of quoted investments, provision for diminution in value of investments is made, if such diminution is of a permanent nature in the opinion of management. | ||
(iv) | Repurchase
and Resale Transactions (Repo) As a Primary Dealer, Reserve Bank of India has permitted the Company to enter into Repo transactions. Such transactions are treated as secured borrowing / lending transactions and accordingly disclosed in the financial statements. The difference between purchase and sale consideration is treated as interest and is accounted as income or expenditure, as the case may be, over the period of the contract. |
||
(v) | Zero
Coupon Instruments The difference between the acquisition price and maturity value of zero coupon instruments are treated as interest and is recognised as income over the remaining life of the instrument |
||
(vi) | Fixed
Assets and Depreciation Fixed assets are stated at historical cost. Expenditure incurred on plumbing, flooring and other civil works at leased premises prior to its occupation by the Company have been capitalized as Improvement to Leasehold Property. Depreciation on value of improvements to leasehold property is provided on straight line method at the rate determined, considering the period of lease or at the rate prescribed in |
11
schedules | |||
forming part of the Accounts | Continued |
Schedule XIV of the Companies Act, 1956, whichever is higher. Depreciation on fixed assets other than the leased assets and improvement to leasehold property is provided on written down value method at the rate prescribed in Schedule XIV of the Companies Act, 1956. Additionally, the written down value of an asset falls below Rs. 5,000 or the cost of which is less than Rs. 5,000 is fully depreciated. The management has decided to capitalize expenditure incurred on software from the current financial year. As a result of this change profit for the period is higher by Rs. 4,470 thousand. |
||||||
(vii) | Deferred Tax The tax effects of significant temporary differences are reflected through a Deferred Tax Asset / Liability, which has been reflected in the Balance Sheet and the corresponding effect of the same is given in the Profit and Loss Account. | |||||
(viii) |
Provision for Doubtful Loans and Advances The policy of provisioning against Non-Performing Loans and Advances has been decided by the management considering prudential norms issued by the Reserve Bank of India for Non Banking Financial Companies except that amounts recovered subsequent to the balance sheet date have not been considered for provisioning. As per the policy adopted, the provision against sub standard assets are fixed on a conservative basis, taking into account managements perception of the higher risk associated with the business of the Company. Certain Non-Performing Loans and Advances are considered as loss assets and full provision has been made against such assets. |
|||||
(ix) | Miscellaneous
Expenditure Lease rentals and other revenue expenditure incurred on leased premises prior to occupation of the premises are amortized over the balance period of the lease, starting from the date of occupation of leased premises. |
|||||
(x) | Foreign
Currency Transactions Expenses and income are recorded at the exchange rate prevailing on the date of transaction. Assets and liabilities at the balance sheet date are restated at the exchange rate prevailing on the Balance Sheet date. Exchange differences arising on settlement of the transaction and on account of restatement of assets and liabilities are dealt with in the profit and loss account. |
|||||
(xi) | Retirement
Benefits Provident Fund contribution is paid to the Provident Fund Commissioners fund while gratuity is covered under schemes with Life Insurance Corporation (LIC) and contribution is made to LIC. |
|||||
(xii) | Derivatives | |||||
(a) | Gains are recognized only on settlement/expiry of the derivative instruments. | |||||
(b) | All open positions are marked to market. Mark-to-market gains, if any, are not recognised. | |||||
(c) | Debit/ credit balance on open position are shown as current assets/current liabilities, as the case may be. | |||||
2. |
Deferred
Tax The break-up of deferred tax assets into major components is as follows:- |
|||||
(Rs. in 000s) | ||||||
Deferred Tax Assets | ||||||
Depreciation | 2,290 | |||||
Provision for Debtors | 760 | |||||
3,050 | ||||||
3. | Contingent Liabilities | |||||
(a) | Income tax and interest tax matters disputed by the Company Rs. 84,340 thousand (Previous year Nil). | |||||
(b) | Outstanding counter guarantees for subsidiary company as at March 31, 2003 is Rs. 130,000 thousand (Previous year Rs. 43,500 thousand). | |||||
4. | Notional Principal outstanding on account of Swaps/Forward Rate Agreements/Foreign Currency Swaps Rs. 161,846,260 thousand (previous year- Rs. 50,550,000 thousand). | |||||
5. | Loans and advances availed by the Company inclusive of interest accrued thereon but not paid : | |||||
(Rs. in '000s) | ||||||
Amount outstanding |
Amount overdue |
|||||
(a) | Unsecured Debentures | 2,184,480 | NIL | |||
(b) | Inter-corporate loans and borrowing | 385,310 | NIL | |||
(c) | Commercial Paper | 2,270,720 | NIL | |||
(d) | Other Loans | |||||
- Liquidity Adjustment Facility from RBI | 8,001,530 | NIL | ||||
- Subordinated Bonds issued as Tier III Capital | 761,680 | NIL | ||||
- Money at Call and Short Notice | 4,827,400 | NIL | ||||
Total | 18,431,120 | NIL | ||||
(Rs. in 000s) | ||||||
2002-2003 | 2001-2002 | |||||
6 | Auditors Remuneration | |||||
(a) | Audit Fees | 650 | 590 | |||
(b) | Tax Audit & Certification Fees | 90 | 90 | |||
(c) | Out of Pocket Expenses | 10 | 10 | |||
750 | 690 | |||||
7. | Expenditure
in foreign currency (Travelling & Other expenses) |
14,200 | 6,790 | |||
8. | Earnings
in foreign currency (Fees towards Advisory Services) |
36,850 | 190 |
9. | QUANTITATIVE DETAILS OF SECURITIES HELD AS STOCK IN TRADE | |||||||
(a) OPENING AND CLOSING STOCK | ||||||||
|
||||||||
Category | Opening Stock | Closing Stock | ||||||
|
||||||||
Face Value | Value | Face Value | Value | |||||
(Rs. in 000s) | (Rs. in 000s) | (Rs. in 000s) | (Rs. in 000 | |||||
|
||||||||
Government Securities | 12,249,820 | 14,148,290 | 11,415,830 | 13,789,000 | ||||
(6,400,751) | (6,629,02) | (12,249,820) | (14,148,290) | |||||
Treasury Bills | | | 1,250,000) | 1,184,540) | ||||
(48,125) | (45,650) | | | |||||
Equity Shares | 183,671) | 144,490) | 61,969) | 75,370) | ||||
(186,406) | (186,600) | (183,670) | (144,490) | |||||
Debentures | 1,898,721) | 1,888,240) | 1,553,794) | 1,522,910) | ||||
(1,160,737) | (1,094,120) | (1,898,721) | (1,888,240) | |||||
Others | 2,877,917) | 2,899,320) | 2,561,900) | 2,567,460) | ||||
(3,388,238) | (3,598,060) | (2,877,917) | (2,899,320) | |||||
|
||||||||
Total | 17,210,129 | 19,080,340 | 16,843,493 | 19,139,280 | ||||
(11,184,257) | (11,553,450) | (17,210,128) | (19,080,340) | |||||
|
||||||||
(b) PURCHASES AND SALES | ||||||||
|
||||||||
Category | Purchases | Sales | ||||||
Face Value | Value | Face Value | Value | |||||
(Rs. in 000s) | (Rs. in 000s) | (Rs. in 000s) | (Rs. in 000 | |||||
|
||||||||
Government Securities | 364,927,824 | 410,020,490 | 365,761,814 | 411,427,550 | ||||
(430,686,605 | ) | (471,857,440 | ) | (424,837,536 | ) | (466,088,120) | ||
Treasury Bills | 59,610,150 | 57,886,330 | 58,360,150 | 56,705,600 | ||||
(45,570,300 | ) | (43,529,670 | ) | (45,618,425 | ) | (43,594,170) | ||
Equity Shares | 37,944 | 47,230 | 159,645 | 130,520 | ||||
(750 | ) | (10 | ) | (3,486 | ) | (5,540) | ||
Debentures | 20,935,000 | 21,617,160 | 21,279,927 | 22,067,470 | ||||
(12,050,000 | ) | (12,501,850 | ) | (11,312,016 | ) | (11,752,130) | ||
Others | 47,721,627 | 52,974,460 | 48,037,644 | 53,357,590 | ||||
(23,164,560 | ) | (24,694,240 | ) | (23,674,881 | ) | (25,229,250) | ||
|
||||||||
Total | 493,232,545 | 542,545,670 | 493,599,180 | 543,688,730 | ||||
(511,472,215 | ) | (552,583,210 | ) | (505,446,344 | ) | (546,669,210) | ||
|
||||||||
Note: Figures in parenthesis pertain to previous year. |
12
schedules | ||
forming part of the Accounts | Continued |
10. | Related Party Disclosures | ||
The Company being a finance company the transactions in the normal course of business have not been disclosed. The following are the details of transactions with related parties: |
(Rs. in 000s) | ||
Name of the Related Party | Type of Transactions | Amount |
ICICI
Bank Limited The Holding Company |
Establishment
Expenses Dividend paid Procurement Expenses Fee Income Interest Income |
111,610 709,920 2,450 2,300 60 |
ICICI
Brokerage Services Limited Subsidiary of ICICI Securities Limited ICICI Infotech Services Limited Associate of ICICI Bank Limited |
Brokerage Expenses Establishment Expenses Fee Income |
90 5,760 3,000 |
ICICI
Lombard General Insurance Company Limited Subsidiary of ICICI Bank Limited |
Establishment Expenses |
2,210 |
|
|
|
The control exists over the following parties with whom | there are no transactions: | |
a. ICICI Brokerage Services Limited | ||
(b) ICICI Securities Holdings Inc. | ||
(c) ICICI Securities Inc. |
11. | For the purpose of comparison, figures for the previous year have been given, which have been regrouped/reclassified wherever necessary. |
Per
our Report attached For N. M. RAIJI & CO. Chartered Accountants |
For and on behalf of the Board | ||
K.V.
KAMATH Chairman |
|||
J.
M. GANDHI Partner |
LALITA
D. GUPTE Director |
||
Mumbai, April 17, 2003 | ABHIJEET
GUIN Vice President & Head Financials |
POYNI
BHATT Senior Vice President & Company Secretary |
RAMNI
NIRULA Managing Director & CEO |
13
Statement
pursuant to Part IV, Schedule VI to the Companies Act, 1956 Balance Sheet Abstract and Company’s General Business Profile |
1. | Registration Details | |||||||||||||
Registration No. | 1 | 3 | 1 | 9 | 0 | 0 | State Code | 1 | 1 |
Balance Sheet Date | 3 | 1 | 0 | 3 | 2 | 0 | 0 | 3 | |||||
Date | Month | Year |
2. |
Capital Raised during the Year | ||||||||||||||||||
(Amount in Rupees thousand) | |||||||||||||||||||
Public Issue | Bonus Issue | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
Rights Issue | Private Placement | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
3. | Position of Mobilisation and Deployment of Funds | ||||||||||||||||||
(Amount in Rupees thousand) | |||||||||||||||||||
Total Liabilities and Shareholders Funds | Total Assets | ||||||||||||||||||
2 | 1 | 9 | 0 | 9 | 4 | 3 | 0 | 2 | 1 | 8 | 9 | 8 | 4 | 3 | 9 | ||||
Sources of Funds | |||||||||||||||||||
Paid-up Capital | Reserves and Surplus | ||||||||||||||||||
2 | 0 | 3 | 0 | 0 | 3 | 0 | 1 | 4 | 8 | 0 | 7 | 8 | 0 | ||||||
Secured Loans | Unsecured Loans | ||||||||||||||||||
8 | 0 | 0 | 0 | 0 | 0 | 0 | 1 | 0 | 3 | 9 | 8 | 6 | 2 | 0 | |||||
Application of Funds | |||||||||||||||||||
Fixed Assets | Investments | ||||||||||||||||||
1 | 0 | 7 | 7 | 6 | 0 | 1 | 8 | 7 | 3 | 9 | 5 | 0 | |||||||
Net Current Assets | Miscellaneous Expenditure | ||||||||||||||||||
1 | 9 | 9 | 2 | 4 | 6 | 7 | 0 | N | I | L | |||||||||
4. |
Performance of Company (Amount in Rupees thousand) |
||||||||||||||||||
Turnover | Total Expenditure | ||||||||||||||||||
3 | 0 | 5 | 3 | 1 | 9 | 0 | 1 | 5 | 5 | 9 | 6 | 0 | 0 | ||||||
Profit before Tax | Profit after Tax | ||||||||||||||||||
1 | 4 | 9 | 3 | 5 | 9 | 0 | 1 | 0 | 2 | 9 | 4 | 4 | 0 | ||||||
Earning per Share in Rupees | Dividend Rate % | ||||||||||||||||||
5 | . | 0 | 7 | 3 | 5 | % | |||||||||||||
5. |
Generic Names of Three Principal Services of the Company (As per monetary terms) |
||||||||||||||||||
Item
Code No.
: Not Applicable |
|||||||||||||||||||
Product Description : Securities Investment and Trading Investment Banking Activities and Corporate Finance |
|||||||||||||||||||
For and on behalf of the Board | |||
K.V.
KAMATH Chairman |
|||
LALITA
D. GUPTE Director |
|||
Mumbai, April 17, 2003 | ABHIJEET
GUIN Vice President & Head Financials |
POYNI
BHATT Senior Vice President & Company Secretary |
RAMNI
NIRULA Managing Director & CEO |
14
cash flow statement | ||
for the year ended March 31, 2003 |
(Rs. in 000s) | March 31, 2002 |
A. | Cash Flow From Operating Activities | |||||
Profit Before Tax | 1,493,590 | 1,876,170 | ||||
(Profit)/Loss on Sale of Fixed Assets | 1,070 | 5,450 | ||||
Depreciation | 15,310 | 13,440 | ||||
Deferred Revenue Expenses Written Off | | 43,460 | ||||
Provision for Wealth Tax | 100 | 100 | ||||
Bad and Doubtful Debts (Net) | 3,480 | 7,760 | ||||
|
|
|||||
Operating Profit before Changes in Operating Assets and Liabilities | 1,513,550 | 1,946,380 | ||||
Adjustments for net change in Operating Assets and Liabilities | ||||||
Current Assets excluding Cash and Cash Equivalents | (73,130 | ) | (7,281,110) | |||
Loans and advances relating to Operations | (193,330 | ) | 2,606,250 | |||
Current Liabilities relating to Operations | 100,540 | (246,150) | ||||
|
|
|||||
(165,920 | ) | (4,921,010) | ||||
|
|
|||||
Cash Generated from Operations | 1,347,630 | (2,974,630) | ||||
Payment of Taxes (Net) | (325,780 | ) | (568,68) | |||
|
|
|||||
Net Cash from Operating Activities | 1,021,850 | (3,543,310) | ||||
|
|
|||||
B. | Cash Flow From Investment Activities | |||||
Acquisition of Equity Investments in Subsidiary Companies | (24,410 | ) | | |||
Purchase of Investments | (1,323,110 | ) | (12,350) | |||
Purchase of Fixed Assets | (17,490 | ) | (13,350) | |||
Sale of Fixed Assets | 530 | (16,960 | ) | 370 | ||
|
|
|
||||
Net cash used in Investment Activities | (1,364,480 | ) | (25,330) | |||
|
|
|||||
C | Cash Flow From Financing Activities | |||||
Borrowings (net of repayments) | 108,740 | 4,267,680 | ||||
Proceeds from Issue of Debentures | 954,360 | 150,000 | ||||
Payment of Dividends (including Dividend Tax) | (710,510 | ) | (851,230) | |||
|
|
|||||
352,590 | 3,566,450 | |||||
|
|
|||||
Net Cash used in Financing Activities | ||||||
Net Change in Cash & Cash Equivalents | 9,960 | (2,180) | ||||
Cash and Cash Equivalents at the Beginningof the Year | 13,420 | 15,600 | ||||
|
|
|||||
Cash and Cash Equivalents at the End of the Year | 23,380 | 13,420 | ||||
|
|
|||||
Per
our Report attached For N. M. RAIJI & CO. Chartered Accountants |
For and on behalf of the Board | ||
K.V.
KAMATH Chairman |
|||
J.
M. GANDHI Partner |
LALITA
D. GUPTE Director |
||
Mumbai, April 17, 2003 | ABHIJEET
GUIN Vice President & Head Financials |
POYNI
BHATT Senior Vice President & Company Secretary |
RAMNI
NIRULA Managing Director & CEO |
15
statement pursuant to section 212 | |||
of the Companies Act, 1956, relating to subsidiary companies |
(Rs. in ’000s) | ||||||||
Sr. No. | Name of the Subsidiary Company | ICICI
Brokerage Services Limited |
ICICI
Securities Holdings, Inc. |
ICICI Securities, Inc. | ||||
1. | The financial year of the Subsidiary Company ended on | March 31, 2003 | March31, 2003 | March31, 2003 | ||||
2. | (a) | Number of Equity Shares held by ICICI Securities Limited and/or its nominees in the Subsidiary as on March 31, 2003 | 4,500,700 Equity Shares of Rs. 10 each Fully Paid-up | 1,600,000 Equity Shares of US$1.00 per unit Fully Paid up | 1,050,000 Equity Shares of US $1.00 per unitFully Paid up held by ICICI Securities Holdings Inc. | |||
(b) | Extent of interest of ICICI Securities Limited in the Capital of the Subsidiary | 100% | 100% | 100% | ||||
3 | Net aggregate amount of Profits/Losses of the Subsidiary so far as it concerns the Members of ICICI Securities Limited and is not dealt with in the Accounts of ICICI Securities Limited | |||||||
(a) | Profits (losses) of the Subsidiary for the financial year ended on March 31, 2003 | 54,820 | 3,060 | (5,489) | ||||
(b) | Profits (losses) for the previous financial years of the Subsidiary since it became Subsidiary o fICICI Securities Limited | 89,230 | (9,103) | (18,133) | ||||
4 | Net aggregate amount of Profits/Losses of the Subsidiary so far as dealt with or provisions made for those losses in the Accounts of ICICI Securities Limited | |||||||
(a) | Profits of the Subsidiary for the financial year ended on March 31, 2003 | Nil | Nil | Nil | ||||
(b) | Profits for the previous financial years of the Subsidiary since it became Subsidiary of ICICI Securities Limited | 2,250 | Nil | Nil |
For and on behalf of the Board | |||
K.V.
KAMATH Chairman |
|||
LALITA
D. GUPTE Director |
|||
Mumbai, April 17, 2003 | ABHIJEET
GUIN Vice President & Head Financials |
POYNI
BHATT Senior Vice President & Company Secretary |
RAMNI
NIRULA Managing Director & CEO |
16
CONSOLIDATED
FINANCIAL STATEMENTS OF ICICI SECURITIES LIMITED AND ITS SUBSIDIARIES |
to the members of ICICI Securities Limited and Subsidiaries (Group) |
We have audited the attached Consolidated Balance Sheet of ICICI SECURITIES LIMITED and subsidiaries (Group) as at March 31, 2003, the Consolidated Profit and Loss Account and Consolidated Cash Flow Statement of the Group for the year ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
We report that:
1. | we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit; | |
2. | in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the books; | |
3. | in our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report are in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, in so far as they are applicable to the Company; | |
4. | the
consolidation has been carried out as per Accounting Standard 21 Consolidated Financial Statements issued by the Institute of the Chartered Accountants of India; |
|
5. | in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give a true and fair view : | |
(i) | in the case of the Balance Sheet, of the state of affairs of the group as at March 31, 2003; | |
(ii) | in the case of the Profit and Loss Account, of the Profit of the group for the year ended on that date; and | |
(iii) | in the case of Cash Flow Statement, of the cash flows for the year ended on that date. |
For
N. M. RAIJI & CO.
Chartered
Accountants
J.
M. GANDHI
Partner
Mumbai, April 17, 2003
17
balance sheet | |||
as at March 31, 2003 |
Schedule | (Rs. in 000s) | March
31, 2002 |
SOURCES OF FUNDS | |||||||||
1. | Shareholders Funds | ||||||||
A. Share Capital | A | 2,030,030 | 2,030,030 | ||||||
B. Reserves and Surplus | B | 1,595,710 | 1,225,700 | ||||||
|
|||||||||
3,625,740 | 3,255,730 | ||||||||
2. | Loan Funds | ||||||||
A. | Secured Loans | C | 8,000,000 | 11,258,300 | |||||
B. | Unsecured Loans | D | 10,398,620 | 6,077,220 | |||||
|
|
||||||||
22,024,360 | 20,591,250 | ||||||||
|
|
||||||||
APPLICATION OF FUNDS | |||||||||
1. | Fixed Assets | E | |||||||
Gross Block | 228,440 | 233,660 | |||||||
Less: Depreciation | 113,130 | 117,430 | |||||||
|
|||||||||
Net Block | 115,310 | 116,230 | |||||||
2. | Investments | F | 1,753,920 | 430,810 | |||||
3. | Deferred Tax Asset | 1,970 | 6,100 | ||||||
4. | Current Assets, Loans and Advances | ||||||||
A. | Current Assets | ||||||||
(a) Interest Accrued | G | 471,180 | 682,460 | ||||||
(b) Securities held as Stock-in-Trade | H | 19,016,780 | 18,859,430 | ||||||
(c) Sundry Debtors | I | 219,160 | 60,220 | ||||||
(d) Cash and Bank Balances | J | 211,780 | 135,880 | ||||||
B. | Loans and Advances | K | 2,926,850 | 2,378,910 | |||||
|
|||||||||
22,845,750 | 22,116,900 | ||||||||
Less: | Current Liabilities and Provisions : | L | |||||||
A. Current Liabilities | 453,740 | 333,310 | |||||||
B. Provisions | 2,238,850 | 1,745,480 | |||||||
|
|||||||||
NET CURRENT ASSETS | 20,153,160 | 20,038,110 | |||||||
|
|
||||||||
22,024,360 | 20,591,250 | ||||||||
|
|
||||||||
Notes
forming part of the Accounts and Accounting Policies |
T |
profit and loss account | |||
for the year ended March 31, 2003 |
Schedule | (Rs. in 000s) | March
31, 2002 |
INCOME FROM OPERATIONS | |||||||||
(a) | Income from Services | M | 288,100 | 192,840 | |||||
(b) | Interest Income | N | 1,307,720 | 1,675,890 | |||||
(c) | Profit / (Loss) on Securities | O | 1,229,250 | 1,649,600 | |||||
(d) | Other Income | P | 379,480 | 370,490 | |||||
|
|
||||||||
3,204,550 | 3,888,820 | ||||||||
Less: Operating Expenditure | |||||||||
(a) | Financial Charges and | ||||||||
Operating Expenses | Q | 956,310 | 1,413,690 | ||||||
|
|||||||||
2,248,240 | 2,475,130 | ||||||||
EXPENDITURE | |||||||||
Less: Administrative Expenditure | |||||||||
(a) | Payments to and Provisions | ||||||||
for Employees | R | 247,050 | 242,900 | ||||||
(b) | Establishment Expenses | S | 404,180 | 338,220 | |||||
(c) | Depreciation - | 17,070 | 15,330 | ||||||
|
|
||||||||
668,300 | 596,450 | ||||||||
|
|||||||||
Profit Before Taxation | 1,579,940 | 1,878,680 | |||||||
Less: | Provision for Taxation | 494,000 | 622,980 | ||||||
Deferred Tax Adjustment | 4,130 | (20,186) | |||||||
|
|||||||||
Profit After Taxation | 1,081,810 | 1,275,890 | |||||||
Brought forward from previous years | 202,920 | 116,050 | |||||||
|
|||||||||
Amount available for appropriations | 1,284,730 | 1,391,940 | |||||||
Transfer to Special Reserve | 205,890 | 255,780 | |||||||
Transfer to General Reserve | 102,940 | 127,890 | |||||||
Interim Dividend (Current Year | |||||||||
Subject to Tax) | 710,510 | 730,810 | |||||||
Tax on Dividend | | 74,540 | |||||||
|
|||||||||
Balance carried to Balance Sheet | 265,390 | 202,920 | |||||||
|
|||||||||
Notes
forming part of the Accounts and Accounting Policies |
T |
Per
our Report attached For N. M. RAIJI & CO. Chartered Accountants |
For and on behalf of the Board | ||
K.V.
KAMATH Chairman |
|||
J.
M. GANDHI Partner |
LALITA
D. GUPTE Director |
||
Mumbai, April 17, 2003 | ABHIJEET
GUIN Vice President & Head Financials |
POYNI
BHATT Senior Vice President & Company Secretary |
RAMNI
NIRULA Managing Director & CEO |
18
schedules | ||
forming part of the Accounts |
(Rs. in 000s) | March
31, 2002 |
SCHEDULE A SHARE CAPITAL | ||||||||||
Authorised: | ||||||||||
50,00,00,000 Equity Shares of Rs. 10 each | 5,000,000 | 5,000,000 | ||||||||
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Issued: | ||||||||||
20,30,02,800 Equity Shares of Rs. 10 each | 2,030,030 | 2,030,030 | ||||||||
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Subscribed and Paid up: | ||||||||||
20,30,02,800 Equity Shares of Rs. 10 each | 2,030,030 | 2,030,030 | ||||||||
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Notes : | ||||||||||
Of the above, 20,28,33,200 ( Previous year - 20,28,33,200) Equity Shares of Rs.10 each are held by ICICI Bank Limited (the holding company) and its nominees. |
SCHEDULE B RESERVES AND SURPLUS: | |||||||||
(Rs. in 000s) | |||||||||
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Balance as | Additions/ | Deductions/ | Balance | Balance | |||||
on April 1, | transfers | transfers | as on | as on | |||||
2002 | during the | during the | March 31, | March 31, | |||||
Period | Period | 2003 | 2002 | ||||||
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Share Premium Account | 112,800 | | | 112,800 | 112,800 | ||||
General Reserve | 389,000 | 102,940 | | 491,940 | 389,000 | ||||
Special Reserve (maintained | |||||||||
under Section | 519,130 | 205,890 | | 725,020 | 519,130 | ||||
45 IC of the RBI Act, 1935) | |||||||||
Translation Reserve | 1,860 | | | 560 | 1,860 | ||||
Profit and Loss Account | 202,920 | 265,390 | 202,920 | ||||||
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Total | 1,595,710 | 1,225,710 | |||||||
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(Rs. in 000s | March
31, 2002 |
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SCHEDULE C SECURED LOANS | |||||||||
Borrowings
from Reserve Bank of India (Secured by Government Securities of face value Rs.8,050 million; Previous year - Rs. 11,271.50 million) |
8,000,000 | 10,663,900 | |||||||
Repo Borrowings
from Banks (Secured by Underlying Security) |
| 594,400 | |||||||
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Total | 8,000,000 | 11,258,300 | |||||||
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SCHEDULE D UNSECURED LOANS | |||
Short Term Loans | | 1,368,500 | |
Subordinated Bonds issued as Tier III Capital | 750,000 | 500,000 | |
Inter-Corporate Borrowings | 380,700 | 625,000 | |
Money at Call and Short Notice | |||
From Banks | 3,440,000 | 830,000 | |
From Others | 1,386,700 | 10,000 | |
Commercial Paper Borrowings | 2,270,720 | 1,527,580 | |
7.00% Debentures 2003 | 110,000 | | |
(Redeemable at par by April 2003) | |||
Floating Rate Debenture | 500,000 | | |
(Redeemable at par by April 2003) | |||
Floating Rate Debenture 2003 | 295,000 | | |
(Redeemable at par by May 2003) | |||
Floating Rate Debenture 2003 | 340,500 | | |
(Redeemable at par by June 2003) | |||
6.05% Debentures 2003 | 100,000 | | |
(Redeemable at par by April 2003) | |||
6.10% Debentures 2003 | 250,000 | | |
(Redeemable at par by April 2003) | |||
6.00% Debentures 2003 | 200,000 | | |
(Redeemable at par by June 2003) | |||
7.55% Debentures 2003 | 295,000 | | |
(Redeemable at par by May 2003) | |||
6.25% Debentures 2003 | 70,000 | | |
(Redeemable at par by April 2003) | |||
7.75% Debentures 2003 | 10,000 | | |
(Redeemable at par by April 2003) | |||
Floating Rate Debenture | | 768,000 | |
(Redeemable at par by May 2002) | |||
8.50% Debentures 2002 | | 100,000 | |
(Redeemable at par by April 2002) | |||
7.95% Debentures 2002 | | 5,640 | |
(Redeemable at par by April 2002) | |||
8.15% Debentures 2002 | | 45,000 | |
(Redeemable at par by April 2002) | |||
7.86% Debentures 2002 | | 250,000 | |
(Redeemable at par by April 2002) | |||
8.45% Debentures 2002 | 47,500 | ||
(Redeemable at par by April 2002) | |||
Total | 10,398,620 | 6,077,220 | |
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(Rs. in 000s) | |||||||||||||||||
Gross Block (at Cost) | Net Block | ||||||||||||||||
April 1, | Additions | Sale/Adj | March 31, | Additions | Sale/Adj | March 31, | March 31, | March 31, | |||||||||
2002 | 2003 | 2003 | 2003 | 2002 | |||||||||||||
Freehold Land | 57,230 | | | 57,230 | | | | 57,230 | 57,230 | ||||||||
Building | 10,050 | | | 10,050 | 390 | | 2,710 | 7,340 | 7,730 | ||||||||
Improvements to Leasehold Property | 21,530 | | | 21,530 | 2,630 | | 18,920 | 2,610 | 5,240 | ||||||||
Plant and Machinery/Electrical Installation | 5,980 | | 30 | 5,950 | 360 | | 3,820 | 2,130 | 2,520 | ||||||||
Office Equipment | 29,090 | 5,080 | 1,330 | 32,840 | 2,860 | 850 | 16,180 | 16,660 | 14,920 | ||||||||
Computers & Software | 75,620 | 12,150 | 18,470 | 69,300 | 8,180 | 17,990 | 53,140 | 16,160 | 12,670 | ||||||||
Furniture and Fixtures | 21,330 | 570 | 1,860 | 20,040 | 1,470 | 1,540 | 13,150 | 6,890 | 8,110 | ||||||||
Vehicles | 2,760 | | 1,260 | 1,500 | 150 | 950 | 1,150 | 350 | 810 | ||||||||
BSE Membership Rights | 10,000 | | | 10,000 | 1,000 | | 4,070 | 5,930 | 6,930 | ||||||||
Sub-Total | 233,590 | 17,800 | 22,950 | 228,440 | 17,040 | 21,330 | 113,130 | 115,310 | 116,160 | ||||||||
Capital Work-in-Progress | | | | | | | | | 70 | ||||||||
Net Block | 233,590 | 17,800 | 22,950 | 228,440 | 17,040 | 21,330 | 113,130 | 115,310 | 116,230 | ||||||||
Previous Year | 235,700 | 15,000 | 17,030 | 233,660 | 113,300 | 15,330 | 11,200 | 116,230 | |||||||||
19
schedules | |||
forming part of the Accounts | Continued |
(Rs. '000s) | |||||||
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Name of the Company | Quantity in | Face Value | March 31, | March | |||
thousands | per unit (Rs.) | 2003 | 2002 | ||||
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Bonds/Units | |||||||
Birla Bond Plus | 232.3 (Nil) | 10 | 250,000 | ||||
Birla Bond Plus | 231.9 (Nil) | 10 | 250,000 | ||||
HDFC Short Term Plan | 236.8 (Nil) | 10 | 250,000 | ||||
JM Short Term Fund | 291.3 (Nil) | 10 | 300,480 | ||||
JM Short Term Fund | 243.5 (Nil) | 10 | 253,440 | ||||
Kotak Mahindra | 193.5 (Nil) | 10 | 200,000 | ||||
Prudential ICICI Short Term Plan | 229.3 (Nil) | 10 | 250,000 | ||||
ICICI Limited 2002 | Nil (500.0) | 100 | | 430,810 | |||
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Total | 1,753,920 | 430,810 | |||||
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Notes : | |||||||
1. The aggregate cost and market value of the quoted Investments as at March 31, 2003 is Rs. 1,753,920 thousand and Rs. 1,807,500 thousand respectively (Previous year - Rs. 430, 810 thousand and Rs. 430,800 thousand respectively). |
SCHEDULE
G INTEREST ACCRUED |
||||||
(Rs. '000s) | March
31, 2002 |
|||||
On Investments | | 40,330 | ||||
On Stock-in-Trade | 442,410 | 611,330 | ||||
On Loans and Advances | 28,770 | 30,800 | ||||
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Total | 471,180 | 682,460 | ||||
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(at
lower of cost or market value) (Quoted unless otherwise stated) |
Total
Face Value (in Rupees thousands) |
(Rs. in 000s) | March
31, 2002 |
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Government
of India Securities and Deemed Government of India Securities |
||||||
6.96% Oil Co Bonds 2009 | 250,000 (Nil) | 251,870 | | |||
7.27% Government of India 2013 | 300,000 (Nil) | 317,080 | | |||
7.40% Government of India 2012 | 315,000 (Nil) | 336,420 | | |||
7.46% Government of India 2017 | 400,000 (Nil) | 426,000 | | |||
7.55% Government of India 2010 | 300,000 (Nil) | 319,500 | | |||
8.07% Government of India 2017 | 311,800 (Nil) | 349,840 | | |||
8.25% Government of India 2005 | 30 (30) | 30 | 30 | |||
8.35% Government of India 2022 | 510,700 (Nil) | 582,700 | | |||
9.39% Government of India 2011 | 300,000 (926,500) | 355,800 | 1,027,030 | |||
9.40% Government of India 2012 | 700,000 (150,000) | 836,150 | 167,100 | |||
9.81% Government of India 2013 | 200,000 (1,300,000) | 249,600 | 1,483,950 | |||
9.85% Government of India 2015 | 300,000 (1,335,000) | 380,850 | 1,538,590 | |||
9.90% Government of India 2005 | Nil (150,000) | | 162,450 | |||
10.03% Government of India 2019 | 650,000 (Nil) | 843,700 | | |||
10.18% Government of India 2026 | Nil (175,000) | | 206,760 | |||
10.25% Government of India 2021 | 100,000 (197,600) | 133,100 | 233,460 | |||
10.71% Government of India 2016 | Nil (600,000) | | 727,800 | |||
11.00% Government of India 2002 | Nil (100) | | 100 | |||
11.00% Government of India 2006 | 300,000 (130,900) | 342,600 | 150,210 | |||
11.03% Government of India 2012 | 150,000 (Nil) | 195,600 | | |||
11.10% Government of India 2003 | Nil (2,209,780) | | 2,305,910 | |||
11.15% Government of India 2002 | Nil (800) | | 810 | |||
11.19% Government of India 2005 | 200,000 (50,000) | 222,100 | 56,430 | |||
11.40% Government of India 2008 | 2,300,000 (800,000) | 2,838,660 | 967,200 | |||
11.50% Government of India 2011 | 400,000 (2,150,000) | 530,800 | 2,690,730 | |||
11.50% Government of India 2007 | 400,000 (Nil) | 475,180 | | |||
11.78% Government of India 2003 | Nil (39,300) | | 41,850 | |||
11.99% Government of India 2009 | 2,750,000 (1,050,000) | 3,508,690 | 1,302,000 | |||
12.50% Government of India 2004 | 202,550 (960,000) | 214,910 | 1,060,800 | |||
13.80% Government of India 2002 | Nil (24,810) | | 25,080 | |||
6.60% Government of Jammu and Kashmir 2013 | 30,000 (Nil) | 29,150 | | |||
7.80% Government of Andhra Pradesh 2012 | 10,000 (Nil) | 10,500 | | |||
7.80% Government of Maharashtra 2012 | 10,000 (Nil) | 10,500 | | |||
8.30% Government of Kerala 2012 | 15,400 (Nil) | 16,700 | | |||
12.50% Government of Maharashtra 2004 | 10,350 (Nil) | 10,970 | | |||
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13,789,000 | 14,148,290 | |||||
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Total
Face Value (in Rupees thousands) |
(Rs. in '000s) | March
31, 2003 |
||||
Treasury Bills | ||||||
364 Day Treasury Bills 11-07-2003 | 50,000 (Nil) | 47,560 | | |||
364 Day Treasury Bills 12-12-2003 | 100,000 (Nil) | 95,690 | | |||
364 Day Treasury Bills 20-02-2004 | 400,000 (Nil) | 379,960 | | |||
364 Day Treasury Bills 05-03-2004 | 100,000 (Nil) | 94,690 | | |||
364 Day Treasury Bills 19-03-2004 | 600,000 (Nil) | 566,640 | | |||
91 Day Treasury Bills 01-05-2003 | 300,000 (Nil) | 14,204 | | |||
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1,198,744 | | |||||
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Zero Coupon Bonds | ||||||
Power Finance Corp. Limited 2022 | 30,900 (Nil) | 6,480 | | |||
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6,480 | | |||||
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Fixed Rate Bonds | ||||||
6.05% Exim Bank of India 2007 | 200,000 (Nil) | 196,000 | | |||
6.20% Exim Bank of India 2008 | 50,000 (Nil) | 47,920 | | |||
6.30% Exim Bank of India 2007 | 100,000 (Nil) | 96,390 | | |||
6.90% Union Bank of India 2010 | 321,000 (Nil) | 313,930 | | |||
7.50% Power Finance Corp. Limited 2009 | 50,000 (Nil) | 50,700 | | |||
7.85% Powergrid Corp. Limited 2005 | 150,000 (Nil) | 152,770 | | |||
8.05% National Thermal Power Corp. Limited 2006 2007 | 450,000 (Nil) | 465,470 | | |||
8.63% Powergrid Corp. Limited 2010 2016 | 260,000 (Nil) | 278,190 | | |||
8.85% Bharat Heavy Electricals Limited 2008 | 350,000 (Nil) | 371,350 | | |||
8.90% Neyveli Lignite Corp. Limited 2009 | Nil (100,000) | | 98,420 | |||
9.00% Power Finance Corp. Limited 2009 | 50,000 (Nil) | 54,200 | | |||
9.20% Powergrid Corp. Limited 2006 | Nil (50,000) | | 49,760 | |||
9.25% Power Finance Corp. Limited 2012 | Nil (334,700) | | 331,340 | |||
9.70% Canara Bank 2007 | Nil (5,000) | | 5,030 | |||
9.70% Powergrid Corp. Limited 2006 2017 | Nil (600,000) | | 584,960 | |||
9.90% Bharat Petroleum Corp. Limited 2008 | 150,000 (150,000) | 162,670 | 152,880 | |||
9.95% Bharat Petroleum Corp. Limited 2008 | 100,000 (200,000) | 108,550 | 204,160 | |||
10.00% Housing Urban Development Corp. 2012 | Nil (90,000) | | 87,300 | |||
10.00% National Thermal Power Corp. Limited 2007 2009 | Nil (103,200) | | 103,200 | |||
10.00% Steel Authority Of India Limited 2003 | Nil (80,000) | | 79,900 | |||
10.40% Bharat Sanchar Nigam Limited 2006 | Nil (50,000) | | 51,080 | |||
10.80% Infrastructure Development 2006 | Nil (50,000) | | 52,440 | |||
11.55% State Bank Of India 2006 | Nil (100,000) | | 106,880 | |||
11.75% ICICI Bank Limited 2002 | Nil (5,100) | | 4,460 | |||
12.00% Bharat Petroleum Corp. Limited 2006 | Nil (150,000) | | 159,940 | |||
13.75% ICICI Bank Limited 2003 | 50,000 (50,000) | 52,220 | 52,780 | |||
13.75% ICICI Bank Limited 2003 | Nil (50,000) | | 52,460 | |||
14.50% National Aluminium Co Limited 2005 | 150,000 (Nil) | 110,620 | | |||
16.00% ICICI Bank Limited 2003 | Nil (150,000) | | 166,510 | |||
16.00% ICICI Bank Limited 2003 | Nil (50,000) | | 55,600 | |||
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2,460,980 | 2,399,100 | |||||
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Debentures | ||||||
5.95% Indogulf Corp. Limited 2008 | 50,000 (Nil) | 47,870 | | |||
6.00% Housing Development Finance Corp. Limited 2005 | 100,000 (Nil) | 97,550 | | |||
6.10% Housing Development Finance Corp. Limited 2008 | 250,000 (Nil) | 240,000 | | |||
6.20% Reliance Industries Limited 2007 | 350,000 (Nil) | 336,870 | | |||
6.30% Housing Development Finance Corp. Limited 2007 | 200,000 (Nil) | 193,500 | | |||
6.45% Reliance Industries Limited 2012 | 100,000 (Nil) | 91,200 | | |||
7.05% Housing Development Finance Corp. Limited 2007 | 50,000 (Nil) | 49,680 | | |||
7.10% LIC Housing Finance Corp. Limited 2009 | 50,000 (Nil) | 48,880 | | |||
7.95% Hindalco Industries Limited 2009 | 50,000 (Nil) | 51,700 | | |||
8.34% BSES Limited 2007 | Nil (250,000) | | 242,800 | |||
8.65% Reliance Industries Limited 2007 | 50,000 (Nil) | 52,380 | | |||
8.80% Housing Development Finance Corp. Limited 2006 | 50,000 (Nil) | 52,780 | | |||
8.85% Grasim Industries Limited 2008 | Nil (150,000) | | 147,090 | |||
9.00% LIC Housing Finance Corp. Limited 2007 | Nil (50,000) | | 49,020 | |||
9.25% LIC Housing Finance Corp. Limited 2009 | Nil (50,000) | | 48,340 | |||
9.60% Gujarat Ambuja Cements Limited 2008 | Nil (100,000) | | 98,340 | |||
9.60% Reliance Industries Limited 2006 | Nil (50,000) | | 49,940 | |||
9.70% Grasim Industries Limited 2008 | Nil (100,000) | | 101,080 | |||
9.75% Hindalco Industries Limited 2008 | Nil (250,000) | | 254,770 | |||
9.75% ICICI Bank Limited 2007 | Nil (100,000) | | 98,020 | |||
9.90% Reliance Industries Limited 2006 | Nil (50,000) | | 50,530 | |||
10.10% Grasim Industries Limited 2006 | Nil (50,000) | | 51,200 | |||
10.75% Grasim Industries Limited 2005 | Nil (50,000) | | 52,210 | |||
11.22% Hindalco Industries Limited 2008 | Nil (250,000) | | 265,930 | |||
11.75% Great Eastern Shipping Co Limited 2002 - 2006 | Nil (50,000) | | 50,250 | |||
12.70% Reliance Industries Limited 2007 | 100,000 (Nil) | 122,260 | | |||
13.00% Reliance Petrochemicals Limited 2004 | Nil (50,000) | | 53,810 | |||
13.20% Indian Rayon and Industries Limited 2003 | Nil (50,000) | | 53,120 | |||
13.50% Prism Cement Limited 2004 | 3,105 (1,553) | 90 | 870 | |||
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1,384,760 | 1,667,320 | |||||
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20 |
schedules | ||
forming part of the Accounts | Continued |
Total
Face Value (in Rupees thousands) |
(Rs. in '000s) | March
31, 2003 |
||||
Debentures (Unquoted) | ||||||
10.00% Rama Newsprint & Papers Limited 2004 | Nil (90,835) | | 79,080 | |||
12.50% Arvind Mills Limited 2000 | Nil (4,092) | | 3,690 | |||
15.00% Pal Peugot Limited 2004 | 16,160 (16,160) | 12,170 | 12,170 | |||
17.50% Grapco Granites Limited 1998 | 20,000 (20,000) | 18,250 | 18,250 | |||
17.50% Grapco Granites Limited 2000 | 15,000 (15,000) | 13,100 | 13,100 | |||
17.50% Grapco Mining Limited 1995 | 10,000 (10,000) | 9,310 | 9,310 | |||
18.00% Parasrampuria Synthetics Limited 1999 | 20,000 (20,000) | 17,620 | 17,620 | |||
19.50% Grapco Granites Limited 1998 | 20,000 (20,000) | 18,920 | 18,920 | |||
20.00% Das Lagerwey 1996 | 30,000 (30,000) | 30,000 | 30,000 | |||
20.00% Veena Textiles Limited 1996 | 15,000 (15,000) | 14,300 | 14,300 | |||
22.00% GTV Spinners Limited 1996 | 4,529 (4,529) | 4,480 | 4,480 | |||
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138,150 | 220,920 | |||||
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Equity | ||||||
Balaji Telefilms Limited | 43 (Nil) | 1,150 | | |||
Bharat Forge Limited | 1,500 (1,500) | 29,700 | 16,020 | |||
Bharat Forge Utilities Limited | 750 (750) | | | |||
Bhushan Steel Limited | 7,828 (7,828) | 18,980 | 12,130 | |||
Biochem Synergy Limited | 635 (635) | | | |||
Britania Industries Limited | 2 (Nil) | 110 | | |||
CRISIL | 2 (Nil) | 50 | | |||
Dabur India Limited | 76 (Nil) | 270 | | |||
Eveready Industries India Limited | 5,059 (5,059) | 5,200 | 5,520 | |||
Hughes Tele.Com (India) Limited | Nil (121,782) | | 85,250 | |||
India Containers Limited | 934 (934) | | | |||
Indian Seamless Metaltube Limited | 1,000 (1,000) | 800 | 1,040 | |||
Inland Printers Limited | 7,992 (7,992) | | | |||
Jocil Ind Limited | 2,371 (2,371) | | | |||
Kallam Spinning Mills Limited | 4,634 (4,634) | | | |||
Nucent Finance Limited | 1(1) | | | |||
Parakaram Tehcnofab Limited | 1,910 (1,910) | | | |||
Parasrampuria Synthetics Limited | 2,151 (2,151) | 10 | 10 | |||
Rama Newsprint Limited | 10 (10) | | | |||
Shri Renuga Textiles Limited | 1,000 (1,000) | | | |||
South Indian Bank Limited | 3,081 (3,081) | 10,990 | 13,250 | |||
Sun Pharmaceuticals Limited | 37 (19) | 90 | 90 | |||
Sunshield Chemicals Limited | 2(2) | | | |||
Tata Investment Corp. Limited | 768 (768) | 5,830 | 6,590 | |||
Unipon Industries Limited | 2,177 (2,177) | | | |||
United Breweries (Holdings) Limited | 41 (Nil) | 70 | | |||
United Breweries Limited | 25 (Nil) | 180 | | |||
Usha Beltron Limited | 625 (625) | 3,140 | 3,340 | |||
Usha Martin Infotech Limited | 625 (625) | 250 | 1,250 | |||
Vickers System Limited | 1(1) | | | |||
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76,820 | 144,490 | |||||
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Units | ||||||
HDFC Liquid Fund Dividend Option | Nil (500,017) | | 500,230 | |||
J M Income Fund Growth Option | 4,133 (Nil) | 100,000 | | |||
|
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100,000 | 500,230 | |||||
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|
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Total | 19,154,934 | 19,080,350 | ||||
Less: Provision against Non-performing | ||||||
Assets / Bad debts written off | 138,150 | 220,920 | ||||
|
|
|||||
Grand Total | 19,016,780 | 18,859,430 | ||||
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Notes : |
1. |
Certain
Debentures which have defaulted for payment on maturity date have
been written off. However, the same have been continued to be disclosed
as Stock-in-trade to reflect existence of the claim on the Issuer/Seller. |
2. |
The
aggregate carrying value and market value of quoted securities as
at March 31, 2003 is Rs. 18,916,780 thousand and Rs. 18,919,050 thousand
respectively. (Previous year -Rs. 18,359,190 thousand and Rs. 18,369,490
thousand respectively). |
SCHEDULE I SUNDRY DEBTORS (Unsecured) | |||||
(Rs. is 000s) | March
31, 2002 |
||||
(A) | Receivables
outstanding for a period exceeding six months: |
||||
Considered Doubtful | 3,070 | 3,240 | |||
(B) | Other Receivables Considered Good : | ||||
Fees Receivable | 13,610 | 13,290 | |||
Trade Receivables | 205,550 | 46,930 | |||
|
|
||||
222,230 | 63,460 | ||||
Less: | Provision for Doubtful Debts | 3,070 | 3,240 | ||
|
|
||||
Total | 219,160 | 60,220 | |||
|
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SCHEDULE J CASH AND BANK BALANCES | ||||||
Cash and Cheques on hand | 100 | 90 | ||||
In Current Accounts with Scheduled Banks | 49,140 | 27,040 | ||||
In Current Accounts with Reserve Bank of India | 10,040 | 9,780 | ||||
Fixed Deposits with Scheduled Banks | 152,500 | 98,970 | ||||
(Under
lien with Stock Exchanges Rs. 133,000 thousand; Previous year Rs. 81,890 thousand)) |
||||||
Total | 211,780 | 135,880 | ||||
|
|
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SCHEDULE K LOANS AND ADVANCES | ||||||
(Unsecured and considered good unless otherwise stated) | ||||||
Advances | ||||||
(Recoverable
in cash or in kind or for value to be received) |
||||||
Advance Income and Other Tax | 2,223,460 | 1,875,890 | ||||
Security Deposit for Leased Premises | 122,560 | 228,080 | ||||
Other Advances and Deposits | 61,880 | 59,090 | ||||
Application Money for Securities | 500,010 | 200,000 | ||||
Deposit with stock exchanges | 18,940 | 18,440 | ||||
|
|
|||||
2,926,850 | 2,381,500 | |||||
Less: Provision for Doubtful Advances | | 2,590 | ||||
|
|
|||||
Total | 2,926,850 | 2,378,910 | ||||
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SCHEDULE L CURRENT LIABILITIES AND PROVISIONS | ||||||
(A) Current Liabilities : | ||||||
Interest Accrued but not due | 32,500 | 77,320 | ||||
Sundry Creditors | 148,300 | 94,490 | ||||
Sundry Creditors for Expenses | 123,370 | 50,620 | ||||
Other Liabilities | 148,950 | 110,720 | ||||
Unclaimed Dividends | 620 | 160 | ||||
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|
|||||
Total (A) | 453,740 | 333,310 | ||||
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|||||
(B) Provisions : | ||||||
Income and Other Taxes | 2,229,830 | 1,735,730 | ||||
Retirement Benefits | 9,020 | 9,750 | ||||
|
|
|||||
Total (B) | 2,238,850 | 1,745,480 | ||||
|
|
|||||
SCHEDULE M INCOME FROM SERVICES | ||||||
Issue Management Fees | 20,560 | 9,300 | ||||
Financial Advisory Services | 73,420 | 26,060 | ||||
Syndication Fees | 36,490 | 41,840 | ||||
Underwriting Commission | 3,100 | 2,530 | ||||
Brokerage and Commission | 154,530 | 113,110 | ||||
|
|
|||||
Total | 288,100 | 192,840 | ||||
|
|
|||||
SCHEDULE N INTEREST INCOME | ||||||
Interest on Securities Held as Stock-in-Trade | ||||||
Stock-in-Trade | 1,123,470 | 1,325,540 | ||||
Income on Discounted Instruments | ||||||
Investments | 25,510 | 104,830 | ||||
Stock-in-Trade | 102,090 | 55,760 | ||||
Interest on Repo and Call Lendings | 13,550 | 85,320 | ||||
Interest on Inter-Corporate Deposits | | 40,930 | ||||
Interest on Deposits for Leased Premises | 36,810 | 48,020 | ||||
Interest on Income Tax Refund | | 3,160 | ||||
Interest on Other Loans and Advances | 6,290 | 12,330 | ||||
|
|
|||||
Total | 1,307,720 | 1,675,890 | ||||
|
|
|||||
SCHEDULE O PROFIT/(LOSS) ON SECURITIES | ||||||
Profit on Sale of Investments | 1,090 | 2,520 | ||||
Sale of Securities | 543,914,020 | 547,023,230 | ||||
Less: Purchases | 542,790,340 | 552,937,680 | ||||
|
|
|||||
1,123,680 | (5,914,450) | |||||
Add/Less: Increase/(Decrease) | ||||||
In Closing Stock | 74,590 | 7,526,870 | ||||
|
|
|||||
Profit on Stock-In-Trade | 1,198,270 | 1,612,420 | ||||
Derivaties | 29,890 | 34,660 | ||||
|
|
|||||
Total | 1,229,250 | 1,649,600 | ||||
|
|
21
schedules | |||
forming part of the Accounts | Continued |
(Rs. in 000s) | March 31, 2002 |
SCHEDULE P OTHER INCOME | ||||||
Dividend Income from Mutual Funds/Companies | 350,600 | 337,090 | ||||
Recovery against Bad Debts Written Off | 27,500 | 31,920 | ||||
Miscellaneous Income | 1,380 | 1,480 | ||||
|
||||||
Total | 379,480 | 370,490 | ||||
|
|
|||||
SCHEDULE Q FINANCIAL CHARGES AND | ||||||
OPERATING EXPENSES | ||||||
Interest on Fixed Loans and Debentures | 410,030 | 800,820 | ||||
Interest on Borrowings from Reserve Bank of India | 34,540 | 111,340 | ||||
Interest on Repo and Call Borrowings | 428,020 | 361,340 | ||||
Procurement Expenses | 24,180 | 91,280 | ||||
Guarantee Commission | 480 | 650 | ||||
Rating Agency Fees | 3,120 | 3,680 | ||||
Turnover Fees | 10 | 800 | ||||
Transaction Charges | 9,880 | 1,220 | ||||
Brokerage and Stamp Duty | 35,990 | 30,910 | ||||
Bank Charges | 2,940 | 2,800 | ||||
Custodial Services | 2,670 | 1,090 | ||||
Doubtful Debts Written Off / Provided | 13,970 | 10,600 | ||||
Less: Opening Provision | 9,520 | 2,840 | ||||
|
|
|||||
4,450 | 7,760 | |||||
|
|
|||||
Total | 956,310 | 1,413,690 | ||||
|
|
|||||
SCHEDULE R PAYMENTS TO AND | ||||||
PROVISIONS FOR EMPLOYEES | ||||||
Salaries, Wages and Incentive | 230,420 | 228,410 | ||||
Contribution to Provident and other Funds | 9,340 | 6,810 | ||||
Staff Welfare Expenses | 7,290 | 7,680 | ||||
|
|
|||||
Total | 247,050 | 242,900 | ||||
|
|
|||||
SCHEDULE S ESTABLISHMENT AND | ||||||
OTHER EXPENSES | ||||||
Rent and Amenities | 231,570 | 155,160 | ||||
Insurance | 2,910 | 1,850 | ||||
Travelling, Conveyance and Motor Car Expenses | 36,310 | 30,610 | ||||
Business Promotion Expenses | 22,860 | 3,570 | ||||
Repairs, Maintenance and Upkeep | 19,800 | 19,460 | ||||
Rates and Taxes | 1,700 | 1,750 | ||||
Electricity Expenses | 9,180 | 8,900 | ||||
Loss on Sale of Fixed Assets | 1,090 | 5,450 | ||||
Communication Expenses | 13,080 | 14,340 | ||||
Printing and Stationery | 6,570 | 5,350 | ||||
Deferred Revenue Expenditure Written Off | | 43,460 | ||||
Subscription and Periodicals | 18,980 | 11,250 | ||||
Professional Fees | 8,680 | 12,750 | ||||
Advertisement Expenses | 70 | 3,330 | ||||
Auditors Remuneration | 2,210 | 2,340 | ||||
Miscellaneous Expenses | 29,170 | 18,650 | ||||
|
|
|||||
Total | 404,180 | 338,220 | ||||
|
|
SCHEDULE T NOTES FORMING PART OF THE ACCOUNTS AND ACCOUNTING POLICIES
1. | Significant Accounting Policies: | |
(i) | Method of Accounting | |
The accounts are prepared in accordance with accounting principles generally accepted in India. The Company follows accrual method of accounting. | ||
(ii) | Revenue Recognition | |
In case of non-fund based activities such as issue management, loan syndication, financial advisory services etc., the revenue is recognized based on the stage of completion of assignments and the bills raised for the recovery of fees. | ||
(iii) | Stock-in-trade and Investments | ||
(a) |
The securities acquired with the intention of short-term holding and trading positions are considered as stock-in-trade and shown as current assets. Other securities acquired with the intention of long-term holding are considered as Investments. | ||
(b) |
In respect of investments, brokerage and stamp duty payable are considered to arrive at the cost. However, in respect of securities held as stock-in-trade, brokerage and stamp duty are written off as revenue expenditure. Commission earned in respect of securities held as stock-in-trade and investments acquired from the primary market and on devolvement are adjusted from the cost of acquisition. | ||
(c) |
The securities held as stock-in-trade under current assets are valued at cost or market/fair value, whichever is lower. In case of investments transferred to stock-in-trade, carrying amount on the date of transfer is considered as cost. In case of unquoted shares fair value is taken at break-up value of shares as per the latest audited balance sheet of the concerned company. In case of debt instruments, fair value is worked out on the basis of yield to maturity rate selected considering quotes where available and credit profile of the issuer. | ||
(d) | The investments are shown in balance sheet at cost. In case of quoted investments, provision for diminution in value of investments is made, if such diminution is of a permanent nature in the opinion of management. | ||
(iv) | Repurchase and Resale Transactions (Repo) | ||
As a Primary Dealer, Reserve Bank of India has permitted the Company to enter into Repo transactions. Such transactions are treated as secured borrowing / lending transactions and accordingly disclosed in the financial statements. The difference between purchase and sale consideration is treated as interest and is accounted as income or expenditure, as the case may be, over the period of the contract. | |||
(v) | Zero Coupon Instruments | ||
The
difference between the acquisition price and maturity value of zero coupon
instruments are treated as interest and is recognised as income over the
remaining life of the instrument. | |||
(vi) | Fixed Assets and Depreciation | ||
Fixed assets are stated at historical cost. Expenditure incurred on plumbing, flooring and other civil works at leased premises prior to its occupation by the Company have been capitalized as Improvement to Leasehold Property. | |||
Depreciation on fixed assets other than the leased assets and improvement to leasehold property is provided on written down value method at the rate prescribed in Schedule XIV of the Companies Act, 1956. Additionally, the written down value of an asset falls below Rs. 5,000 or the cost of which is less than Rs. 5,000 is fully depreciated. | |||
Membership Rights of Stock Exchanges is treated as an asset and the value paid to acquire such rights is amortised over a period of 10 years. | |||
The management has decided to capitalize expenditure incurred on software from the current financial year. As a result of this change profit for the period is higher by Rs. 4,600 thousand. | |||
(vii) | Sundry debtors and creditors | ||
Amounts receivable from and payable to clients for broking transactions are recognised on trade date basis and disclosed separately as sundry debtors and creditors. | |||
(viii) | Deferred Tax | ||
The tax effects of significant temporary differences are reflected through a deferred tax Asset /Liability, which has been reflected in the Balance Sheet and the corresponding effect of the same is given in the Profit and loss Account. |
22
schedules | ||
forming part of the Accounts | Continued |
(ix) | Provision for doubtful Loans and Advances | |
The policy of provisioning against Non Performing Loans and Advances has been decided by the management considering prudential norms issued by the Reserve Bank of India for Non Banking Financial Companies except that amounts recovered for provisioning. As per the policy adopted, the provision against sub standard assets are fixed on a conservative basis, taking into account managements perception of the higher risk associated with the business of the Company. Certain Non Performing Loans and Advances are considered as loss assets and full provision has been made against such assets. | ||
(x) | Miscellaneous Expenditure | |
Lease rentals and other revenue expenditure incurred on leased premises prior to occupation of the premises are amortized over the balance period of the lease, starting from the date of occupation of leased premises. | ||
(xi) | Foreign Currency Transactions | |
Expenses and income are recorded at the exchange rate prevailing on the date of transaction. Assets and Liabilities at the balance sheet date are restated at the exchange rate prevailing on the Balance Sheet date. Exchange differences arising on settlement of the transaction and on account of restatement of assets and liabilities are dealt with in the profit and loss account. | ||
(xii) | Retirement Benefits | |
Provident Fund contribution is paid to the Provident Fund Commissioners fund while gratuity is covered under schemes with Life Insurance Corporation (LIC) and contribution is made to LIC. | ||
(xiii) | Derivatives | ||
(a) | Gains are recognized only on settlement / expiry of the derivative instruments. | ||
(b) | All open positions are marked to market and the unrealized gains/loss are netted off on a scrip wise basis. Mark-to-market gains, if any, are not recognised. | ||
(c) | Debit / credit balance on open position are shown as current assets / current liabilities, as the case may be. | ||
2. | Contingent Liabilities | ||
(a) |
Outstanding counter guarantees for subsidiary company, as at March 31, 2003 is Rs. 130,000 thousand (Previous year Rs. 43,500 thousand). | ||
(b) | Income tax and interest tax matters disputed by the Company Rs. 110,960 thousand (Previous year - Nil). | ||
3. |
Notional Principal outstanding on account of Swaps / Forward Rate Agreements / Currency Swaps Rs. 161,846,260 thousand (Previous year - Rs. 50,550,000 thousand). | ||
4. | Related Party Disclosures | ||
The Company being a finance company the transactions in the normal course of business have not been disclosed. The following are the details of transactions with related parties: - |
(Rs. in 000s) | ||
|
|
|
Name of the related Party | Type of Transactions | Amount |
|
|
|
ICICI Bank Limited | ||
The Holding Company | Establishment Expenses | 112,100 |
Dividend paid | 709,920 | |
Procurement Expenses | 12,290 | |
Fee Income | 2,300 | |
Brokerage Income | 1,520 | |
Interest Income | 6,920 | |
Guarantee Commission | 100 | |
ICICI Infotech Services Limited | ||
Associate of ICICI Bank Limited | Establishment Expenses | 5,760 |
Income from Services | 3,000 | |
ICICI Lombard General Insurance Co. Limited | ||
Subsidiary of ICICI Bank Limited | Establishment Expenses | 2,210 |
ICICI Infotech, Inc. | ||
Associate of ICICI Bank Limited | Establishment Expenses | 2,070 |
The procedure for consolidation of Account is as per Accounting Standard 21 in case of subsidiary companies. The list of subsidiary companies is given below. | |
1. | ICICI Brokerage Services Limited |
2. | ICICI Securities Holdings, Inc. |
3. | ICICI Securities, Inc. |
The Company does not have any associate companies. | |
5. | Segmental Disclosures |
Internally evaluation of performance is based on two business segments Investment & Trading and Advisory & Transaction Services. These have been considered as a Primary reportable segment. The Company does not have any secondary reportable segment. Following are the disclosures for the two identified segments. This being a finance company, interest and finance costs is allocated to each segment. | |
Segment Wise Revenue, Results and Capital Employed for the year ended March 31, 2003 |
(Rs. in 000s) | ||||||
March 31, | March 31, | |||||
2003 | 2002 | |||||
Segment Revenue | ||||||
Investment and Trading | 2,876,580 | 3,640,960 | ||||
Advisory and Transaction Services | 296,860 | 192,850 | ||||
Unallocable Income | 31,190 | 55,010 | ||||
|
|
|||||
3,204,630 | 3,888,820 | |||||
|
|
|||||
Segment Results | ||||||
Investment and Trading | 1,957,160 | 2,385,180 | ||||
Advisory and Transaction Services | 259,880 | 54,720 | ||||
|
|
|||||
2,217,040 | 2,439,900 | |||||
Unallocable Expenditure | ||||||
(Net off Unallocable Income) | 637,100 | 561,210 | ||||
|
|
|||||
Profit Before Tax | 1,579,940 | 1,878,690 | ||||
Less : Tax Expense | 498,130 | 602,800 | ||||
|
|
|||||
1,081,810 | 1,275,890 | |||||
|
|
|||||
Segment Assets | ||||||
Investment and Trading | 21,921,370 | 20,199,560 | ||||
Advisory and Transaction Services | 244,960 | 169,090 | ||||
Unallocable Assets | 2,550,840 | 2,301,380 | ||||
|
|
|||||
24,717,170 | 22,670,030 | |||||
|
|
|||||
Segment Liabilities | ||||||
Investment and Trading | (18,565,510 | ) | (17,474,290 | ) | ||
Advisory and Transaction Services | (49,570 | ) | (33,040 | ) | ||
Unallocable Liabilities | (2,476,350 | ) | (1,906,960 | ) | ||
|
|
|||||
(21,091,430 | ) | (19,414,290 | ) | |||
|
|
|||||
Cost of Acquisition of Segment Assets | ||||||
Investment and Trading | | | ||||
Advisory and Transaction Services | 250 | 1,210 | ||||
|
|
|||||
250 | 1,210 | |||||
|
|
|||||
6. | For the purpose of comparison, figures for the previous year have been given, which have been regrouped / reclassified wherever necessary. | |||||
Signatures to Schedules A to T
Per
our Report attached For N. M. RAIJI & CO. Chartered Accountants |
For and on behalf of the Board | ||
K.V.
KAMATH Chairman |
ABHIJEET
GUIN Vice President & Head Financials |
||
J.
M. GANDHI Partner |
LALITA
D. GUPTE Director |
POYNI
BHATT Senior Vice President & Company Secretary |
|
Mumbai, April 17, 2003 | RAMNI
NIRULA Managing Director & CEO |
||
23
cash flow statement | |||
for year ended March 31, 2003 |
(Rs. in 000s) | March 31, 2002 |
A. | Cash Flow From Operating Activities | |||||||
Profit Before Tax | 1,579,940 | 1,878,680 | ||||||
(Profit)/Loss on Sale of Fixed Assets | 1,090 | 5,450 | ||||||
Depreciation | 17,070 | 15,330 | ||||||
Deferred Revenue Expenses Written off | | 43,460 | ||||||
Provision for Wealth Tax | 100 | 100 | ||||||
Exchange adjustments | (1,300 | ) | 1,900 | |||||
Bad and Doubtful Debts (Net) | 4,450 | 7,760 | ||||||
|
|
|||||||
Operating Profit before Changes in Operating Assets and Liabilities | 1,601,350 | 1,952,680 | ||||||
Adjustments for net change in Operating Assets and Liabilities | ||||||||
Current Assets excluding Cash and Cash equivalents | (105,010 | ) | (7,226,980 | ) | ||||
Loans and advances relating to Operations | (200,400 | ) | 2,612,560 | |||||
Current Liabilties relating to Operations | 115,250 | (248,620 | ) | |||||
|
|
|||||||
(190,160 | ) | (4,863,040 | ) | |||||
|
|
|||||||
Cash generated from Operations | 1,411,190 | (2,910,360 | ) | |||||
Payment of Taxes (Net) | (347,570 | ) | (575,310 | ) | ||||
|
|
|||||||
Net Cash from Operating Activities | 1,063,620 | (3,485,670 | ) | |||||
|
|
|||||||
B. | Cash Flow From Investment Activities | |||||||
Purchase of Investments | (1,323,110 | ) | (12,340 | ) | ||||
Purchase of Fixed Assets | (17,730 | ) | (15,000 | ) | ||||
Sale of Fixed Assets | 530 | (17,200 | ) | 390 | ||||
|
||||||||
Net cash used in Investment Activities | (1,340,310 | ) | (26,950 | ) | ||||
|
||||||||
C. | Cash Flow From Financing Activities | |||||||
Borrowings (net of repayments) | 108,740 | 4,202,780 | ||||||
Proceeds from Issue of Debentures | 954,360 | 150,000 | ||||||
Payment of Dividends (including Dividend Tax) | (710,510 | ) | (851,230 | ) | ||||
|
||||||||
352,590 | 3,501,550 | |||||||
|
||||||||
Net Cash used in Financing Activities | ||||||||
Net Change in Cash & Cash Equivalents | 75,900 | (11,070 | ) | |||||
Cash and Cash Equivalents at the beginning of the Year | 135,880 | 146,950 | ||||||
|
||||||||
Cash and Cash Equivalents at the end of the Year | 211,780 | 135,880 | ||||||
|
|
Per
our Report attached For N. M. RAIJI & CO. Chartered Accountants |
For and on behalf of the Board | ||
K.V.
KAMATH Chairman |
|||
J.
M. GANDHI Partner |
LALITA
D. GUPTE Director |
||
ABHIJEET
GUIN Vice President & Head Financials |
POYNI
BHATT Senior Vice President & Company Secretary |
RAMNI
NIRULA Managing Director & CEO |
|
Mumbai, April 17, 2003 | |||
24
ICICI BROKERAGE SERVICES LIMITED |
8TH ANNUAL REPORT AND ACCOUNTS 2002-2003 |
Directors | Auditors | Registered Office |
Ramni Nirula, Chairperson | N.M. Raiji & Co. | 41/44, Minoo Desai Marg |
A. Murugappan | Chartered Accountants | Colaba, Mumbai 400 005 |
Meher Baburaj | ||
Nitin Jain | ||
Devesh Kumar | ||
Paresh Shah | ||
T.S. Baskaran | ||
to the members |
Your Directors have pleasure in presenting the Eighth Annual Report of ICICI Brokerage Services Limited (the Company) with the audited Statement of Accounts for the year ended March 31, 2003.
OPERATIONS AND FINANCIAL RESULTS
During the year, the Company recorded gross income of Rs. 135.16 million (previous year Rs. 95.81 million). The profit before tax is Rs. 88.80 million (previous year Rs. 16.52 million) and profit after tax is Rs. 54.82 million (previous year Rs. 10.99 million) after provision of Rs. 33.98 million (previous year Rs. 5.53 million) towards tax.
To conserve resources for the business of the Company, your Directors do not recommend payment of dividend for the current year.
BUSINESS ENVIRONMENT AND PERFORMANCE
The Indian capital markets experienced yet another challenging year in 2002-2003 as foreign and domestic inflows into equity market was very weak, with Foreign Institutional Investors (FIIs) investments dropping by 67%. The benchmark equity index, the Sensex, declined 12.10% in the fiscal year 2002-2003 and underperformed its peers in the region, due to regional geo-political tensions, weakest monsoon in several years and the Iraq crisis. The volatility led to higher than usual trading activity, although this could not be sustained due to poor fund allocations.
Despite the unfavourable environment in 2002-2003, the Company saw a significant improvement in its ranking and profile, with a strong 331% growth in commission income from Rs. 29.4 million in 2001-2002 to Rs. 126.9 million in 2002-2003. The Company managed to increase its presence among institutional clients by increasing its FIIs client base and thereby emerging as a major institutional brokerage house. On the primary market side, the Company was involved with three large banks Initial Public Offerings and also in a large rights issue during the year.
The Companys sales initiatives also registered several firsts, with a successful equity placement of around Rs. 1 billion for a leading media content provider. This was followed by a large deal of a similar kind for a fast growing FMCG company with high brand equity. The Company also successfully executed one of the largest secondary market deals (Rs. 13 billion) in India. This has helped the Company prove its execution ability, thereby moving it into the big league of brokerage houses in terms of ability to source and place large deals with leading FIIs.
Fiscal year 2002-2003 has also seen considerable improvement in the performance of the Derivatives desk, with a majority of the overall derivatives business in this segment serviced by the Company. The Companys derivatives research capabilities and marketing efforts have positioned it as one of the most respected names in the Indian derivatives market. Going forward, the Company envisages substantial growth opportunities in this segment, by addition of new clients and continuously exploring new client segments.
THE YEAR AHEAD
2003-2004 began on a weak note, due to the tense situation in Iraq, the outbreak of SARS (Severe Acute Respiratory Syndrome) and other events in the sub-continent castings their shadows on the global equities markets in general and India in particular. However, FII inflows continue to be steady and there are nascent signs of a pick up in domestic equity mutual fund activity. A key factor to watch for is an expected shift in global asset allocation in favour of emerging markets after the Iraq situation has stabilized.
On the domestic front, the waiver of long-term capital gains should act as a fillip to the equity markets, as individuals increase allocations to attractively valued equities and pull money out of low-yield fixed income securities.
The Company has successfully managed to move up from gaining acceptance by clients to being acknowledged and appreciated for its trading and execution capabilities. The Company is thus well-positioned to seize the opportunity and going forward, is confident of delivering superior performance.
PUBLIC DEPOSITS
During the year, the Company has not accepted any deposit under Section 58A of the Companies Act, 1956.
DIRECTORS
Devdatt Shah resigned from the Board with effect from December 31, 2002. The Board places on record their appreciation for the valuable advice and guidance given by him during his tenure on the Board.
Ramni Nirula was appointed as an Additional Director with effect from October 10, 2002. In terms of Section 260 of the Companies Act, 1956, she holds office as an Additional Director only up to the forthcoming Annual General Meeting of the Company, and being eligible, offers herself for appointment. Paresh Shah and T.S. Baskaran were appointed as Additional Directors of the Company with effect from April 16, 2003. In terms of Section 260 of the Companies Act, 1956, they hold office as Additional Directors only upto the forthcoming Annual General Meeting of the Company and being eligible offer themselves for appointment as Directors.
In terms of the provisions of the Articles of Association of the Company, Nitin Jain will retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offers himself for re-appointment.
AUDITORS
The Auditors, M/s. N. M. Raiji & Co., Chartered Accountants, Mumbai, will retire at the ensuing Annual General Meeting. The Board at its Meeting held on April 16, 2003, has proposed their re-appointment as Auditors to audit the accounts of the Company for the financial year ending on March 31, 2004. You are requested to consider their re-appointment.
FOREIGN EXCHANGE EARNING AND EXPENDITURE
During 2002-2003, expenditure in foreign currencies amounted to Rs. 10.18 million. There was no earnings in foreign currencies during the year.
PERSONNEL AND OTHER MATTERS
There are no employees within the purview of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended.
Since your Company does not own any manufacturing facility, the disclosure of information relating to conservation of energy and technology absorption to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors confirm :
1. | that in preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; |
2. | that the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period; |
3. | that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; and |
4. |
that
the Directors had prepared the annual accounts on a going concern basis. |
ACKNOWLEDGEMENTS
Your Directors thank the clients, the Securities and Exchange Board of India, the Stock Exchange, Mumbai, the National Stock Exchange of India Limited, Mumbai, its bankers and statutory authorities for their continued support to the Company.
Your Directors express its gratitude for the unstinted support and guidance received from its shareholders, ICICI Bank Limited and other group companies.
Your Directors also express their sincere thanks and appreciation to all the employees for their commendable teamwork, professionalism and contribution during the year.
For and on behalf of the Board
RAMNI
NIRULA
Chairperson
Mumbai, April 16, 2003
25
auditors report | ||
to the members of ICICI Brokerage Services Limited |
We have audited the attached Balance Sheet of ICICI BROKERAGE SERVICES LIMITED as at March 31, 2003 and the annexed Profit and Loss Account for the year ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
(1) | As required by the Manufacturing and Other Companies (Auditors Report) Order, 1988 issued by the Company Law Board in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order to the extent applicable to the Company. | |
(2) | Further to our comments in the Annexure referred to in paragraph (1) above: | |
(a) | we have obtained
all the information and explanations which, to the best of our
knowledge and belief, were necessary for the purpose of our audit; |
|
(b) | in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the books; |
(c) | the Balance Sheet and Profit and Loss Account dealt with by this Report are in agreement with the books of account of the Company; | |
(d) | in our opinion, the Balance Sheet and Profit and Loss Account dealt with by this Report are in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 and are in agreement with the books of account; | |
(e) | on the basis of written representations received from the Directors, we report that none of the Directors is disqualified as on March 31, 2003 from being appointed as a Director u/s 274(1)(g) of the Companies Act, 1956. | |
(f) | in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view : | |
(i) | in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2003; and | |
(ii) | in the case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date. |
For
N. M. RAIJI & CO.
Chartered Accountants
J.
M. GANDHI
Partner
Mumbai, April 16, 2003
annexure to the auditors report |
1. | The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. Fixed Assets have been physically verified by the management during the year. No material discrepancies were noticed on such verification. |
2. | None of the fixed assets have been revalued during the year. |
3. | The securities held as stock in trade and in custody of the Company have been physically verified by the management at reasonable intervals. For securities with the custodian and depository participants, statements from them have been obtained on a regular basis. |
4. | The procedures of physical verification of securities followed by the management are reasonable and adequate in relation to the size of the Company. |
5. | No material discrepancies have been noticed on physical reconciliation of stock in custody of the Company, and with the custodian and depository participants as compared to the book stock. |
6. | In our opinion, the valuation of stock-in-trade is fair and proper in accordance with the normally accepted accounting principles and is on the same basis as in the preceding year. |
7. | The Company has taken loans from the companies listed in the register maintained under Section 301 of the Companies Act, 1956. The rate of interest and other terms and conditions of such loans are, prima facie, not prejudicial to the interest of the Company. The Company has taken loans, secured or unsecured, from companies under the same management as defined under Section 370(1B) of the Companies Act, 1956. The rate of interest and other terms and conditions of such loans are, prima facie, not prejudicial to the interest of the Company. |
8. | The Company has neither granted loan to the parties listed in the register maintained under Section 301 of the Companies Act, 1956 nor to the Companies under the same management defined under Section 370 (1B) of the Companies Act, 1956. |
9. | The Company has not accepted any deposits from the public and the provisions of Section 58A of the Companies Act, 1956 and the rules framed thereunder are not applicable to the Company. |
10. | The Company has an adequate internal control procedure commensurate with the size of the Company and the nature of its business in respect of purchase of assets and purchase and sale of securities. |
11. | In our opinion, and according to the information and explanations given to us, services provided and purchase and sale of securities in pursuance of contracts or arrangements listed in the register maintained under Section 301 of the Companies Act, 1956 and aggregating during the year to Rs. 50,000 or more in respect of each party, have been made at prices which are reasonable, having regard to the prevailing market prices for such services/securities. |
12. | In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business. |
13. | The Employees Provident Fund Act and Employees State Insurance Act are not applicable to the Company. |
14. | As per the records of the Company and according to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty and excise duty were outstanding as at March 31, 2003 for a period of more than six months from the date they became payable. |
15. | During the course of our examination of the books of account and according to the information and explanations given to us, no personal expenses of employees or Directors have been charged to revenue account, other than those payable under contractual obligations or in accordance with generally accepted business practice. |
16. | The Company is not an industrial company and hence the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 will not be applicable. |
17. | In respect of service activities, there is a reasonable system of authorization at proper levels and the system of internal control is commensurate with the size of the Company and nature of its business. |
18. | In
respect of the loans and advances granted on the basis of security by way
of pledge of shares, debentures and other securities, the Company has maintained
adequate documents and records. |
19. |
Proper
records have been maintained for the transactions relating to trading in
shares, securities, debentures and other investments and entries therein
have been made generally on a timely basis. Securities are held by the Company
as Stock-in-trade and are generally sent for transfer or are
held in dematerialised form. |
For
N. M. RAIJI & CO.
Chartered Accountants
J.
M. GANDHI
Partner
26
balance sheet | ||
as at March 31, 2003 |
Schedule | (Rs. in 000s) | March
31, 2002 |
I. | SOURCES OF FUNDS | ||||||||||
1. | Shareholders Funds | ||||||||||
A. | Share Capital | A | 45,010 | 45,010 | |||||||
B. | Reserves and Surplus. | 144,050 | 89,230 | ||||||||
189,060 | 134,240 | ||||||||||
2. | Deferred Tax Liability | 1,080 | 1,100 | ||||||||
|
|
||||||||||
190,140 | 135,340 | ||||||||||
|
|
||||||||||
II. | APPLICATION OF FUNDS | ||||||||||
1. | Fixed Assets | ||||||||||
A. | Gross Block | B | 14,690 | 14,470 | |||||||
Less: Depreciation | 7,510 | 5,920 | |||||||||
|
|
||||||||||
Net Block | 7,180 | 8,550 | |||||||||
2. | Current Assets, Loans and Advances | ||||||||||
A. | Current Assets: | ||||||||||
(a) | Interest Accrued | C | 3,810 | 2,830 | |||||||
(b) | Securities held as | ||||||||||
Stock-in-Trade | D | 1,450 | | ||||||||
(c) | Sundry Debtors | E | 48,980 | 35,610 | |||||||
(d) | Cash and | ||||||||||
Bank Balances | F | 159,870 | 91,330 | ||||||||
B. | Loans and Advances | G | 108,940 | 86,830 | |||||||
|
|
||||||||||
323,050 | 216,600 | ||||||||||
Less: | Current Liabilities | ||||||||||
and Provisions: | H | ||||||||||
(a) | Current Liabilities | 51,200 | 34,920 | ||||||||
(b) | Provisions | 88,890 | 54,890 | ||||||||
|
|
||||||||||
Net Current Assets | 182,960 | 126,790 | |||||||||
|
|
||||||||||
190,140 | 135,340 | ||||||||||
|
|
||||||||||
Notes
forming part of the Accounts and Accounting Policies |
O |
profit and loss account | ||
for the year ended March 31, 2003 |
Schedule | (Rs. in 000s) | March
31, 2002 |
INCOME FROM OPERATIONS | |||||||||
(a) | Brokerage Income | 127,700 | 87,890 | ||||||
(b) | Interest Income | I | 8,610 | 6,710 | |||||
(c) | Other Income | J | 1,360 | 1,690 | |||||
(d) | Profit/(Loss) on Securities | K | (2,510) | (480) | |||||
|
|||||||||
135,160 | 95,810 | ||||||||
Less: | Financial Charges and | ||||||||
Operating Expenses | L | 31,580 | 65,090 | ||||||
|
|||||||||
103,580 | 30,720 | ||||||||
EXPENDITURE | |||||||||
(a) | Payments to and provisions | ||||||||
for Employees | M | 1,490 | 1,050 | ||||||
(b) | Establishment and | ||||||||
other Expenses | N | 11,690 | 11,380 | ||||||
(c) | Depreciation | 1,600 | 1,770 | ||||||
|
|||||||||
14,780 | 14,200 | ||||||||
|
|||||||||
Profit before Taxation | 88,800 | 16,520 | |||||||
Less: | Provision for Taxation | 34,000 | 5,300 | ||||||
Deferred Tax Adjustment | (20 | ) | 234 | ||||||
|
|||||||||
Profit after Taxation | 54,820 | 10,990 | |||||||
Brought forward from previous years | 89,230 | 78,240 | |||||||
Balance carried to Balance Sheet | 144,050 | 89,230 | |||||||
|
|
||||||||
Notes
forming part of the Accounts and Accounting Policies |
O |
Per our Report attached | For and on behalf of the Board | ||||||||
For
N.M. RAIJI & CO. Chartered Accountants |
RAMNI
NIRULA Chairperson |
||||||||
J.M.
GANDHI Partner |
DEVESH
Director |
||||||||
Mumbai, April 16, 2003 |
27
schedules | ||
forming part of the Accounts |
(Rs. in 000s) | March 31, 2002 |
A. | SHARE CAPITAL: | ||||
Authorised: | |||||
25,000,000 Equity Shares of Rs. 10 each | 250,000 | 250,000 | |||
|
|
||||
Issued: | |||||
4,500,700 Equity Shares of Rs. 10 each | 45,010 | 45,010 | |||
|
|
||||
Subscribed and Paid-up: | |||||
4,500,700 Equity Shares of Rs. 10 each | 45,010 | 45,010 | |||
|
|
||||
The entire share capital of the Company is held by ICICI Securities Limited (the Holding Company) and its nominees. |
B. | FIXED ASSETS: | |||||||||||||||||
Gross Block (At Cost) | Accumulated Depreciation | Net Block | ||||||||||||||||
|
||||||||||||||||||
April 1, | Additions | Sale/Adj. | March 31, | Additions | Sale/Adj. | March 31, | March 31, | March 31, | ||||||||||
2002 | 2003 | 2003 | 2003 | 2002 | ||||||||||||||
Computers & Software | 2,310 | 240 | | 2,550 | 400 | | 1,820 | 730 | 890 | |||||||||
Office Equipment | 1,130 | 10 | 30 | 1,110 | 60 | 10 | 710 | 400 | 470 | |||||||||
Improvements to Leasehold Property | 1,030 | | | 1,030 | 140 | | 910 | 120 | 260 | |||||||||
BSE Membership Rights | 10,000 | | | 10,000 | 1,000 | | 4,070 | 5,930 | 6,930 | |||||||||
Total | 14,470 | 250 | 30 | 14,690 | 1,600 | 10 | 7,510 | 7,180 | 8,550 | |||||||||
|
||||||||||||||||||
Previous Year | 13,260 | 1,210 | | 14,470 | 1,770 | | 5,920 | 8,550 | ||||||||||
(Rs. in 000s) | March
31, 2002 |
||||||||
C. | INTEREST ACCRUED: | ||||||||
On Fixed Deposits | 3,810 | 2,830 | |||||||
Total | 3,810 | 2,830 | |||||||
|
|
||||||||
D. | SECURITIES HELD AS STOCK-IN-TRADE: | Face Value | |||||||
(At cost or market value whichever is lower) | (in Rupees) | ||||||||
EQUITY SHARES | |||||||||
Balaji Telefilms Limited | 40,000 (Nil) | 1,080 | | ||||||
Britannia Industries Limited | 2,150 (Nil) | 110 | | ||||||
Crisil Limited | 740 (Nil) | 20 | | ||||||
United Breweries (Holdings) Limited | 40,700 (Nil) | 70 | | ||||||
United Breweries Limited | 24,940 (Nil) | 170 | | ||||||
PREFERENCE SHARES | |||||||||
6% Sun Pharmaceuticals Limited | 10,216 (Nil) | | | ||||||
Total | 1,450 | | |||||||
|
|
||||||||
Note:
The aggregate carrying value and market value of quoted securities as at March 31, 2003 is Rs. 1,450 thousand and |
|||||||||
Rs. 1,450 thousand respectively (previous year - NIL). | |||||||||
E. | SUNDRY DEBTORS (Unsecured): | ||||||||
Considered Good | |||||||||
(less than six months) | |||||||||
Trade Receivables | 48,980 | 35,610 | |||||||
|
|||||||||
Total | 48,980 | 35,610 | |||||||
|
|
||||||||
28 |
schedules | ||
forming part of the Accounts | Continued |
(Rs. in 000s) | March 31, 2002 |
F. | CASH AND BANK BALANCES: | ||||||
In
Current Accounts with Scheduled Banks |
8,370 | 9,440 | |||||
Fixed Deposits with Scheduled Banks | 151,500 | 81,890 | |||||
(Under Lien with Stock Exchanges | |||||||
Rs. 133,000 thousand, previous year | |||||||
Rs. 81,890 thousand)) | |||||||
Total | 159,870 | 91,330 | |||||
G. | LOANS AND ADVANCES: | ||||||
(Unsecured and considered good) | |||||||
Advances: | |||||||
(Recoverable in cash or in kind or | |||||||
for value to be received) | |||||||
Advance income and other taxes | 88,570 | 66,770 | |||||
Deposit with stock exchanges | 18,940 | 18,440 | |||||
Other advances and deposits | 1,430 | 1,620 | |||||
Total | 108,940 | 86,830 | |||||
H. | CURRENT LIABILITIES AND PROVISIONS: | ||||||
(A) Current Liabilities: | |||||||
Trade Creditors | 48,220 | 33,050 | |||||
Other Sundry Creditors | 2,470 | 1,460 | |||||
Other Liabilities | 510 | 410 | |||||
Total (A) | 51,200 | 34,920 | |||||
(B) Provisions: | |||||||
Income and Other Taxes | 88,890 | 54,890 | |||||
Total (B) | 88,890 | 54,890 | |||||
I. | INTEREST INCOME: | ||||||
Interest income on Fixed Deposits | 8,610 | 6,270 | |||||
Interest Income on - | |||||||
Inter Corp Deposits Lent | | 440 | |||||
Total | 8,610 | 6,710 | |||||
J. | OTHER INCOME: | ||||||
Fees for Services | 150 | 50 | |||||
Dividend Income | 290 | 1,640 | |||||
Miscellaneous Income | 920 | | |||||
Total | 1,360 | 1,690 | |||||
K. | PROFIT/(LOSS) ON SECURITIES: | ||||||
On Securities held as Stock-in-Trade | |||||||
Sales | 225,310 | 354,020 | |||||
Less: Purchases | 230,470 | 354,470 | |||||
(5,160) | (450 | ) | |||||
Add/(Less): Increase/(Decrease) | |||||||
in Closing Stock | 1,450 | (3,710 | ) | (30 | ) | ||
On Derivatives | 1,200 | | |||||
Total | (2,510 | ) | (480 | ) | |||
L. | FINANCIAL CHARGES AND OPERATING EXPENSES: | ||||||
Interest on Fixed Loans | 1,440 | 2,300 | |||||
Procurement Expenses | 21,490 | 58,830 | |||||
Turnover Fees | 10 | 800 | |||||
Transaction Charges | 2,110 | 760 | |||||
Custodial and Depository Charges | 970 | 350 | |||||
Guarantee Commission | 480 | 650 | |||||
Stamp Duty | 5,010 | 1,360 | |||||
Bank Charges | 70 | 40 | |||||
|
|||||||
Total | 31,580 | 65,090 | |||||
|
|
||||||
M. | PAYMENTS TO AND PROVISIONS FOR EMPLOYEES: | ||||||
Salaries, Wages and Incentive | 1,460 | 1,020 | |||||
Staff Welfare Expenses | 30 | 30 | |||||
|
|||||||
Total | 1,490 | 1,050 | |||||
|
|
||||||
N. | ESTABLISHMENT AND OTHER EXPENSES: | ||||||
Rent and Amenities | 6,120 | 6,120 | |||||
Insurance | 110 | 230 | |||||
Travelling, Conveyance and | |||||||
Motor Car Expenses | 120 | 250 | |||||
Repairs, Maintenance and Upkeep | 850 | 720 | |||||
Rates and Taxes | 10 | 30 | |||||
Loss on Sale of Fixed Assets | 20 | | |||||
Communication Expenses | 1,140 | 1,200 | |||||
Printing and Stationery | 500 | 30 | |||||
Subscription and Periodicals | 670 | 280 | |||||
Professional Fees | 1,800 | 1,210 | |||||
Auditors' Remuneration | 290 | 290 | |||||
Miscellaneous Expenses | 60 | 1,020 | |||||
Total | 11,690 | 11,380 | |||||
|
|
29
schedules | ||
forming part of the Accounts | Continued |
O. | NOTES FORMING PART OF THE ACCOUNTS AND ACCOUNTING POLICIES: | |||
1. | Significant Accounting Policies | |||
(ii) | Revenue Recognition | |||
Income from Brokerage activities is recognised as income on the trade date of the transaction. Related expenditure incurred for procuring business is accounted for as procurement expenses. | ||||
(iii) | Investments and Stock-in-trade | |||
(a) |
The securities acquired with the intention of short-term holding and trading positions are considered as stock-in-trade and shown under current assets. Other securities acquired with the intention of long-term holding are considered as Investments. | |||
(b) |
In
respect of securities held as stock-in-trade, brokerage and stamp
duty are written-off as revenue expenditure. The cost of investment
includes brokerage and stamp duty payable. |
|||
(c) | The securities held as stock-in-trade under current assets are valued at cost or market / realisable value, whichever is lower. | |||
(d) |
Investments are shown in the Balance Sheet at cost. In case of quoted investments, provision for diminution in value of investments is made, if such diminution is of a permanent nature in the opinion of the management. | |||
(iv) | Derivatives | |||
(a) | Gains are recognised only on settlement/ expiry of the derivative instruments. | |||
(b) |
All open positions are marked to market and the unrealized gains/loss are netted off on a scripwise basis. Mark-to-market gains, if any, are not recognised. | |||
(c) | Debit/credit balance on open position are shown as current assets/current liabilities, as the case may be. | |||
(v) | Fixed Assets and Depreciation/Amortisation | |||
Fixed assets are stated at historical cost. | ||||
Depreciation on value of improvements to leasehold property is provided on straight line method at the rate determined, considering the period of the lease or at the rate prescribed in Schedule XIV of the Companies Act, 1956, whichever is higher. | ||||
Membership Rights of Stock Exchanges is treated as an asset and the value paid to acquire such rights is amortised over a period of 10 years. | ||||
Depreciation on fixed assets other than improvements to leasehold property and Membership Rights of Stock Exchanges, is provided on written down value method at the rates prescribed in Schedule XIV of the Companies Act, 1956. Additionally, the written down value of an asset falls below Rs. 5,000 or the cost of which is less than Rs. 5,000 is fully depreciated. | ||||
The management has decided to capitalize expenditure incurred on software from the current financial year. As a result of this change, profit for the year is higher by Rs. 130 thousand. | ||||
(vi) | Sundry Debtors and Creditors | |||
Amounts receivable from and payable to clients for broking transactions are recognised on trade date basis and disclosed separately as sundry debtors and creditors. | ||||
(vii) | Deferred Tax | |||
The tax effects of significant temporary differences are reflected through a deferred tax Asset / Liability, which has been reflected in the Balance Sheet and the corresponding effect of the same is given in the Profit and Loss Account. | ||||
(viii) | Foreign Currency Transactions | |||
Expenses and income are recorded at the exchange rate prevailing on the date of transaction. Assets and liabilities at the balance sheet date are restated at the exchange rate prevailing on the Balance Sheet date. Exchange differences arising on settlement of the transaction and on account of restatement of assets and liabilities are dealt with in the profit and loss account. | ||||
2. | Deferred Tax | |||
The break-up of deferred tax assets and liabilities into major components is as follows: |
(Rs. in 000s) | |||
Deferred Tax Liability | |||
Depreciation | 1,180 | ||
Less: Deferred Tax Assets | |||
Preliminary Expenses | 100 | ||
|
|||
1,080 | |||
|
|||
3. | Contingent Liabilities | |
(a) |
Income
tax matters disputed by the Company Rs. 26,620 thousand (Previous year
Nil). |
|
(b) |
Outstanding
bank guarantees amounting to Rs. 130,000 thousand provided to Stock Exchanges
(Previous year Rs. 43,500 thousand). |
|
4. | Retirement
Benefits |
|
At present, there is no liability towards retirement benefits. | ||
5. | Auditors Remuneration | (Rs. in 000s) | |||||
2002-2003 | 2001-2002 | ||||||
(a) | Audit Fees | 130 | 130 | ||||
(b) | Tax Audit and Certification Fees | 150 | 150 | ||||
(c) | Out-of-Pocket Expenses | 10 | 10 | ||||
|
|
||||||
290 | 290 | ||||||
|
|
||||||
6. | Expenditure in Foreign Currency | ||||||
Procurement & other expenses | 10,180 | 30 | |||||
7. | Quantitative Details | ||||||||||
(a) | Details of Opening and Closing Stock | (Rs. in 000s) | |||||||||
|
|||||||||||
CATEGORY | OPENING STOCK | CLOSING STOCK | |||||||||
Face Value | Value | Face Value | Value | ||||||||
|
|||||||||||
EQUITY | | | 120 | 1,450 | |||||||
3 | 30 | | | ||||||||
|
|||||||||||
(b) | Details of Purchases and Sales during the year | (Rs. in 000s) | |||||||||
|
|||||||||||
CATEGORY | PURCHASES | SALES | |||||||||
Face Value | Value | Face Value | Value | ||||||||
|
|||||||||||
EQUITY | 11,880 | 230,470 | 11,770 | 225,310 | |||||||
(16,150) | (354,470) | (16,160) | (354,020) | ||||||||
|
|||||||||||
Note: Figures in parenthesis pertain to previous year. |
8. Related Party Disclosures: | |||
The following are the details of transactions with related parties: - | |||
(Rs. in 000s) | |||
|
|||
Name of the Related Party | Type of Transactions | Amount | |
|
|||
ICICI Bank Limited The Parent Company | Brokerage Income | 1,520 | |
ICICI Bank Limited The Parent Company | Interest Income | 6,860 | |
ICICI Bank Limited The Parent Company | Procurement Expenses | 10,030 | |
ICICI Bank Limited The Parent Company | Guarantee Commission | 100 | |
ICICI Securities Limited | Brokerage Income | 90 | |
The Holding Company | |||
ICICI Securities, Inc. | Procurement Expenses | 9,840 | |
Subsidiary of Holding Company |
9. | For the purpose of comparison, figures for the previous year have been given, which have been regrouped/reclassified wherever necessary. |
Signatures to Schedules A to O | ||
For and on behalf of the Board | ||
Per our Report attached | ||
For N.M.
RAIJI & CO. Chartered Accountants |
RAMNI
NIRULA Chairperson |
|
J.M. GANDHI Partner |
DEVESH
KUMAR Director |
|
Mumbai, April 16, 2003 | ||
30 |
Statement
pursuant to Part IV, Schedule VI to the Companies Act, 1956 Balance Sheet Abstract and Company’s General Business Profile |
1. | Registration Details | |||||||||||||
Registration No. | 8 | 6 | 2 | 4 | 1 | State Code | 1 | 1 |
Balance Sheet Date | 3 | 1 | 0 | 3 | 2 | 0 | 0 | 3 | |||||
Date | Month | Year |
2. |
Capital Raised during the Year | ||||||||||||||||||
(Amount in Rupees Thousands) | |||||||||||||||||||
Public Issue | Bonus Issue | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
Rights Issue | Private Placement | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
3. | Position of Mobilisation and Deployment of Funds | ||||||||||||||||||
(Amount in Rupees Thousands) | |||||||||||||||||||
Total Liabilities and Shareholders' Funds | Total Assets | ||||||||||||||||||
1 | 9 | 0 | 1 | 4 | 0 | 1 | 9 | 0 | 1 | 4 | 0 | ||||||||
Sources of Funds | |||||||||||||||||||
Paid-up Capital | Reserves and Surplus | ||||||||||||||||||
4 | 5 | 0 | 1 | 0 | 1 | 4 | 4 | 0 | 5 | 0 | |||||||||
Secured Loans | Unsecured Loans | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
Application of Funds | |||||||||||||||||||
Fixed Assets | Investments | ||||||||||||||||||
7 | 1 | 8 | 0 | N | I | L | |||||||||||||
Net Current Assets | Miscellaneous Expenditure | ||||||||||||||||||
1 | 8 | 2 | 9 | 6 | 0 | N | I | L | |||||||||||
4. | Performance
of Company (Amount in Rupees Thousands) |
||||||||||||||||||
Turnover | Total Expenditure | ||||||||||||||||||
1 | 3 | 5 | 1 | 6 | 0 | 4 | 6 | 3 | 6 | 0 | |||||||||
Profit before Tax | Profit after Tax | ||||||||||||||||||
8 | 8 | 8 | 0 | 0 | 5 | 4 | 8 | 2 | 0 | ||||||||||
Earning per Share in Rupees | Dividend Rate % | ||||||||||||||||||
1 | 2 | . | 1 | 8 | N | I | L | ||||||||||||
5. | Generic
Names of Principal Products/Services of the Company (As per Monetary Terms) |
||||||||||||||||||
Brokerage
commission from primary market operations Brokerage commission from secondary market operations |
|||||||||||||||||||
Income from trading in securities |
|
|
For and on behalf of the Board | |
RAMNI
NIRULA Chairperson |
|
DEVESH
KUMAR Director |
|
Mumbai, April 16, 2003 |
31
ICICI SECURITIES HOLDINGS, INC. |
3RD ANNUAL REPORT AND ACCOUNTS 2002-2003 |
Directors | Auditors | Registered Office |
Sripat Pandey, President | N.M. Raiji & Co. | 1013 Centre Road |
Meher Baburaj | Chartered Accountants | City of Wilmington |
Nitin Jain | County of New Castle | |
Delaware 19805 |
to the members |
Your Directors have pleasure in presenting the Third audited Statement of Accounts of ICICI Securities Holdings, Inc. (the Company) for the year ended March 31, 2003.
OPERATIONS
The Company, a wholly owned subsidiary of ICICI Securities Limited (formerly ICICI Securities and Finance Company Limited) provides corporate advisory services to the investors in the United States of America (U.S.A.) who wish to enter the Indian financial market and Indian investors who wish to enter the financial market in the U.S.A.
BUSINESS ENVIRONMENT AND OVERALL PERFORMANCE
Business environment in the U.S.A. remained lackluster during the year under review. However, despite adverse business environment, the Company created some good business opportunities for its Indian clients as the slowdown in the U.S. economy had presented good opportunities for the Indian companies to acquire businesses in the U.S.A. at reasonable valuation. Small businesses who have suffered even worse and poor succession planning in the U.S. businesses could provide good opportunities for Indian companies to acquire small U.S. companies. At the same time many U.S. companies are looking at India as an out-sourcing destination. This phenomenon can be observed across industries such as auto, software services, business process outsourcing, pharmaceuticals.
During the year, the Company advised its Indian clients to acquire businesses in the U.S. The Company successfully closed certain transactions in the U.S. and improved upon its previous years performance. The Company is playing an important role of filling the gap by advising companies on both sides. The Company generated total revenues of Rs. 30.64 million during the year as compared to Rs. 20.05 million in the financial year 2001-2002.
DIRECTORS
During the year there were no changes in the composition of the Board. Sripat Pandey, Meher Baburaj and Nitin Jain continue as Directors of the Company.
AUDITORS
The Auditors, M/s. N. M. Raiji and Co., Chartered Accountants, Mumbai, appointed pursuant to the provisions of the Companies Act, 1956, will retire at the ensuing Annual General Meeting and offer themselves for re-appointment.
ANNUAL ACCOUNTS OF SUBSIDIARY
As required under Section 212 of the Companies Act, 1956, the audited statements of accounts for the financial year 2002-2003, together with the reports of Directors and Auditors for the year ended March 31, 2003, of the subsidiary company namely ICICI Securities, Inc. are attached.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors confirm:
1. |
that
in the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating
to material departures; |
2. |
that
the Directors had selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the profit
or loss of the Company for that period; |
3. |
that
the Directors had taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of
the Companies Act, 1956 for safeguarding the assets of the Company
and for preventing and detecting fraud and other irregularities; and |
4. |
that
the Directors had prepared the annual accounts on a going concern
basis. |
For and on behalf of the Board
Mumbai, April 16, 2003
Director
32
auditors report | ||
to the members of ICICI Securities Holdings, Inc. |
We have audited the attached Balance Sheet of ICICI SECURITIES HOLDINGS, INC. as at March 31, 2003 and the annexed Profit and Loss Account for the year ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
(1) |
As required by the Manufacturing and Other Companies (Auditors Report) Order, 1988 issued by the Company Law Board in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in the said Order to the extent applicable to the Company. | ||
(2) | Further to our comments in the Annexure referred to in paragraph (1) above: | ||
(a) |
we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit; | ||
(b) | in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the books; | ||
(c) | the Balance Sheet and Profit and Loss Account dealt with by this Report are in agreement with the books of account of the Company; | ||
(d) | in our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report are in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 and are in agreement with the books of account; | ||
(e) | on the basis of written representations received from the Directors, we report that none of the Directors is disqualified as on March 31, 2003 from being appointed as a Director u/s 274(1)(g) of the Companies Act, 1956. | ||
(f) | in our opinion, to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view: | ||
(i) | in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2003; and | ||
(ii) | in the case of the Profit and Loss Account, of the Profit for the year ended on that date. |
For
N. M. RAIJI & CO. Chartered Accountants |
|
J.
M. GANDHI Partner |
|
Mumbai, April 16, 2003 |
to the auditors report |
1. |
In
our opinion, clauses of Manufacturing and Other Companies (Auditors
Report) Order, 1988, numbering (iii), (iv), (v), (vi), (vii), (viii),
(ix), (xi), (xii), (xiii), (xiv), (xvi), (xviii) and (xx) are not
applicable for the current year. |
2. |
The
Company has maintained proper records showing full particulars including
quantitative details and situation of fixed assets. Fixed Assets have
been physically verified by the management during the year. No material
discrepancies were noticed on such verification. |
3. |
None
of the fixed assets have been revalued during the year. |
4. |
The
Company has an adequate internal control procedure commensurate with
the size of the Company and the nature of its business in respect
of purchase and sale of assets and services. |
5. |
During
the year there is no internal audit system for the Company. In the
opinion of the management, considering the size of operations and
the structure of the Company, internal audit system is not required. |
6. |
This
being a Foreign Company, Provident Fund Act and Employees State
Insurance Corporation Act are not applicable. |
7. |
During
the course of our examination of the books of account and according
to the information and explanations given to us, no personal expenses
of employees or Directors have been charged to revenue account, other
than those payable under contractual obligations or in accordance
with generally accepted business practice. |
|
8. |
In
respect of services activities: |
|
(a) |
the
system of allocating man-hours utilized to the relative jobs, is not
yet formalized; |
|
(b) |
there
is a reasonable system of authorization at proper levels and adequate
system of internal control commensurate with the size of the Company
and nature of its business. |
For
N. M. RAIJI & CO. Chartered Accountants |
|
J.
M. GANDHI Partner |
|
Mumbai, April 16, 2003 |
33
balance sheet | ||
as at March 31, 2003 |
Schedule | (Rs. in 000s) | March
31, 2002 |
SOURCES OF FUNDS | |||||||||
Shareholders Funds | |||||||||
A. | Share Capital | A | 75,025.00 | 50,610.00 | |||||
B. | Reserves & Surplus | B | (7,069.05) | (9,589.10) | |||||
|
|
||||||||
67,955.95 | 41,020.90 | ||||||||
|
|
||||||||
APPLICATION OF FUNDS | |||||||||
1. | Fixed Assets | C | |||||||
Gross Block | 642.98 | 660.79 | |||||||
Less: Depreciation | 270.55 | 114.52 | |||||||
|
|
||||||||
Net Block | 372.43 | 546.27 | |||||||
2. | Investments | D | 48,309.55 | 48,309.55 | |||||
3. | Current Assets, | ||||||||
Loans & Advances | |||||||||
A. | Current Assets - | ||||||||
(a) Interest Accrued | E | 27.53 | | ||||||
(b) Sundry Debtors | F | | | ||||||
(c) Securities held | |||||||||
as Stock-in-Trade | G | 14,204.45 | | ||||||
(d) Cash & Bank | |||||||||
Balances | H | 7,156.50 | 6,261.92 | ||||||
B. | Loans & Advances | I | 140.20 | 96.62 | |||||
|
|
||||||||
21,528.68 | 6,358.54 | ||||||||
Less: | Current Liabilities & | ||||||||
Provisions: | J | 2,254.71 | 14,193.46 | ||||||
|
|
||||||||
Net Current Assets | 19,273.97 | (7,834.92) | |||||||
|
|
||||||||
67,955.95 | 41,020.90 | ||||||||
|
|
||||||||
Notes forming part of the Accounts and Accounting Policies | Q |
profit and loss account | ||
for the year ended March 31, 2003 |
Schedule | (Rs. in 000s) | March
31, 2002 |
Income from Operations | |||||||||
(a) | Income from Services | K | 16,062.64 | | |||||
(b) | Interest Income | L | 28.10 | | |||||
(c) | Other Income | M | 14,547.30 | 20,046.60 | |||||
|
|
||||||||
30,638.04 | 20,046.60 | ||||||||
Less: | Operating Expenditure | ||||||||
Financial Charges and | |||||||||
Operating Expenses | N | 1,093.59 | 131.27 | ||||||
|
|
||||||||
29,544.45 | 19,915.33 | ||||||||
Expenditure | |||||||||
Less: | Administrative Expenditure | ||||||||
(a) | Payments to and Provisions | ||||||||
for Employees | O | 14,324.31 | 9,979.92 | ||||||
(b) | Establishment and | ||||||||
Other Expenses | P | 11,998.02 | 9,643.57 | ||||||
(c) | Depreciation | 162.48 | 112.01 | ||||||
|
|
||||||||
26,484.81 | 19,735.50 | ||||||||
|
|
||||||||
Profit Before Taxation | 3,059.64 | 179.83 | |||||||
Less: Provision for Taxation | | | |||||||
Profit After Taxation | 3,059.64 | 179.83 | |||||||
Brought
forward from previous years |
(9,103.00) | (9,282.83) | |||||||
|
|
||||||||
Amount
available for appropriations |
(6,043.37) | (9,103.00) | |||||||
Balance
carried to Balance Sheet |
(6,043.37) | (9,103.00) | |||||||
|
|
||||||||
Notes forming part of the Accounts and Accounting Policies | Q |
For and on behalf of the Board | |
Per our Report attached | |
For N. M.
RAIJI & CO. Chartered Accountants |
SRIPAT
PANDEY President |
J. M. GANDHI Partner |
NITIN
JAIN Director |
Mumbai, April 16, 2003 |
34
schedules | ||
forming part of the Accounts |
(Rs. in '000s) | March
31, 2002 |
A. | SHARE CAPITAL | |||||||
Authorised: | ||||||||
10,000,000 Equity Shares of USD 1 each | ||||||||
Issued, Subscribed and Paid up: | ||||||||
Common stock, USD 1 par value; 1,600,000 shares | 75,025.00 | 50,610.00 | ||||||
|
|
|||||||
B. | RESERVES AND SURPLUS | |||||||
Balance as on | Balance as on | Balance as on | ||||||
April 1, 2002 | March 31, 2003 | March 31, 2002 | ||||||
Profit and Loss Account | (9,103.00 | ) | (6,043.37 | ) | (9,103.00 | ) | ||
Translation Reserve | (1,025.68 | ) | (486.10 | ) | ||||
|
|
|||||||
Total | (7,069.05 | ) | (9,589.10 | ) | ||||
|
|
C. FIXED ASSETS | ||||||||||||||||||
|
||||||||||||||||||
Gross Block (At Cost) | Accumulated Depreciation | Net Block | ||||||||||||||||
April
1, 2003 |
Additions | Sale/Adj. | March
31, 2003 |
Additions | Sale/Adj. | March
31, 2003 |
March
31, 2003 |
March
31, 2002 |
||||||||||
|
||||||||||||||||||
Office Equipment | 362.89 | (9.78) | | 353.11 | 115.10 | | 211.89 | 141.22 | 266.10 | |||||||||
Furniture and Fixtures | 297.90 | (8.03) | | 289.87 | 40.93 | | 58.66 | 231.21 | 280.17 | |||||||||
|
||||||||||||||||||
Total | 660.79 | (17.81) | | 642.98 | 156.03 | | 270.55 | 372.43 | 546.27 | |||||||||
|
||||||||||||||||||
Previous period | 227.93 | 432.86 | | 660.79 | 114.52 | | 114.52 | 546.27 | ||||||||||
|
||||||||||||||||||
Note : | ||||||||||||||||||
1. Fixed Assets includes Translation Reserve of Rs.17.81 Thousand | ||||||||||||||||||
2. Depreciation for the year includes Translation Reserve of Rs.3.09 Thousand |
D. | INVESTMENTS - LONG TERM (at cost) | |||||||
Name of the Company | Quantity in thousands | FV per unit (Rs.) | (Rs. in 000s) | March 31, 2002 | ||||
In Equity Shares of Subsidiary Company | ||||||||
- Unquoted and fully paid up | ||||||||
ICICI Securities, Inc. | 1,050.00 | * | 48,309.55 | 48,309.55 | ||||
|
|
|||||||
Total | 48,309.55 | 48,309.55 | ||||||
|
|
|||||||
* Face Value of US Dollar 1.00 per unit. | ||||||||
E. | INTEREST ACCRUED | |||||||
On Stock-in-Trade | 27.53 | | ||||||
|
|
|||||||
Total | 27.53 | | ||||||
|
|
|||||||
F. | SUNDRY DEBTORS (Unsecured) | |||||||
(A) Receivables outstanding for a period | ||||||||
exceeding six months: | ||||||||
Considered Doubtful | 949.70 | | ||||||
Less: Provision for Doubtful Debts | 949.70 | | ||||||
|
|
|||||||
Total | | | ||||||
|
|
|||||||
G. | SECURITIES HELD AS STOCK IN TRADE | |||||||
(at lower of cost or market value) | Total Face Value | |||||||
(Quoted unless otherwise stated) | (in Rs. thousands) | |||||||
91 Day Treasury Bills 01-05-2003 | 14,246 (Nil) | 14,204.45 | | |||||
|
|
|||||||
14,204.45 | | |||||||
|
|
|||||||
H. | CASH AND BANK BALANCES | |||||||
In Current Accounts with Banks | 7,156.50 | 6,261.92 | ||||||
|
|
|||||||
Total | 7,156.50 | 6,261.92 | ||||||
|
|
35
schedules | ||
forming part of the Accounts | Continued |
(Rs. in '000s) | March
31, 2002 |
I. | LOANS AND ADVANCES | |||||
(Unsecured and considered good | ||||||
unless otherwise stated) | ||||||
Advances : | ||||||
(Recoverable in cash or in kind or | ||||||
for value to be received) | ||||||
Other Advances and Deposits | 46.18 | | ||||
Security Deposit for Leased Premises | 94.02 | 96.62 | ||||
|
|
|||||
Total | 140.20 | 96.62 | ||||
|
|
|||||
J. | CURRENT LIABILITIES AND PROVISIONS | |||||
Sundry Creditors for Expenses | 2,254.71 | 14,193.46 | ||||
|
||||||
Total | 2,254.71 | 14,193.46 | ||||
|
|
|||||
K. | INCOME FROM SERVICES | |||||
Financial Advisory Services | 16,062.64 | | ||||
|
||||||
Total | 16,062.64 | | ||||
|
|
|||||
L. | INTEREST INCOME | |||||
Income On Discounted Instruments | ||||||
Stock in Trade | 28.10 | | ||||
|
||||||
Total | 28.10 | | ||||
|
|
|||||
M. | OTHER INCOME | |||||
Service Charges | 14,547.30 | 20,046.60 | ||||
|
||||||
Total | 14,547.30 | 20,046.60 | ||||
|
|
|||||
N. | FINANCIAL CHARGES AND | |||||
OPERATING EXPENSES | ||||||
Bank Charges | 123.77 | 131.27 | ||||
Doubtful Debts Provided | 969.82 | |||||
Less : Opening Provision | | |||||
|
||||||
969.82 | | |||||
|
||||||
Total | 1,093.59 | 131.27 | ||||
|
|
|||||
O. | PAYMENTS TO AND PROVISIONS FOR EMPLOYEES | |||||
Salaries, Wages and Incentive | 14,323.92 | 8,452.56 | ||||
Staff Welfare Expenses | 0.39 | 1,527.36 | ||||
|
||||||
Total | 14,324.31 | 9,979.92 | ||||
|
|
|||||
P. | ESTABLISHMENT AND OTHER EXPENSES | |||||
Rent and Amenities | 1,449.42 | 1,788.36 | ||||
Insurance | 673.79 | 565.84 | ||||
Travelling, Conveyance and | ||||||
Motor Car Expenses | 3,119.42 | 1,355.37 | ||||
Business Promotion Expenses | 342.07 | 130.61 | ||||
Repairs, Maintenance and Upkeep | 16.96 | | ||||
Rates and Taxes | 1,018.23 | 1,048.58 | ||||
Communication Expenses | 1,015.70 | 389.32 | ||||
Printing and Stationery | 21.02 | 42.54 | ||||
Subscription and Periodicals | 1,530.98 | 5.25 | ||||
Professional Fees | 2,325.22 | 2,825.53 | ||||
Advertisement Expenses | 31.81 | 96.40 | ||||
Auditors Remuneration | 402.48 | 1,342.63 | ||||
Miscellaneous Expenses | 50.92 | 53.14 | ||||
|
||||||
Total | 11,998.02 | 9,643.57 | ||||
|
|
Q. | NOTES FORMING PART OF THE ACCOUNTS AND ACCOUNTING POLICIES: | |
1. | Significant Accounting Policies: | |
(i) | Method of Accounting | |
The accounts are prepared in accordance with accounting principles generally accepted in India. The Company follows accrual method of accounting. | ||
(ii) | Revenue Recognition | |
In case of non-fund based activities such as issue management, loan syndication, financial advisory services etc., the revenue is recognized based on the stage of completion of assignments and the bills raised for the recovery of fees. | ||
(iii) | Investments | |
The investments are shown in Balance Sheet at cost. In case of quoted investments, provision for diminution in value of investments is made, if such diminution is of a permanent nature in the opinion of management. | ||
(iv) | Conversion to Indian Rupees | |
For the purpose of the accounts during the year all income and expense items are converted at the average rate of exchange applicable for the year. All assets and liabilities are translated at the closing rate as on the Balance Sheet date. The exchange difference arising out of the year-end translation is being debited or credited to Translation Reserve. | ||
The Equity Share Capital and Investments in subsidiary is carriedforward at the rate of exchange prevailing on the transaction date.The resulting exchange difference on account of translation at theyear-end are transferred to Translation Reserve Account and the saidaccount is being treated as Reserves and Surplus | ||
(v) | Fixed Assets and Depreciation | |
Fixed assets are stated at historical cost.Depreciation on fixed assets is provided on written down valuemethod at the rates which are equal or higher than the ratesprescribed in Schedule XIV of the Companies Act, 1956. Such ratesare fixed after considering applicable laws in the United States ofAmerica and management estimation of the useful life of the asset. | ||
|
Depreciation of Assets | Estimate Life | ||
|
|||
Office Equipment & Computers | 3 Years | ||
Furniture & Fixtures | 7 Years | ||
|
(vi) | Deferred Tax | |
The tax effects of significant temporary differences are reflected through a Deferred Tax Asset /Liability, which has been reflected the Balance Sheet and the corresponding effect of the same is given in the Profit and Loss Account. | ||
2. | The Company is a wholly owned subsidiary of ICICI Securities Limited. The accounts have been prepared and audited to attach with the accounts of ICICI Securities Limited, the Holding Company, to comply with the provisions of the Indian Companies Act, 1956. | |
3. | Deferred Tax | |
Deferred Tax asset resulting from accumulated losses have not been accounted because of uncertainty of availability of sufficient future taxable income. | ||
4. | For the purpose of conversion of the local currency (USD) into Indian Currency (Indian Rupees) the exchange rate applied is as per para (iv) of the accounting policies. | |
5. | Related Party Disclosures | |
The Company being a finance company the transactions in the normal course of business have not been disclosed. The following are the details of transactions with related parties: |
(Rs. in 000s) | |||
|
|||
Name of the Related Party | Type of Transactions | Amount | |
|
|||
ICICI Securities, Inc. | |||
Subsidiary Company | Services | 14,547.30 | |
ICICI Infotech, Inc. | |||
Associate of ICICI Bank Limited | Establishment Expenses | 2,070.28 | |
ICICI Bank Limited | |||
The Holding Company | Establishment Expenses | 488.92 | |
|
|||
6. | For the purpose of comparison, figures for the previous year have been given, which have been regrouped/reclassified wherever necessary. |
Signatures to Schedules A to Q | ||
Per our Report attached | For and on behalf of the Board | |
For N. M.
RAIJI & CO. Chartered Accountants |
SRIPAT
PANDEY President |
|
J. M. GANDHI Partner |
NITIN
JAIN Director |
|
Mumbai, April 16, 2003 | ||
36 |
ICICI SECURITIES, INC. |
3RD ANNUAL REPORT AND ACCOUNTS 2002-2003 |
Directors | Auditors | Registered Office |
Sripat Pandey, President | N.M. Raiji & Co. | 1013 Centre Road |
Meher Baburaj | Chartered Accountants | City of Wilmington |
Nitin Jain | County of New Castle | |
Devesh Kumar | Delaware 19805 | |
|
to the members |
Your Directors have pleasure in presenting the Third audited Statement of Accounts of ICICI Securities, Inc. (the Company) for the year ended March 31, 2003.
OPERATIONS
The Company was formed to undertake securities business in the United States of America (U.S.A.). The Company, a broker-dealer registered with National Association of Securities Dealers (NASD), commenced its operations in 2001. Since commencement of its operations, the Company has been providing broking and research services and has been focusing on institutional clients in the U.S.A. who have been actively investing in the Indian equity markets.
BUSINESS ENVIRONMENT AND OVERALL PERFORMANCE
Business environment
in the U.S.A. remained lackluster during the year under review. Besides, business
restructuring coupled with domestic security concerns have led to delays in
the revival of the U.S. economy. This economy downturn coupled with U.S.-Iraq
conflicts in the last quarter hampered investment activities flowing from the
U.S.A. Despite adverse business conditions in the U.S.A, the Company has seen
significant growth in 2002-2003 and generated total revenues of Rs.10.04 million
in 2002-2003 as compared to Rs.7.85 million in 2001-2002.
During the period under review, the Company added a significant number of large
institutional clients based in the U.S.A. including some of the largest fund
management companies who have been actively investing in stocks listed on Indian
stock exchanges. With a view to expanding its business activities, the Company
has entered into an arrangement with BNY Clearing Services LLC, a subsidiary
of the Bank of New York, for availing of clearing and execution facility for
American Depository Receipts (ADRs) listed on the U.S. stock exchanges and internationally
listed Global Depository Receipts (GDRs) issued by Indian companies. Going forward,
this arrangement will enable the Company to function as a full fledged broker-dealer
by executing trades in Indian ADRs listed on the stock exchanges in the U.S.
and also to execute trades in the Indian GDRs listed on other international
stock exchanges.
In addition,
a few brand building efforts were undertaken throughout the year, with road
shows involving various Indian companies and analysts from ICICI Securities
Limited (formerly ICICI Securities and Finance Company Limited), a second level
holding company of the Company, making presentations to major fund
management companies based in the U.S.A. The Company also successfully organized
its first India Investor Conference in Boston in September, 2002.
DIRECTORS
During the year, there were no changes in the composition of the Board. Sripat Pandey, Meher Baburaj, Nitin Jain and Devesh Kumar continue as Directors of the Company.
AUDITORS
The Auditors, M/s. N. M. Raiji and Co., Chartered Accountants, Mumbai, appointed pursuant to the provisions of the Companies Act, 1956, will retire at the ensuing Annual General Meeting and offer themselves for re-appointment.
DIRECTORS
RESPONSIBILITY STATEMENT
The Directors confirm:
1. | that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; |
2. |
that the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period; |
3. |
that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and |
4. |
that
the Directors had prepared the annual accounts on a going concern basis. |
For
and on behalf of the Board
Director
Mumbai, April 16, 2003
37
auditors report | ||
to the members of ICICI Securities, Inc. |
We have audited the attached Balance Sheet of ICICI SECURITIES, INC., as at March 31, 2003 and the annexed Profit and Loss Account for the year ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
(1) |
As
required by the Manufacturing and Other Companies (Auditors Report)
Order, 1988 issued by the Company Law Board in terms of Section 227(4A)
of the Companies Act, 1956, we enclose in the Annexure a statement on the
matters specified in the said Order to the extent applicable to the Company. |
||
(2) |
Further
to our comments in the Annexure referred to in paragraph (1) above : |
||
(a) | we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit; | ||
(b) | in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the books; | ||
(c) | the Balance Sheet and Profit and Loss Account dealt with by this Report are in agreement with the books of account of the Company; | ||
(d) | in our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report are in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956 and are in agreement with the books of account; | ||
(e) |
on the basis of written representations received from the Directors, we report that none of the directors is disqualified as on March 31, 2003 from being appointed as a Director u/s 274(1)(g) of the Companies Act, 1956. | ||
(f) |
in our opinion, to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view: | ||
(i) | in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2003; and | ||
(ii) | in the case of the Profit and Loss Account, of the Loss for the year ended on that date. | ||
For
N. M. RAIJI & CO. Chartered Accountants |
|
J.
M. GANDHI Partner |
|
Mumbai, April 16, 2003 | |
annexure | ||
to the Auditors Report |
1. |
In
our opinion, clauses of Manufacturing and Other Companies (Auditors
Report) Order, 1988, numbering (i), (ii), (iii), (iv), (v), (vi), (vii),
(viii), (ix), (xi), (xii), (xiii), (xiv), (xvi), (xvii), (xviii) and (xx)
are not applicable for the current year. |
2. |
The
Company has an adequate internal control procedure commensurate with the
size of the Company and the nature of its business in respect of purchase
and sale of assets and services. |
3. |
During
the year there is no internal audit system for the Company. In the opinion
of the management, considering the size of operations and the structure
of the Company, internal audit system is not required. |
4. |
During
the course of our examination of the books of account and according to the
information and explanations given to us, no personal expenses of employees
or Directors have been charged to revenue account, other than those payable
under contractual obligations or in accordance with generally accepted business
practice. |
5. |
In
respect of services activities: |
|
(a) |
the
system of allocating man-hours utilized to the relative jobs, is not
yet formalized; |
|
(b) |
there
is a reasonable system of authorization at proper levels and adequate
system of internal control commensurate with the size of the Company
and nature of its business. |
For
N. M. RAIJI & CO. Chartered Accountants |
|
J.
M. GANDHI Partner |
|
Mumbai, April 16, 2003 |
38 |
balance sheet | ||
as at March 31, 2003 |
Schedule | (Rs. in 000s) | March
31, 2002 |
SOURCE OF FUNDS | ||||||||||
Shareholders Funds | ||||||||||
A. | Share Capital | A | 48,309.55 | 48,309.55 | ||||||
B. | Reserves & Surplus | B | (22,040.21) | (15,788.55) | ||||||
|
|
|||||||||
26,269.34 | 32,521.00 | |||||||||
|
|
|||||||||
APPLICATION OF FUNDS | ||||||||||
Current Assets, Loans & Advances | ||||||||||
A. | Current Assets - | |||||||||
(a) | Sundry Debtors | C | 219.90 | 315.20 | ||||||
(b) | Cash & Bank Balances | D | 21,367.32 | 24,864.54 | ||||||
B. | Loans & Advances | E | 4,748.49 | 9,245.51 | ||||||
|
||||||||||
26,335.71 | 34,425.25 | |||||||||
Less: | Current Liabilities & | |||||||||
Provisions: | F | 66.37 | 1,904.25 | |||||||
NET CURRENT ASSETS | 26,269.34 | 32,521.00 | ||||||||
|
|
|||||||||
26,269.34 | 32,521.00 | |||||||||
Notes forming part of the Accounts and Accounting Policies | K | |
|
profit and loss account | ||
for the year ended March 31, 2003 |
Schedule | (Rs. in 000s) | March
31, 2002 |
Income from Operations | ||||||||
(a) | Income from Services | G | 9,841.49 | 6,994.02 | ||||
(b) | Interest Income | H | 194.87 | 854.18 | ||||
|
|
|||||||
10,036.36 | 7,848.20 | |||||||
Less : Operating Expenditure | ||||||||
Financial Charges and | ||||||||
Operating Expenses | I | | 29.51 | |||||
|
|
|||||||
10,036.36 | 7,818.69 | |||||||
Expenditure | ||||||||
Less: | Administrative Expenditure | |||||||
Establishment and | ||||||||
Other Expenses | J | 15,525.57 | 22,011.05 | |||||
|
|
|||||||
Profit Before Taxation | (5,489.21) | (14,192.36) | ||||||
Less: Provision for Taxation | | | ||||||
Profit After Taxation | (5,489.21) | (14,192.36) | ||||||
Brought forward from | ||||||||
previous years | (18,133.50) | (3,941.13) | ||||||
|
|
|||||||
Amount available for | ||||||||
apropriations | (23,622.71) | (18,133.50) | ||||||
Balance carried to |
|
|
||||||
Balance Sheet | (23,622.71) | (18,133.50) | ||||||
|
|
|||||||
Per
our Report attached For N. M. RAIJI & CO. Chartered Accountants |
For and on behalf of the Board | |
SRIPAT
PANDEY President |
||
J.
M. GANDHI Partner |
DEVESH
KUMAR Director |
|
Mumbai, April 17, 2003 | ||
|
schedules | |||||
(Rs. ’in 000s) | March
31, 2002 |
||||
SCHEDULE A SHARE CAPITAL : | |||||
Authorized: | |||||
10,000,000 Equity Shares of US$ 1 each | |||||
Issued, Subscribed and Paid up: | |||||
Common stock, US$1 par value; 1,050,000 shares authorised | 48,309.55 | 48,309.55 | |||
|
|
||||
(Rs. in 000s) | |||||
SCHEDULE B RESERVES AND SURPLUS: | Balance as on | Balance as on | Balance as on | ||
April 1, 2002 | March 31, 2003 | March 31, 2002 | |||
Profit and Loss Account | (18,133.50) | (23,622.71) | (18,133.50) | ||
Translation Reserve | 1,582.50 | 2,344.95 | |||
|
|
||||
Total | (22,040.21) | (15,788.55) | |||
|
|
||||
(Rs. in 000s) | March 31, | ||||
2002 | |||||
SCHEDULE C SUNDRY DEBTORS (Unsecured) : | |||||
Other Receivables : | |||||
Receivables outstanding for a period | 219.90 | 315.20 | |||
not exceeding six months (consid ered good) | |||||
219.90 | 315.20 | ||||
|
|
39
schedules | ||
Continued |
(Rs. in 000s) | March
31, 2002 |
SCHEDULE D - CASH AND BANK BALANCES: | |||
In Current Accounts with Banks | 21,367.32 | 24,864.54 | |
|
|
||
Total | 21,367.32 | 24,864.54 | |
|
|
||
SCHEDULE E - LOANS AND ADVANCES: | |||
(Unsecured and considered good unless | |||
otherwise stated) | |||
Advances : | |||
(Recoverable in cash or in kind or for | |||
value to be received) | |||
Other Advances and Deposits | 4,748.49 | 9,245.51 | |
|
|
||
Total | 4,748.49 | 9,245.51 | |
|
|
||
SCHEDULE F - CURRENT LIABILITIES : | |||
Sundry Creditors for Expenses | 66.37 | 1,904.25 | |
|
|
||
Total | 66.37 | 1,904.25 | |
|
|
||
SCHEDULE G - INCOME FROM SERVICES : | |||
Brokerage and Commission | 9,841.49 | 6,994.02 | |
|
|
||
Total | 9,841.49 | 6,994.02 | |
|
|
||
SCHEDULE H - INTEREST INCOME: | |||
Interest On Other Loans and Advances | 194.87 | 854.18 | |
|
|
||
Total | 194.87 | 854.18 | |
|
|
||
SCHEDULE I - FINANCIAL CHARGES AND | |||
OPERATING EXPENSES: | |||
Bank Charges | | 29.51 | |
|
|
||
Total | | 29.51 | |
|
|
||
SCHEDULE J - ESTABLISHMENT AND | |||
OTHER EXPENSES: | |||
Rates and Taxes | 231.50 | 101.95 | |
Professional Fees | | 1,837.50 | |
Auditors Remuneration | 756.46 | 25.00 | |
Service Charges | 14,537.61 | 20,046.60 | |
|
|
||
Total | 15,525.57 | 22,011.05 | |
|
|
SCHEDULE “K” - NOTES FORMING PART OF THE ACCOUNTS AND ACCOUNTING POLICIES: | ||
1. | Significant Accounting Policies: | |
(i) | Method of Accounting | |
The accounts are prepared in accordance with accounting principles generally accepted in India. The Company follows accrual method of accounting. | ||
(ii) |
Revenue
Recognition In case of non-fund based activities such as issue management, loan syndication, financial advisory services etc., the revenue is recognized based on the stage of completion of assignments and the bills raised for the recovery of fees. |
|
(iii) |
Conversion
to Indian Rupees For the purpose of the accounts during the year all income and expense items are converted at the average rate of exchange applicable for the year. All assets and liabilities are translated at the closing rate as on the Balance Sheet date. The exchange difference arising out of the year-end translation is being debited or credited to Translation Reserve. |
|
The Equity Share Capital is carried forward at the rate of exchange prevailing on the transaction date. The resulting exchange difference on account of translation at the year-end are transferred to Translation Reserve Account and the said account is being treated as Reserves and Surplus. | ||
(iv) |
Deferred
Tax The tax effects of significant temporary differences are reflected through a Deferred Tax Asset /Liability, which has been reflected in the Balance Sheet and the corresponding effect of the same is given in the Profit and Loss Account. |
|
2. |
The Company is a wholly owned subsidiary of ICICI Securities Holdings, Inc. The accounts have been prepared and audited to attach with the accounts of ICICI Securities Limited, the Holding Company, to comply with the provisions of the Indian Companies Act, 1956. | |
3. |
Deferred
Tax Deferred Tax Asset resulting from accumulated losses have not been accounted because of uncertainty of availability of sufficient future taxable income. |
|
4. | For the purpose of conversion of the local currency (USD) into Indian Currency (Indian Rupees) the exchange rate applied is as per para (iii) of the accounting policies. | |
5. | Related
Party Disclosures The following are the details of transactions with related parties: - |
(Rs. 000s) | |||
|
|||
Name of the Related Party | Type of Transactions | Amount | |
|
|||
ICICI Securities Holdings, Inc. | |||
| The Holding Company | Establishment Expenses | 14,547.30 |
ICICI Brokerage Services Limited | |||
| Subsidiary of ICICI | ||
Securities Limited | Brokerage & Commission | 9,841.49 | |
|
|||
6. | For the purpose of comparison, figures for the previous year have been given, which have been regrouped or reclassified wherever necessary. |
Signatures to Schedules A to K | ||||
Per our Report attached | ||||
For
N. M. RAIJI & CO. Chartered Accountants |
For and on behalf of the Board | |||
SRIPAT
PANDEY President |
||||
J. M. GANDHI Partner |
||||
DEVESH KUMAR | ||||
Mumbai, April 16, 2003 | Director | |||
40 |
ICICI VENTURE FUNDS MANAGEMENT COMPANY LIMITED |
Directors | Auditors | Registered Office |
K.V. Kamath Chairman | S.B. Billimoria & Co. | 4th Floor, Raheja Plaza |
Balu Doraisamy | Chartered Accountants | 17, Commissariat Road |
Gopal Srinivasan | Bangalore | Bangalore - 560 025 |
H.N. Sinor | ||
Kalpana Morparia | Regional Office | |
Lalita D. Gupte | ICICI Bank Towers | |
Dr. Nachiket Mor | Bandra-Kurla Complex | |
Mumbai - 400 051 | ||
R. Rajamani | ||
Renuka Ramnath Managing Director & CEO | ||
directors report | ||||
to the members |
Your Directors have pleasure in presenting the Fifteenth Annual Report on the business and operations of your Company together with the Statement of Accounts for the year ended March 31, 2003.
1. | FINANCIAL REVIEW | |||
(Rupees in million) | ||||
2002-2003 | 2001-2002 | |||
Profit before taxation | 185.66 | 89.52 | ||
Provision for Income Tax | 65.15 | 30.00 | ||
Provision for Deferred Tax | (4.45 | ) | 3.77 | |
Profit after taxation | 124.96 | 55.75 | ||
Balance of Profit & Loss Account | ||||
brought forward from the previous year | 25.19 | 47.41 | ||
Disposable Profits | 150.15 | 103.16 | ||
Appropriations : | ||||
Statutory Reserve | 24.99 | 11.15 | ||
General Reserve | 12.50 | 5.57 | ||
Proposed Dividend | | 61.25 | ||
Interim Dividend | 90.63 | | ||
Balance Carried forward to next year | 22.03 | 25.19 | ||
150.15 | 103.16 | |||
ANALYSIS OF FINANCIAL PERFORMANCE | ||||
During the financial year 2002-2003, your Company launched four new domestic funds whereas six existing funds under management were either liquidated or were in the process of liquidation. However, the growth in Assets Under Management (AUM) on account of the new funds by far exceeded the decline in AUM on account of the liquidations resulting in a net increase of Rs. 6296.42 million, a growth of 34% over the previous year significantly contributing to the increase in Fee Income. Consequently, Fee Income from management of the Funds grew by 84% over last year to Rs. 326.30 million. | ||||
During the financial year 2002-2003, your Company increased the scale of its operations on account of growth in AUM. Consequently, the expenses, excluding depreciation increased to Rs. 158.56 million compared to Rs. 100.16 million for the previous year. As there was no major capital expenditure during the year, the depreciation charges were stable at Rs. 12.35 million as against Rs. 13.43 million during the previous year. Consequent to higher growth in income, the profit before tax of the Company for the year under review more than doubled to Rs. 185.66 million as against Rs. 89.52 million for the previous year. After providing for tax including deferred tax for the current year, the Companys profit after tax is Rs. 124.96 million. The Earnings Per Share of the Company is Rs. 40 per share. | ||||
Consequent to higher growth in income, the profit before tax of the Company for the year under review more than doubled to Rs. 185.66 million as against Rs. 89.52 million for the previous year. After providing for tax including deferred tax for the current year, the Company’s profit after tax is Rs. 124.96 million. The Earnings Per Share of the Company is Rs. 40 per share. | ||||
Profit available for disposal, after taking into account the profit of Rs. 25.19 million brought forward from the previous year is Rs 150.15 million. Transfers to Statutory Reserve and General Reserve were Rs. 24.99 million and Rs. 12.50 million respectively. | ||||
During the year under review, the Company sold foreign securities amounting to Rs. 206.67 million at cost. The proceeds were utilized to repay the short-term interest free loan of Rs. 206.67 million, which it had obtained from ICICI Bank Limited. The Company also repaid Rs. 15.00 million of another interest free loan from ICICI Bank Limited. The Company also acquired two investments amounting to Rs. 33.90 million. | ||||
Your Directors are pleased to inform you that, during the financial year 2002-2003, your Company has declared and paid four interim dividends amounting to Rs. 90.63 million, resulting in an aggregate dividend rate of 290%. Your Directors recommend the same as final dividend for the financial year 2002-2003. | ||||
2. | YEAR IN RETROSPECT | |||
Financial year 2002-2003 was a landmark year for ICICI Venture. Despite an unfavourable economic environment wherein earnings were weak, valuations plummeted and the prospects of war in Iraq were looming large, ICICI Venture not only raised the largest Indian Private Equity Fund, but also engineered effective exits and enhanced the value of its existing portfolio. However, equities in general and private equity in particular did not gain favour in the year. Hence, the year was challenging to say the least | ||||
The most significant achievement for ICICI Venture in the current year was the successful First Closing of the Rs. 7.50 billion India Advantage Fund launched this year. The Funds investment philosophy is to pursue investments in established companies that are leaders (or potential leaders) in their respective markets and where there is a clear proposition for value creation. The Fund will provide capital for expansion, acquisitions and buy-out of assets for restructuring. The Fund also intends to selectively pursue opportunities arising out of the privatisation initiative of the Government of India. | ||||
Your
Company is pleased to report that the Fund received an overwhelming response
and the First Closing was announced with commitments of Rs. 5.56 billion
from large deep-pocketed institutional investors in India. ICICI Venture
is on track to raise the balance Rs. 1.94 billion in the forthcoming year.
The Fund is Indias largest Private Equity Fund till date. This is
also the largest Fund ever managed by ICICI Venture in its history and also
its first third party Fund after a gap of six years. The India Advantage Fund firmly establishes ICICI Venture in the forefront of the private equity business in India. |
||||
3. | PORTFOLIO STRATEGY | |||
As of March 31, 2003, ICICI Venture was Manager/Advisor to the following Funds: | ||||
Sl. No. | Fund | (Rupees in million) | ||||
|
|
|
||||
1. | ICICI Equity Fund | 4,300.00 | ||||
2. | ICICI Econet Internet & Technology Fund | 1,000.00 | ||||
3. | ICICI Emerging Sectors Fund | 4,000.00 | ||||
4. | ICICI Strategic Investments Fund | 5,650.00 | ||||
5. | VECAUS I (R) | 1,500.00 | ||||
6. | India Advantage Fund I & II | 5,562.50 | ||||
7. | TCW / ICICI Offshore Funds | 2,425.92 | ||||
|
||||||
Total | 24,438.42 | |||||
|
||||||
To create focus and achieve optimum results for the Funds under management of ICICI Venture, last year your Company restructured its organization. ICICI Venture consolidated its learning and experience in Venture Capital and Private Equity and created distinct teams with specific skill sets in these two areas to handle these products. This ensured creation of a robust strategy for each of the portfolio companies in a manner that maximised gains or minimised losses. Your Company was successful in conserving cash in several companies, turning them around and ensuring sustained growth with profitability. ICICI Ventures Fund Managers played a pivotal role in guiding management thought in their companies to ensure continued progress in improving revenues, raising finances, recruiting senior management, etc. ICICI Venture also set new standards for corporate governance in its portfolio companies. Your Company bolstered its monitoring processes and instituted strong compliance and reporting |
41
directors report |
to the members | Continued |
systems in all companies. As a result, ICICI Venture has enhanced the value to its entire portfolio significantly. | |||
Your Companys constant focus
on divestments ensured cash realization of an aggregate amount of Rs. 541.09
million, despite prevailing tough market conditions. |
|||
ICICI Venture realizes that creating value and extracting cash (exits) are two distinct challenges in a private equity portfolio. Lack of market depth and high volatility in exit markets (IPOs and trade sales) leads to uncertainty in timing and value; this necessitates agility and an innovative approach to exits. At ICICI Venture, its people are continuously alive to these exit challenges and are continuously engaged in creating viable alternatives. Some of its initiatives include structuring innovative cash flow based exits, driving trade sales, sale to other financial investors, etc. Your Company has also proactively commenced discussions with investment bankers on preparing its mature companies for IPOs. These efforts are likely to yield significant results in the forthcoming years. | |||
ICICI Venture hosted Indias
first investee entrepreneur conference titled, The Power of I.
The event, exclusively for its entrepreneurs, was very well received, and
it laid a solid foundation for forging close relationships between our investee
companies and ICICI Venture as their partners in growth. Encouraged by the
success of the event and the feedback received, it is intended to host this
on an annual basis. During the year, ICICI Venture also launched a comprehensive e-enabled Knowledge Management (KM) system to alert management on key developments, ensure real time information exchange and encourage experience sharing at an organisational level. |
|||
On the organisational front, ICICI Venture was the preferred employer by investment banking, private equity and structured finance professionals. Your Company recruited eight seasoned and experienced professionals during the year to augment its investing, industry and legal teams. It is expected that this augmentation in management team will add significantly in fulfilling the long-term aspirations of ICICI Venture. | |||
4. | OUTLOOK | ||
A sustainable platform has been built for ICICI Venture during the current year. | |||
The India Advantage Fund will establish a very dominant position for ICICI Venture in the market place. With a broad-based investment thesis, through the Fund, ICICI Venture will be in a position to build independent practices in restructuring, buy outs and expansionary capital. Your Company has also identified mezzanine capital as an innovative way of funding growth and acquisitions in the Indian context. | |||
ICICI Ventures endeavour will be to identify potential growth drivers as above and build on these areas by channelising all requisite organisational resources. | |||
This strategy will result in building a robust platform in ICICI Venture that would offer the entire gamut of Private Equity products to India centric. | |||
5. | PUBLIC DEPOSITS | ||
During the year under review, the Company has not accepted any deposit under Section 58-A of the Companies Act, 1956. |
|||
6. | DIRECTORS | ||
S. Mukherji, who was on the Board of the Company, tendered his resignation effective July 24, 2002. The Board accepted with regret the resignation of S. Mukherji and placed on record its gratitude for the valuable services rendered by S. Mukherji during his tenure as Director of the Company. Nachiket Mor has been appointed as Director in the casual vacancy caused by the resignation of S. Mukherji with effect from July 24, 2002. Nachiket Mor holds office up to the date that S. Mukherji would have held office, had he not vacated the office, which is at the date of the ensuing Annual General Meeting. | |||
H.
N. Sinor has been appointed as Additional Director of the Company with effect
from July 24, 2002. H. N. Sinor holds office up to the forthcoming Annual
General Meeting of the Company as per the provisions of Section 260 of the
Companies Act, 1956 and is eligible for appointment. Rajeev Chandrasekhar, who was on the Board of the Company, tendered his resignation effective January 22, 2003. The Board accepted with regret the resignation of Rajeev Chandrasekhar and placed on record its gratitude for the valuable services rendered by Rajeev Chandrasekhar during his tenure as Director of the Company. |
|||
K. Anji Reddy, who was on the Board of the Company, tendered his resignation effective February 27, 2003. The Board accepted with regret the resignation of K. Anji Reddy and placed on record its gratitude for the valuable services rendered by K. Anji Reddy during his tenure Director of the Company. | |||
In terms of the Articles of Association of the Company, Balu Doraisamy and Nachiket Mor, Directors of the Company would retire at the forthcoming Annual General Meeting of the Company and, being eligible, offer themselves for re-appointment. | |||
7. | CORPORATE GOVERNANCE | ||
Your Company continued to practise the principles of good corporate governance, which is one of the core values of ICICI Bank group Corporate governance is not just restricted to ensuring compliance with regulatory requirements but also meeting the highest standards transparency, accountability and integrity in respect of all its transactions Your Company has in place clear processes and well-defined roles and responsibilities for people at various levels. This, along with robust internal information systems, ensures appropriate information flow to facilitate monitoring. Adherence to processes is ensured through internal audits. | |||
Your Company has also constituted an Audit Committee though not mandatory under the provisions of the Companies Act, 1956. The Audit Committee comprising R. Rajamani, H. N. Sinor, Kalpana Morparia and Gopal Srinivasan will discharge the functions under Section 292A of the Companies Act, 1956. | |||
8. | AUDITORS | ||
M/s. S. B. Billimoria & Company, Chartered Accountants, Bangalore, retire at the ensuing Annual General Meeting. The Board at its meeting held on April 23, 2003 has proposed their appointment as Auditors to audit the accounts of the Company for the financial year ending March 31, 2004. You are requested to consider their appointment. | |||
9. | FOREIGN EXCHANGE EARNING AND EXPENDITURE | ||
The Foreign Exchange Earnings during the year under review amounted to Rs. 15.16 million. Expenditure in foreign currency amounted to Rs. 1.99 million. | |||
10. | PERSONNEL AND OTHER MATTERS | ||
Information required to be disclosed in accordance with Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, forming part of the Directors Report for the year ended March 31, 2003 is enclosed as an Annexure to this Report. | |||
Since your Company does not own any manufacturing facility, the disclosure of information on other matters, required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence have not been given. | |||
11. | DIRECTORS RESPONSIBILITY STATEMENT | ||
The Directors confirm: | |||
1. | that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; | ||
2. | that the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period; | ||
3. | that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and; | ||
4. | that the Directors had prepared the annual accounts on a going concern basis. | ||
12. | ACKNOWLEDGEMENTS | ||
The Directors wish to place on record their appreciation for the dedication and hard work put in by the employees of the Company. The relationship with the shareholders, government, regulatory authorities and clients remained excellent. Your Directors are grateful for the support extended by them and look forward to receiving their continued support and commitment. Your Directors also wish to thank the investors in the Funds managed and advised for their continued support to the Company. |
For and on behalf of the Board of Directors | |
K.V.
KAMATH Chairman |
|
Mumbai, April 23, 2003 |
42
auditors report |
to the members of ICICI Venture Funds Management Company Limited |
We have audited the attached Balance Sheet of ICICI VENTURE FUNDS MANAGEMENT COMPANY LIMITED as at March 31, 2003 and also the Profit and Loss Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts, and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
1. | As required by the Manufacturing and Other Companies (Auditor's Report) Order, 1988, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order. | ||
2. | Further to our comments in the Annexure referred to in paragraph 1 above, we report that : | ||
(i) | we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; | ||
(ii) | in our opinion, proper books of account as required by law have been kept by the Company, so far as appears from our examination of those books; | ||
(iii) | the Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account; | ||
(iv) | in our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; | ||
(v) | on the basis of written representations received from the Directors, as on March 31, 2003 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2003 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; | ||
(vi) | in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required, and give a true and fair view in conformity with the accounting principles generally accepted in India: | ||
(a) | in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2003; and | ||
(b) | in the case of the Profit and Loss Account, of the profit for the year ended March 31, 2003. |
For
S.B. BILLIMORIA & Co., Chartered Accountants |
|
UDAYAN
SEN Partner |
|
Bangalore, April 24, 2003 | |
annexure to auditors report | |
referred to in paragraph (1) of our report of even date |
1. |
The
Company has maintained proper records showing full particulars including
quantitative details and situation of fixed assets. The Company has a programme
of physically verifying all fixed assets, other than leased assets, in a
year, which, according to us, is reasonable. The said fixed assets have
accordingly been verified by the management. No material discrepancies have
been noticed on such physical verification. In respect of the leased assets, the Company has generally adopted a procedure of calling for confirmation letters from the respective lessees regarding the existence and condition of the assets. Where no confirmation has been received from any lessee for two consecutive years, the procedure provides for physical verification of the respective assets to be carried out by the management in the following year. The above procedure is considered reasonable, taking into account the constraints in arranging for physical verification of the assets located at the premises of the various lessees. |
2. |
The
fixed assets of the Company have not been revalued during the year. |
3. |
In our opinion and as per the information and explanations given to us, the terms and conditions on which the Company has taken loans from companies, firms or other parties listed in the registers maintained under Section 301 of the Companies Act, 1956 are not prima facie prejudicial to the interests of the Company. We are informed that there are no companies under the same management within the meaning of Section 370 (1B) of the Companies Act, 1956. |
4. | The Company has not granted any loans, secured or unsecured to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. We are informed that there are no companies under the same management within the meaning of Section 370 (1B) of the Companies Act, 1956. |
5. | In respect of loans given by the Company, and considered good, parties have generally repaid the principal amounts as stipulated and have also generally been regular in the payment of interest. |
In cases where instalments of principal and/or interest are not received, it is the practice of the Company to review the operations of the borrower and on the basis of such review, to take such steps as are considered appropriate in the circumstances, having regard to the overall objectives of the Company. In our opinion, the steps taken by the Company are reasonable having regard to the nature of business of the Company. | |
6. | In our opinion and according to the information and explanations given to us, there are reasonable internal control procedures commensurate with the size of the Company and the nature of its business with regard to the purchase of the plant & machinery, equipment and other assets. |
7. | There were no purchase of goods and materials or sale of goods, materials and services in excess of Rs. 50,000 in value for each type from firms, companies or other parties entered in the registers maintained under Section 301 of the Companies Act, 1956. |
8. | The Company has not accepted any deposits from the public. |
9. | In our opinion, the Company has an internal audit system commensurate with the size of the Company and the nature of its business. |
10. |
According to the records of the Company, Provident Fund dues have been regularly deposited with the appropriate authorities during the year. According to the information and explanations given to us, the Employees State Insurance Act, 1948 is not applicable to the Company. |
11. | According to information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty and excise duty were outstanding as at March 31, 2003, for a period of more than six months from the date they became payable. |
12. | According to information and explanations received by us and the records of the Company examined by us, no personal expenses have been charged to the revenue account other than those payable under contractual obligations or in accordance with generally accepted business practice. |
13. |
The Company has maintained proper records of the investments made in shares, securities, etc. The investments are held in the name of the Company. |
For
S.B. BILLIMORIA & Co., Chartered Accountants |
|
UDAYAN
SEN Partner |
|
Bangalore, April 24, 2003 |
43
balance sheet |
as at March 31, 2003 |
Schedule | (Rs. in 000s) | March
31, 2002 |
SOURCES OF FUNDS | |||||||
Shareholders Funds | |||||||
Share Capital | I | 31,250 | 31,250 | ||||
Reserves and Surplus | II | 288,774 | 254,447 | ||||
|
|
||||||
320,024 | 285,697 | ||||||
Loan Funds | III | ||||||
Unsecured Loans | 8,000 | 229,668 | |||||
Deferred Tax Liability | 17,295 | 21,741 | |||||
|
|
||||||
Total | 345,319 | 537,106 | |||||
|
|
||||||
APPLICATION OF FUNDS | |||||||
Fixed Assets | IV | ||||||
Gross Block | 167,884 | 166,168 | |||||
Less: Depreciation and | |||||||
lease adjustment | 60,238 | 48,194 | |||||
|
|
||||||
Net Block | 107,646 | 117,974 | |||||
Investments | V | 269,366 | 474,325 | ||||
Current Assets, Loans | |||||||
and Advances | VI | 57,177 | 86,649 | ||||
Less: Current Liabilities and | |||||||
Provisions | VII | 88,870 | 141,842 | ||||
|
|
||||||
Net Current Assets | (31,693) | (55,193) | |||||
|
|
||||||
Total | 345,319 | 537,106 | |||||
|
|
||||||
Notes forming part of Accounts | XIII | ||||||
Accounting Policies | XIV |
|
profit and loss account |
for the year ended March 31, 2003 |
Schedule | (Rs. in 000s) | March
31, 2002 |
INCOME | |||||||
Income from Operations | VIII | 338,189 | 188,411 | ||||
Profit on Sale of Investments (net) | 14,541 | 12,416 | |||||
Provisions Written back (net) | 639 | 1,433 | |||||
Profit on Sale of assets (net) | 194 | | |||||
Other Income | IX | 3,009 | 823 | ||||
|
|||||||
356,572 | 203,083 | ||||||
|
|
||||||
EXPENDITURE | |||||||
Staff Expenses (See Note 8 & 13) | X | 62,172 | 45,534 | ||||
Establishment Expenses | XI | 20,877 | 18,769 | ||||
Other Expenses | XII | 75,516 | 35,857 | ||||
Depreciation | 12,355 | 13,427 | |||||
|
|||||||
170,920 | 113,587 | ||||||
|
|||||||
Profit before taxation | 185,652 | 89,496 | |||||
Less: Provision for Current Tax | |||||||
(See Note 11) | 65,146 | 30,000 | |||||
Less: Provision for Deferred Tax | |||||||
(See Note 11) | (4,446) | 3,766 | |||||
|
|||||||
Profit after Taxation | 124,952 | 55,730 | |||||
Add: Balance brought forward | |||||||
from previous year | 25,153 | 47,392 | |||||
|
|||||||
DISPOSABLE PROFIT | 150,105 | 103,122 | |||||
|
|
||||||
APPROPRIATIONS | |||||||
Statutory Reserve (See Note 10) | 24,991 | 11,146 | |||||
General Reserve | 12,495 | 5,573 | |||||
Proposed Dividend | | 61,250 | |||||
Interim Dividend | 90,625 | | |||||
Balance carried to Balance Sheet | 21,994 | 25,153 | |||||
|
|||||||
150,105 | 103,122 | ||||||
|
|
||||||
Notes forming part of Accounts | XIII | ||||||
Accounting Policies | XIV |
As
per our Report attached |
For and on behalf of the Board | ||
For
S.B. BILLIMORIA & CO Chartered Accountants |
K.V. KAMATH Chairman |
.LALITA
D. GUPTE Director |
RENUKA
RAMNATH Managing Director & CEO |
K.V.
KAMATH Chairman |
|||
UDAYAN SEN | BEENA M. CHOTAI | ANSELM PINTO | |
Partner | Financial Controller | Company Secretary | |
Mumbai, April 17, 2003 | Mumbai, April 23, 2003 | ||
44
schedules |
forming part of the Accounts |
(Rs. in 000s) | March
31, 2002 |
SCHEDULE I | |||
SHARE CAPITAL | |||
Authorised | |||
20,000,000 Equity Shares of Rs. 10 each | 200,000 | 200,000 | |
|
|
||
Issued, Subscribed and Paid-up | 31,250 | 31,250 | |
3,125,000 Equity Shares of Rs.10 each | |||
(Previous Year - 3,125,000 Equity Shares of Rs.10 each) | |||
31,250 | 31,250 | ||
|
|
Out of 3,125,000 equity shares issued by the Company, 3,124,890 equity shares (Previous Year - 3,124,890) are held by ICICI Bank Limited (the holding company) (of the above,125,000 shares have been issued as fully-paid, pursuant to a contract without payment being received in cash) | |||||
Additions/ (deletions) during the year |
Balance
at March 31, 2003 |
Balance
at March 31, 2002 |
|||
SCHEDULE II | |||||
RESERVES AND SURPLUS | |||||
Statutory Reserve | 24,991 | 158,011 | 133,020 | ||
General Reserve | 12,495 | 60,825 | 48,330 | ||
Amalgamation Reserve | | 47,944 | 47,944 | ||
Surplus in Profit and Loss Account | 21,994 | 21,994 | 25,153 | ||
(25,153) | |||||
|
|||||
34,327 | 288,774 | 254,447 | |||
|
|
|
|||
SCHEDULE III | |||||
LOAN FUNDS | |||||
Interest-free loan from ICICI Bank Limited | 8,000 | 23,000 | |||
(Repayable within one year Rs. 7,000,000) | |||||
(Previous Year - Rs. 16,000,000) | |||||
Short-term Loan (interest-free) from ICICI Bank Limited | | 206,668 | |||
(Repayable within one year - Rs. Nil) | |||||
(Previous Year - Rs. 2,06,668,146) | |||||
8,000 | 229,668 | ||||
|
|
SCHEDULE
IV FIXED ASSETS |
|||||||||||||||||||||
(Rs. 000s) | |||||||||||||||||||||
Gross Block | Depreciation | Net Block | |||||||||||||||||||
As
at March 31, 2002 |
Addi-tions | Deduc-tions | As
at March 31, 2003 |
As
at March 31, 2002 |
For
the Year |
Depre- ciation withdrawn |
As
at March 31, 2003 |
Lease Adjust- ment Account upto March 31, 2003 |
As
at March 31, 2003 |
As
at March 31, 2002 |
|||||||||||
ASSETS ON LEASE | |||||||||||||||||||||
Vehicles | 1,200 | | | 1,200 | 1,194 | 3 | | 1,197 | | 3 | 6 | ||||||||||
Plant & Machinery | 90,038 | | | 90,038 | 14,288 | 4,754 | | 19,042 | 6,561 | 64,435 | 69,189 | ||||||||||
|
|||||||||||||||||||||
Sub-Total A | 91,238 | | | 91,238 | 15,482 | 4,757 | | 20,239 | 6,561 | 64,438 | 69,195 | ||||||||||
|
|||||||||||||||||||||
As at March 31, 2002 | 91,238 | 15,482 | 6,561 | 69,195 | |||||||||||||||||
OTHER ASSETS | |||||||||||||||||||||
Building * | 22,782 | | | 22,782 | 6,137 | 832 | | 6,969 | | 15,813 | 16,645 | ||||||||||
Equipment | 19,892 | 336 | 21 | 20,207 | 5,848 | 1,980 | 4 | 7,824 | | 12,383 | 14,044 | ||||||||||
Computers | 14,271 | 1,848 | 446 | 15,673 | 9,176 | 2,371 | 308 | 11,239 | | 4,434 | 5,095 | ||||||||||
Furniture & Fixtures | 16,623 | | | 16,623 | 4,439 | 2,206 | | 6,645 | | 9,978 | 12,184 | ||||||||||
Vehicles | 1,361 | | | 1,361 | 551 | 210 | | 761 | | 600 | 810 | ||||||||||
|
|||||||||||||||||||||
Sub-Total B | 74,929 | 2,184 | 467 | 76,646 | 26,151 | 7,599 | 312 | 33,438 | | 43,208 | 48,778 | ||||||||||
|
|||||||||||||||||||||
As at March 31, 2002 | 74,930 | 26,151 | 48,778 | ||||||||||||||||||
|
|||||||||||||||||||||
Grand Total (A)+(B) | 166,167 | 2,184 | 467 | 167,884 | 41,633 | 12,356 | 312 | 53,677 | 6,561 | 107,646 | 117,973 | ||||||||||
|
|||||||||||||||||||||
As at March 31, 2002 | 166,167 | 41,633 | 6,561 | 117,973 | |||||||||||||||||
|
|||||||||||||||||||||
* Building acquired on long lease |
45
schedules |
forming part of the Accounts | Continued |
(Rs. in 000s) | March
31, 2002 |
SCHEDULE V | ||||||||||||
INVESTMENTS (at cost) | 271,484 | 474,641 | ||||||||||
Less: | Provision for diminution in value of investments | 2,118 | 316 | |||||||||
|
||||||||||||
Total | 269,366 | 474,325 | ||||||||||
|
|
|||||||||||
NOTES TO SCHEDULE V | ||||||||||||
As at March 31, 2003 | As at March 31, 2002 | |||||||||||
|
||||||||||||
Particulars | Face Value | Face Value | ||||||||||
Rs. | Rs. | |||||||||||
Number | (per unit) | Cost | Number | (per unit) | Cost | |||||||
|
||||||||||||
NON TRADE INVESTMENTS | ||||||||||||
Investments | ||||||||||||
I. | Long-term | |||||||||||
1 | Industrial Development Bank of India | | | 9 | | | 9 | |||||
11.5 % IDBI Bonds 2010 (Fifty fifth Series) | ||||||||||||
2 | Creative Eye Limited | 200,000 | 5.00 | 5,500 | 200,000 | 5 | 5,500 | |||||
Equity Shares of Rs. 5 each fully paid | ||||||||||||
{(Shares purchased/acquired during the Year - Nil) | ||||||||||||
(Previous Year - Nil)} {(Shares sold during the Year - Nil) | ||||||||||||
(Previous Year - Nil)} | ||||||||||||
3 | Baazee.com, Inc. | | | | 255,102 | | 12,200 | |||||
Series B. Pref.Stock of USD 0.001 each fully paid | ||||||||||||
{(Shares purchased/acquired during the Year - Nil) | ||||||||||||
(Previous Year - 255,102)} {(Shares sold during the Year - 255,102) | ||||||||||||
(Previous Year - Nil)} | ||||||||||||
4 | Baazee.com, Inc. | | | | 392,928 | | 97,600 | |||||
Series C. Pref. Stock of USD 0.001 each fully paid | ||||||||||||
{(Shares purchased/acquired during the Year - Nil) | ||||||||||||
(Previous Year - 392,928)} {(Shares sold during the Year - 392,928) | ||||||||||||
(Previous Year - Nil)} | ||||||||||||
5 | Powershare Inc. | | | | 125,000 | | 24,400 | |||||
Series A. Pref. Stock of USD 0.01 each fully paid | ||||||||||||
{(Shares purchased/acquired during the Year - Nil) | ||||||||||||
(Previous Year - 125,000)} {(Shares sold during the Year - 125,000) | ||||||||||||
(Previous Year - Nil)} | ||||||||||||
6 | Wafer Solutions Inc. | | | | 2,970,000 | | 72,468 | |||||
Series B. Pref. Stock of USD 0.001 each fully paid | ||||||||||||
{(Shares purchased/acquired during the Year - Nil) | ||||||||||||
(Previous Year - 2,970,000)} {(Shares sold during the | ||||||||||||
Year - 2,970,000) (Previous Year - Nil)} | ||||||||||||
7 | Prudential ICICI Asset Management Company Limited | 2,796,688 | 10.00 | 33,700 | | | | |||||
Equity Shares of Rs. 10 each fully paid | ||||||||||||
{(Shares purchased/acquired during the Year - 2,796,688) | ||||||||||||
(Previous Year - Nil)} {(Shares sold during the Year - Nil) | ||||||||||||
(Previous Year - Nil)} | ||||||||||||
8 | Prudential ICICI Trust Limited | 15,206 | 10.00 | 200 | | | | |||||
Equity Shares of Rs. 10 each fully paid | ||||||||||||
{(Shares purchased/acquired during the Year - 15,206) | ||||||||||||
(Previous Year - Nil)} {(Shares sold during the Year - Nil) | ||||||||||||
(Previous Year - Nil)} | ||||||||||||
|
||||||||||||
Total - (I) | 39,409 | 212,177 | ||||||||||
|
||||||||||||
II. | Current Investments (quoted) | |||||||||||
1 | Television Eighteen India Limited | 4,100 | 10.00 | 738 | 4,100 | 10 | 738 | |||||
Equity Shares of Rs. 10 each fully paid | ||||||||||||
{(Shares purchased/acquired during the Year - Nil) | ||||||||||||
(Previous Year- Nil)} {(Shares sold during the Year - Nil) | ||||||||||||
(Previous Year - Nil)} | ||||||||||||
2 | The Arvind Mills Limited | 131,204 | 10.00 | 197 | | | | |||||
{(Warrants purchased/acquired during the Year-1,31,204) | ||||||||||||
(Previous Year- Nil)} {(Warrants sold during the Year - Nil) | ||||||||||||
(Previous Year - Nil)} (Face value of Rs. 10/- Per Warrant and | ||||||||||||
Rs. 1.50 paid-up Per Warrant) | ||||||||||||
|
||||||||||||
Total - (II) | 935 | 738 | ||||||||||
|
||||||||||||
III. | Current Investments (unquoted) | |||||||||||
1 | Units of Prudential ICICI Liquid Plan - Growth | 3,798,838 | 10 | 56,378 | 13,654,233 | 10 | 189,726 | |||||
2 | Units of Prudential ICICI Short-term Plan - Growth | | | | 2,000,000 | 10 | 20,000 | |||||
3 | Units of Templeton Floating Rate Income Fund - Growth | 2,000,000 | 10 | 20,000 | 2,000,000 | 10 | 20,000 | |||||
4 | Units of Templeton India Liquid Plan - Growth | 600,689 | 10 | 8,616 | | | | |||||
5 | Units of J M High Liquidity Fund - Growth | 2,472,311 | 10 | 40,728 | 2,103,630 | 10 | 32,000 | |||||
6 | Units of Zurich India Liquid Fund - Growth | 1,126,565 | 10 | 13,300 | | | | |||||
7 | Units of Templeton India Treasury Mgt. Account - Growth | 1,046 | 1,000 | 1,500 | | | | |||||
8 | Units of H.D.F.C. Liquid Fund - Growth | 868,306 | 10 | 10,395 | | | | |||||
9 | Units of Reliance Liquid Fund - Treasury Plan - Growth | 711,607 | 10 | 10,000 | | | | |||||
10 | Units of Reliance Liquid Fund - Treasury Plan - Bonus Growth | 962,570 | 10 | 10,000 | | | | |||||
11 | Units of Grindlay Cash Fund - Growth | 947,088 | 10 | 10,608 | | | | |||||
12 | Units of Chola Triple Ace - Bonus - Growth | 1,178,984 | 10 | 13,333 | | | | |||||
13 | Units of Chola Liquid Fund - Growth | 612,416 | 10 | 7,379 | | | | |||||
14 | Units of Sundaram Money Fund - Growth | 280,787 | 10 | 3,500 | | | | |||||
15 | Units of IL&FS Bond Fund - Bonus - Growth | 482,693 | 10 | 5,000 | | | | |||||
16 | Units of IL&FS Liquid Fund - Growth | 929,673 | 10 | 10,306 | | | | |||||
17 | Units of HSBC Cash Fund - Growth | 1,009,793 | 10 | 10,097 | | | | |||||
|
||||||||||||
Total - (III) | 231,140 | 261,726 | ||||||||||
|
||||||||||||
Grand Total - {(I)+(II)+(III)} | 271,484 | 474,641 | ||||||||||
|
||||||||||||
SUMMARY | Current Year | Previous Year | ||||||||||
Rs. | Rs. | |||||||||||
Aggregate Value of Investments : | ||||||||||||
Quoted | 38,217 | 5,921 | ||||||||||
Unquoted | 231,149 | 468,403 | ||||||||||
1) | Investments have been classified as Long-term and Current Investments in accordance with Accounting Standard 13 Issued by the Institute of Chartered Accountants of India. | |||||||||||
2) | Purchases of Units of Mutual Funds held as Investments - 37,907,277 units amounting to (net of brokerage refunds) Rs. 4,95,940. (Previous Year Period - 93,579,150 units amounting to Rs. 12,83,660.) | |||||||||||
3) | Sales of units of Mutual Funds held as Investments - 39,681,674 units amounting to Rs. 5,26,710. (Previous Year - 80,788,146 units amounting to Rs. 11,24,400.) | |||||||||||
4) | Market Value of quoted Investments Rs. 2050. (Previous Year - Rs. 5,940) |
schedules |
forming part of the Accounts | Continued |
(Rs. in 000s) | March
31, 2002 |
SCHEDULE VI | ||||||
CURRENT ASSETS, LOANS | ||||||
AND ADVANCES | ||||||
Current Assets | ||||||
Accrued Interest | | 1 | ||||
Sundry Debtors (unsecured) | ||||||
(i) Debts (considered good - | ||||||
outstanding for less than six months) | 6,885 | 12,763 | ||||
(ii) Debts (considered good outstanding | ||||||
for more than six months) | 18,421 | 13,816 | ||||
(iii) Debts - considered doubtful | 543 | 543 | ||||
Less: Provision for doubtful debts | (543 | ) | (542 | ) | ||
|
||||||
25,306 | 26,580 | |||||
Cash | 20 | 16 | ||||
Balance with Scheduled Banks - | ||||||
Balance in Current Accounts | 17,215 | 18,861 | ||||
|
||||||
42,541 | 45,457 | |||||
|
||||||
Loans and Advances * | ||||||
Loans to Staff (See Note 6) | 2,100 | 4,424 | ||||
Other Loans | | 23,305 | ||||
Advance tax and tax deducted at | ||||||
source (Net of provisions) | 6,801 | 5,359 | ||||
Advances recoverable in cash or in kind | 5,866 | 8,235 | ||||
or for value to be received | ||||||
Less: Provision for doubtful advances | (131 | ) | (131 | ) | ||
|
||||||
5,735 | 8,104 | |||||
|
||||||
14,636 | 41,192 | |||||
|
|
|||||
* Of the above Advances | ||||||
(a) Fully Secured | 2,085 | 27,673 | ||||
(b) Unsecured, Considered Good | 12,551 | 13,519 | ||||
(c) Considered Doubtful | 131 | 131 | ||||
Less: Provision for doubtful advances | (131 | ) | | (131 | ) | |
|
||||||
14,636 | 41,192 | |||||
|
||||||
57,177 | 86,649 | |||||
|
|
|||||
SCHEDULE VII | ||||||
CURRENT LIABILITIES AND PROVISIONS | ||||||
Current Liabilities | ||||||
Sundry Creditors - | ||||||
Dues to creditors other than | ||||||
Small-scale Industrial Undertakings | 70,755 | 43,837 | ||||
Income and Lease Rentals received in advance | 54 | 80 | ||||
Other Liabilites | 8,061 | 26,675 | ||||
|
||||||
78,870 | 70,592 | |||||
|
||||||
Provisions | ||||||
Proposed Dividend | | 61,250 | ||||
Provision for contingencies | 10,000 | 10,000 | ||||
|
||||||
10,000 | 71,250 | |||||
|
||||||
88,870 | 141,842 | |||||
|
|
|||||
SCHEDULE VIII | ||||||
INCOME FROM OPERATIONS | ||||||
Fee Income | 326,297 | 177,261 | ||||
[Tax at source Rs. 17,135,697] | ||||||
(Previous Year - Rs. 7,079,439) | ||||||
Interest on Loans | 1,219 | 1,828 | ||||
Bad debts recovered | 454 | 500 | ||||
Income from Incubation Facility | 275 | 480 | ||||
[Tax at source Rs. 57,820] | ||||||
(Previous Year - Rs. 107,840) | ||||||
Lease rentals and related income | 9,211 | 10,166 | ||||
Less: Lease Equalisation Account | | (2,530 | ) | |||
|
||||||
9,211 | 7,636 | |||||
Dividend (See Note 7) | 50 | 105 | ||||
[Tax at source Rs. 5,250] | ||||||
(Previous Year - Nil) | ||||||
Income from Deposits and Securities | 683 | 601 | ||||
[Tax at source Rs. 24,769] | ||||||
(Previous Year - Rs. 75,467) | ||||||
338,189 | 188,411 | |||||
|
|
SCHEDULE IX | ||||||
OTHER INCOME | ||||||
Interest on Miscellaneous Advances | 351 | 366 | ||||
Income due to Exchange Fluctuation | | 305 | ||||
Miscellaneous Income (net) | 2,658 | 152 | ||||
|
||||||
3,009 | 823 | |||||
|
|
|||||
SCHEDULE X | ||||||
STAFF EXPENSES | ||||||
Salaries, Wages and Bonus | 54,868 | 41,296 | ||||
Contribution to Provident and Other Funds | 4,164 | 3,489 | ||||
Staff Welfare Expenses | 3,140 | 749 | ||||
|
||||||
62,172 | 45,534 | |||||
|
|
|||||
SCHEDULE XI | ||||||
ESTABLISHMENT EXPENSES | ||||||
Insurance | 90 | 69 | ||||
Postage | 607 | 143 | ||||
Electricity Charges | 2,360 | 2,192 | ||||
Rates and Taxes | 777 | 291 | ||||
Repairs and Maintenance Building | 3,286 | 2,631 | ||||
Others | 1,044 | 716 | ||||
Telex, Telephone and Telegram Charges | 3,233 | 3,885 | ||||
Rent - Office | 9,480 | 8,842 | ||||
|
||||||
20,877 | 18,769 | |||||
|
|
|||||
SCHEDULE XII | ||||||
OTHER EXPENSES | ||||||
Advertisement & Business Promotion | 2,022 | 961 | ||||
Bank Charges | 25 | 52 | ||||
Books and Periodicals | 108 | 113 | ||||
Directors Meeting Expenses | 62 | | ||||
E.D.P. Expenses | 6,400 | 1,834 | ||||
Travel, Conveyance and Motor Car Expenses | 16,964 | 8,619 | ||||
Advisory Fees | 13,500 | 144 | ||||
Legal and Professional Charges (See Note 1) | 18,311 | 13,964 | ||||
Printing and Stationery | 1,046 | 566 | ||||
Memberships and Subscriptions | 1,969 | 818 | ||||
Loss on Sale of Assets (net) | | 58 | ||||
Loss due to Exchange Fluctuation | 300 | | ||||
Provision for Diminution in Value of Investments | 1,802 | | ||||
Doubtful Advances Written Off | 3,236 | | ||||
Miscellaneous Expenses (See Note 12) | 9,771 | 8,728 | ||||
|
||||||
75,516 | 35,857 | |||||
|
|
|||||
SCHEDULE XIII | ||||||
NOTES FORMING PART OF THE ACCOUNTS | ||||||
1. Legal & Professional Charges include amounts paid/payable to the Auditors for: | ||||||
(Rs. in 000s | ) | |||||
2002-2003 | 2001-2002 | |||||
Audit Fees | 100 | 70 | ||||
Taxation Matters | 20 | 10 | ||||
Other Matters | 100 | 660 | ||||
Out-of Pocket Expenses | 50 | | ||||
|
||||||
270 | 740 | |||||
|
||||||
2. Earnings in Foreign Exchange | ||||||
Fees | 15,160 | 39,020 | ||||
Interest on EEFC Deposit | | | ||||
|
||||||
15,160 | 39,020 | |||||
|
||||||
3. Expenditure in Foreign Currency | ||||||
Travel | 969 | 480 | ||||
Others | 1,021 | 770 | ||||
|
||||||
1,990 | 1,250 | |||||
|
|
|||||
4. Estimated amount of Contracts remaining to be executed on capital account not provided for (net of advances, if any) - Nil (Previous Year - Nil). |
47
schedules | ||
forming part of the accounts | Continued |
5. |
Income
Tax demands (net of tax provision already created) for which appeals
are being preferred Rs. 3,570 (Previous Year Rs.3,570). |
6. |
Loans
to staff include - Nil (Previous Year - Nil) from an Officer of the
Company. Maximum amount due during the year - Nil. (Previous Year
- Rs. 70). |
7. | Dividend Income comprises of the following : | |||||
(Rs. in 000s) | ||||||
2002-2003 | 2001-2002 | |||||
Dividend from Non-Trade Investments | ||||||
Current Investments | | 105 | ||||
Long term Investments | 50 | | ||||
Dividend from units held as Stock-in-trade | | | ||||
Total | 50 | 105 | ||||
8. | Staff Expenses include provision towards unutilised leave salary Rs. 870 (Previous Year Rs.1,560). |
9. | The Company has complied with the Prudential norms prescribed by the Reserve Bank of India in respect of Income Recognition, Provision for Bad and Doubtful Debts and other Non Performing Assets. |
10. | In accordance with Section 45-IC of the Reserve Bank of India (Amendment) Act, 1997, twenty percent of the profit after taxation in the current year has been transferred to a Statutory Reserve. |
11. | Provision for tax of Rs. 60,700 (Previous YearRs. 33,776) includes provision for deferred tax amounting to Rs. (4,446) (Previous Year Rs.3,776). |
The net deferred tax liability comprises the tax impact arising from timing differences on account of: |
(Rs. in 000s) | |||||||
2002-2003 | 2001-2002 | ||||||
Net Depreciation difference | 70,531 | 73,795 | |||||
Brought forward Capital loss | (6,860 | ) | (2,082 | ) | |||
Provision for Contingencies | (10,000 | ) | (10,000 | ) | |||
Provision for doubtful debts and | |||||||
advances | (672 | ) | (672 | ) | |||
Provision for Diminution in Value | |||||||
of investments | (2,119 | ) | (317 | ) | |||
Accrued expenses | (2,677 | ) | (22,328 | ) | (1,564 | ) | |
48,203 | 59,160 | ||||||
Net Deferred tax liability on above | 17,295 | 21,741 | |||||
12. | Miscellaneous expenses include Rs.5,450 (Previous Year Rs. 5,520), being the Companys share of various common overhead expenses incurred by ICICI Bank Limited, the holding company. |
13. |
Staff
Expenses include Managerial Remuneration to Whole-time Director Rs.
5,760 (Previous Year Nil). Details are given below : |
Salary & Allowances Rs. 4,890 (Previous Year Nil), Companys contribution to Provident Fund Rs. 290 (Previous Year Nil), Companys contribution to Gratuity Rs. 120 (Previous Year Nil), Companys contribution to Superannuation Fund Rs. 360 (Previous Year Nil) and Perquisites Rs. 100 (Previous Year Nil). | |
14. | The
figures for the previous year have been re-grouped wherever necessary
so as to make them comparable with those of the current year. |
SCHEDULE XIV | |
OPERATIONS & SIGNIFICANT ACCOUNTING POLICIES | |
The following paragraphs describe the nature of operations, the basis of presentation and the main policies adopted by the Company. | |
1. | Nature
of Operations The Company is a public financial institution and provides venture capital assistance to a wide spectrum of industrial sectors. The assistance is extended through the Venture Funds and the Private Equity Funds managed/ advised by the Company. The accounts of these Funds are maintained separately and do not form part of the Companys financial statements. |
2. | Basis
of Presentation ICICI Venture Funds Management Company Limited maintains the Books of Account in accordance with Section 209 of the Companies Act, 1956. The accounting and reporting policies of the Company are in conformity with the provisions of the Companies Act, 1956 and the Accounting Standards issued by the Institute of Chartered Accountants of India. The Companys assets and liabilities are principally recorded on the historical cost basis and the accrual method of accounting is followed, except where otherwise noted. The principal accounting policies followed are consistent with those followed in the previous year. |
3. |
Income
Recognition |
|
i. |
As Fund Manager, the Company is entitled to an annual management fee and a performance fee, which is contingent on the payouts to the Fund Investors. In respect of the Private Equity Funds advised by the Company, the Company is entitled to an advisory fee. The annual management fee, performance fee and the advisory fee are recognised as revenue when they contractually accrue except where the management believes that the collectability is in doubt. | |
ii. | Dividend income from investment in units of Mutual Fund is recognised on cash basis. Dividend from shares of corporate bodies is accrued when such dividend has been declared by the corporate body in its Annual General Meeting and the Companys right to receive the dividend payment is established. | |
iii. | Income on securities classified as stock-in-trade is recognised on trade date. | |
iv. | Interest is recognised, except where collectability is in doubt, on time proportionate basis taking into account the amount outstanding and the interest rates implicit in the transaction. Revenue recognition on loans placed in non-accrual status is resumed and suspended income recognised when the investment becomes contractually current and incomes are actually realised. | |
v. |
No credit is taken for interest and other dues in respect of (a) decreed debts, (b) where suits have been filed, (c) where loans have been recalled and (d) where accounts are considered bad or doubtful. | |
4. |
Foreign
Exchange Transactions Transactions in foreign currency, to the extent not covered by forward contracts, are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign currency transactions are recognised as income or expense in the period in which they arise. |
|
Monetary items (other than those relating to fixed assets) are restated at the rates prevailing at the year end. The difference between the year end rate and the exchange rate at the date of the transaction is recognised as income or expense in the profit and loss account. | ||
5. |
Investments Long-term Investments are carried at cost. Provision for diminution, if any, in the value of long-term investments is made to recognise a decline which is not temporary. The said diminution is determined for each investment individually. Current Investments are stated at lower of cost or fair value. |
|
6. |
Stock-in-trade Units and Securities held for trading purposes are classified as Stock-in-trade. Stock-in-trade is stated at lower of cost or market value. |
|
7. |
Leasing
Business Lease income is recognised on accrual basis, except where collectability is in doubt. In respect of assets leased, all of which were leased prior to Accounting Standard 19 Leases, issued by the Institute of Chartered Accountants of India becoming mandatory, the Company has followed the recommendations contained in the guidance note on Accounting for Leases issued by the Institute of Chartered Accountants of India. The corresponding assets are depreciated at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956. |
|
8. |
Fixed
Assets and Depreciation Fixed Assets are stated at cost less accumulated depreciation. Additions, major renewals and improvements are capitalised, while maintenance and repairs are expensed. Upon disposition, the net book value of assets is relieved and resultant gains and losses are reflected in the Profit and Loss Statement. The basis of depreciation is as follows: |
|
a) | In respect of leased assets (other than vehicles leased to third parties), depreciation is provided on straight-line method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956. | |
b) | In respect of all other assets, depreciation is provided on written-down value method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956. | |
9. | Employee
Benefits The Company has a superannuation fund and a gratuity fund maintained and administered by Life Insurance Corporation of India to which transfers are made annually based on advises received from the Life Insurance Corporation of India. Additionally, the Company also makes monthly contributions to the Employees Provident Fund Scheme managed by a trust constituted for the purpose and to the Family Pension Scheme administered by the Central Government. Contributions to retirement benefit schemes are booked under staff expenses. Provision for unutilised leave benefits has been made on the basis of management estimates. |
|
Signatures to Schedules 'I' to 'XIV' which form an integral part of the Accounts. |
|||
As per our Report attached | For and on behalf of the Board | ||
For S.B. BILLIMORIA & CO. | K.V. KAMATH | LALITA D. GUPTE | RENUKA RAMNATH |
Chartered Accountants | Chairman | Director | Managing Director & CEO |
UDAYAN
SEN Partner Bangalore, April 24, 2003 |
BEENA
M. CHOTAI Financial Controller Mumbai, April 23, 2003 |
ANSELM
PINTO Company Secretary |
48
Statement
pursuant to Part IV of Schedule VI to the Companies Act, 1956 Balance Sheet Abstract and Companys General Business Profile |
1. | Registration Details | |||||||||||||
Registration No. | 0 | 8 | / | 1 | 0 | 0 | 9 | 9 | State Code | 0 | 8 |
Balance Sheet Date | 3 | 1 | 0 | 3 | 2 | 0 | 0 | 3 | |||||
Date | Month | Year |
2. |
Capital Raised during the Year | ||||||||||||||||||
(Amount in Rupees Thousands) | |||||||||||||||||||
Public Issue | Bonus Issue | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
Rights Issue | Private Placement | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
3. | Position of Mobilisation and Deployment of Funds | ||||||||||||||||||
(Amount in Rupees Thousands) | |||||||||||||||||||
Total Liabilities | Total Assets | ||||||||||||||||||
3 | 4 | 5 | 3 | 1 | 8 | . | 5 | 2 | 3 | 4 | 5 | 3 | 1 | 8 | . | 5 | 2 | ||
Sources of Funds | |||||||||||||||||||
Paid-up Capital | Reserves and Surplus | ||||||||||||||||||
3 | 1 | 2 | 5 | 0 | . | 0 | 0 | 2 | 8 | 8 | 7 | 7 | 3 | . | 8 | 2 | |||
Secured Loans | Unsecured Loans | ||||||||||||||||||
N | I | L | 8 | 0 | 0 | 0 | . | 0 | 0 | ||||||||||
Deferred Tax Liability | |||||||||||||||||||
1 | 7 | 2 | 9 | 4 | . | 7 | 1 | ||||||||||||
Application of Funds | |||||||||||||||||||
Net Fixed Assets | Investments | ||||||||||||||||||
1 | 0 | 7 | 6 | 4 | 5 | . | 4 | 8 | 2 | 6 | 9 | 3 | 6 | 5 | . | 7 | 2 | ||
Net Current Assets | Miscellaneous Expenditure | ||||||||||||||||||
(3 | 1 | 6 | 9 | 2 | . | 6 | 8) | N | I | L | |||||||||
Accumulated Losses | (to the extent not written-off or adjusted) | ||||||||||||||||||
N | I | L | |||||||||||||||||
4. | Performance
of Company (Amount in Rupees Thousands) Turnover / Income |
||||||||||||||||||
Total Expenditure | |||||||||||||||||||
3 | 5 | 6 | 5 | 7 | 0 | . | 7 | 1 | 1 | 7 | 0 | 9 | 1 | 8 | . | 6 | 5 | ||
Profit / Loss before Tax | Profit / Loss after Tax | ||||||||||||||||||
1 | 8 | 5 | 6 | 5 | 2 | . | 0 | 6 | 1 | 2 | 4 | 9 | 5 | 2 | . | 8 | 3 | ||
Earning per Share in Rupees | Dividend Rate % | ||||||||||||||||||
4 | 0 | . | 0 | 0 | 2 | 9 | 0 | . | 0 | 0 | |||||||||
5. | Generic
Names of Principal Products/Services of the Company (as per monetary terms) |
||||||||||||||||||
Item
Code No. : Not Applicable |
|||||||||||||||||||
Product Description : Financial Services |
For and on behalf of the Board | |||
K.V.
KAMATH Chairman |
LALITA
D. GUPTE Director |
RENUKA
RAMNATH Managing Director & CEO |
|
BEENA
M. CHOTAI Financial Controller |
ANSELM
PINTO Company Secretary |
||
Mumbai, April 23, 2003 |
49
section 217 | |
Statement pursuant to Section 217 (2A) of the Companies Act, 1956 and Companies (Particulars of Employees) Rules, 1975, as amended (Forming part of the Directors' Report for the year ended March 31, 2003) |
Desig./ | Gross | Expe- | Date of | ||||||
Sl. | Nature of | Remuneration | rience | Commencement | |||||
No. | Name, Qualifications and Age (in years) | Duties*** | Received (Rs.) | (in years) | of Employment | Last Employment / Designation | |||
1. | Renuka Ramnath, B.E., PGDM, Advanced Mgmt. | MD & CEO | 5,638,811 | 17 | 01-Apr-02 | ICICI Bank Limited - | |||
Program-Harvard Business School, (41) | General Manager | ||||||||
2. | Sumi tChandwani, B.E. (Industrial Engg.), | C-I | 3,503,493 | 12 | 08-Jan-00 | GE Capital, Mumbai - | |||
PGDM(IIMB) (34) | Vice President - Head Western | ||||||||
3. | Bala Deshpande, M.A., MMS (37) | C-I | 3,631,493 | 13 | 22-Apr-00 | International Best Foods Limited | |||
Marketing Manager | |||||||||
4. | Beena Chotai, B.Com, A.C.A. (34) | FC | 3,203,485 | 12 | 12-Jul-93 | Veejay Lakshmi Engg. Works | |||
Limited, Coimbatore - | |||||||||
Accounts Officer | |||||||||
5. | Kishore Gotety, B.Com, ICWA, MMS (31) | C-I | 4,003,493 | 10 | 10-Sep-01 | ICICI Securities, | |||
Head - Capital Markets and | |||||||||
Investment Banking Services | |||||||||
6. | K. Ravindra, B.E. (Mechanical), PGDM (IIMC) (37) | C-I | 2,603,485 | 14 | 01-Sep-00 | ICICI Limited, Hyderabad, | |||
Zonal Manager | |||||||||
*** | Designation/Nature of Duties Codes | ||||||||
MD & CEO - Managing Director & Chief Financial Officer | C-I | Chief | - Investments | FC | Financial Controller | ||||
Notes: |
1. |
The nature of employment is contractual and the employees are governed by the Companys rules and conditions of service. |
2. | None of the Employees mentioned above is a relative of any Director of the Company. |
3. | Gross Remuneration includes Basic Salary, House Rent Allowance/Rent paid for residential accommodation, Conveyance Allowance, Medical Expenses, Bonus, Leave Encashment, Leave Fare Concession, Companys Contribution to Provident Fund and Superannuation Fund. The Gross amount includes payment of gratuity to the employees on retirement, wherever applicable. |
4. | Designation, Nature of Duties and Remuneration are as on March 31, 2003. |
For and on behalf of the Board of Directors
K.V.
KAMATH
Chairman
Mumbai, April 23, 2003
50
ICICI INTERNATIONAL LIMITED |
7TH ANNUAL REPORT AND ACCOUNTS 2002-2003 |
Directors | Secretary | Auditors |
Renuka
Ramnath Suresh Kumar Couldip Basanta Lala Kapil Dev Joory |
International
Financial Services Limited 3rd Floor, Les Cascades Edith Cavell Street Port Louis Mauritius |
Horwath
Mauritius Public Accountants 3rd Floor, Amod Building 19, Poudrière Street Port Louis Mauritius |
Administrator | Registered Office | |
International
Financial Services Limited 3rd Floor, Les Cascades Edith Cavell Street Port Louis Mauritius |
C/o.
International Financial Services Limited 3rd Floor, Les Cascades Edith Cavell Street Port Louis Mauritius |
commentary of the directors |
year ended March 31, 2003 |
INCORPORATION
The Company was
incorporated in the Republic of Mauritius as a private company limited by shares
on January 18, 1996.
ACTIVITIES
The Company is
an Investment and Fund Management Company.
RESULTS
The results for
the year are shown in the Income statement. The Directors paid an interim dividend
of USD 20,000 during the year under review.
DIRECTORS
The present membership
of the Board is set out as above. All Directors served throughout the year,
DIRECTORS
RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
Company law requires the Directors to prepare financial statements for each
financial year, which present fairly the financial position, financial performance
and the cash flow of the Company. The Directors are also responsible for keeping
accounting records which:
The Directors confirm that they have complied with the above requirements in preparing the financial statements.
AUDITORS
The Auditors, Horwath
Mauritius, have indicated their willingness to continue in office.
REPORT
FROM THE SECRETARY TO THE MEMBERS OF ICICI INTERNATIONAL LIMITED UNDER
SECTION 166 (d) OF THE COMPANIES ACT, 2001
We
certify that we have filed with the Registrar all such returns as are
required of the Company under the Companies Act, 2001 for the financial
year ended March 31, 2003.
for
International
Financial Services Limited
Corporate
Secretary
April 9, 2003
auditors report |
to the members of ICICI International Limited |
We have audited the financial statements of ICICI INTERNATIONAL LIMITED on page 52 which have been prepared on the basis of the accounting policies set out on page 53.
RESPECTIVE
RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The Companys
Directors are responsible for the preparation of the financial statements.
It is our responsibility to form an independent opinion, based on our
audit on the financial statements and to report our opinion to you.
Basis
of opinion
We
conducted our audit in accordance with International Standards on Auditing.
An audit includes an examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Companys circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all information and explanations that we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatements. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion
In
our opinion, the financial statements give a true and fair view of the
state of affairs of the Company as at March 31, 2003 and of its profit,
changes in equity and cash flows for the year ended and have been properly
prepared in accordance with International Accounting Standards and comply
with the Companies Act, 2001. We have obtained all the information and
explanations we considered necessary for the purposes of our audit. In
our opinion, proper accounting records have been kept by the Company.
HORWATH
MAURITIUS
Public
Accountants
K.S.
SEWRAZ, FCCA
Signing
Partner
Port
Louis, Mauritius
April 9, 2003
51
balance sheet | income statement |
as at March 31, 2003 | for the year ended March 31, 2003 | ||||||||||
March 31, | March 31, | ||||||||||
Notes | (USD) | 2002 | Notes | (USD) | 2002 | ||||||
ASSETS | REVENUE | ||||||||||
Non-current Assets | Management fee | 330,302 | 944,273 | ||||||||
Investments | 2 | 300,000 | 300,100 | Interest Income | 3,694 | 7,857 | |||||
Less : Provision for investment written-off | | (100 | ) | |
|
||||||
333,996 | 952,130 | ||||||||||
300,000 | 300,000 | |
|
||||||||
EXPENSES | |||||||||||
Current Assets | Advisory fee | 322,300 | 815,000 | ||||||||
Receivables | 4 | 79,837 | 3,141 | Licence fee | 1,500 | 1,500 | |||||
Cash and cash equivalents | 150,974 | 303,298 | Directors fee | 1,250 | 1,063 | ||||||
|
|
Secretarial fee | 1,250 | 1,063 | |||||||
230,811 | 306,439 | Administration and professional fees | 4,610 | 7,922 | |||||||
|
|
Bank charges | 300 | 63 | |||||||
Total Assets | 530,811 | 606,439 | Audit fee | 2,300 | 2,240 | ||||||
|
|
Provision for investment written-off | | 100 | |||||||
General expenses | 210 | | |||||||||
EQUITY AND LIABILITIES | |
|
|||||||||
Capital and reserves | 333,720 | 828,951 | |||||||||
Issued capital | 5 | 400,000 | 400,000 | |
|
||||||
Accumulated profits | 129,092 | 148,816 | |||||||||
|
|
PROFIT FROM OPERATIONS | 276 | 123,179 | |||||||
529,092 | 548,816 | ||||||||||
|
|
Previous year expenses written back (net) | 3 | | 32,462 | ||||||
Current Liabilities | |
|
|||||||||
Payables | 6 | 1,719 | 7,623 | NET PROFIT FOR THE YEAR | 276 | 155,641 | |||||
Dividend proposed | | 50,000 | |
|
|||||||
|
|
||||||||||
1,719 | 57,623 | ||||||||||
|
|
||||||||||
Total Equity and Liabilities | 530,811 | 606,439 | |||||||||
|
|
||||||||||
Approved by the Board of Directors on April 9, 2003 | ||
COULDIP
BASANTA LALA Director |
RENUKA
RAMNATH Director |
statement of changes in equity | |||||||
for the year ended March 31, 2003 | |||||||
Share | Accumulated | TOTAL | |||||
Capital | Profits | ||||||
USD | USD | USD | |||||
Balance at April 1, 2001 | 400,000 | 43,175 | 443,175 | ||||
Net Profit for the year | | 155,641 | 155,641 | ||||
Dividends | | (50,000 | ) | (50,000 | ) | ||
Balance at March 31, 2002 | 400,000 | 148,816 | 548,816 | ||||
Net Profit for the year | | 276 | 276 | ||||
Dividends | | (20,000 | ) | (20,000 | ) | ||
Balance at March 31, 2003 | 400,000 | 129,092 | 529,092 | ||||
Notes on pages 51 and 52 form an integral part of these financial statements | |||||||
52 |
cash flow statement |
for the year ended March 31, 2003 |
(USD) | March
31, 2002 |
(USD) | March
31, 2002 |
||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||
Net profit for the year | 276 | 155,641 | Interest received | 3,694 | 7,857 | ||||||||||
Adjustments for : | |||||||||||||||
Interest income | (3,694 | ) | (7,857 | ) | Net cash from investing activities | 3,694 | 7,857 | ||||||||
Operating profit before working capital changes | (3,418 | ) | 147,784 | CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
(Increase) / Decrease in receivables | (76,696 | ) | 8,564 | Dividend paid | (20,000 | ) | | ||||||||
Decrease in payables | (55,904 | ) | (159,625 | ) | |||||||||||
Provision for investments written-off | | 100 | Net cash from financing activities | (20,000 | ) | | |||||||||
Net cash used in operating activities | (136,018 | ) | (3,177 | ) | |||||||||||
|
|
NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS | (152,324 | ) | 4,680 | ||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 303,298 | 298,618 | |||||||||||||
CASH AND CASH EQUIVALENTS AT END OF YEAR (note 1 d) | 150,974 | 303,298 | |||||||||||||
for the year ended March 31, 2003 |
1. | ACCOUNTING
POLICIES The financial statements are prepared in accordance with applicable International Accounting Standards. A summary of the more important accounting policies, which have been applied consistently, is set out below. The preparation of financial statements in accordance with International Accounting Standards requires the Directors to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. |
|
(a) |
Basis
of accounting The financial statements are prepared under the historical cost convention. |
|
(b) | Investments The investment in the joint venture entity, TCW/ICICI Investment Partners, is viewed as a strategic investment and has, as a result, been recorded at cost. Available-for-sale investments are valued at fair value and the resulting temporary unrealised (gains) / losses (including unrealised foreign exchange (gains) / losses on retranslation at the closing rate, if any) are reported as a separate component of equity as Investment Revaluation Reserve, till the underlying investment is sold or permanently written off, when the total realised (gains) / losses are included in the Income Statement. |
|
(c) | Foreign
currency translation Foreign currency transactions are translated into US Dollar at the exchange rate ruling on the transaction dates. Monetary assets and liabilities at the balance sheet date, which are denominated in foreign currencies, are translated into US Dollar at the rate of exchange ruling at the balance sheet date. Realised and unrealised gains and losses on exchange are dealt with in the Income Statement. |
|
(d) | Cash
and cash equivalents Cash and cash equivalents consist of cash on hand, balances with banks, and investments in market instruments. |
|
(e) | Revenue
recognition Revenue is recognised on the following basis : Interest Income and Management Fees as they accrue unless collectibility is in doubt. |
2. |
INVESTMENTS Details of the Investments are as follows : |
|
(a) | Unquoted Securities |
No.
of Shares |
% Holding |
Cost USD |
Directors Valuation USD |
||||||
TCW/ICICI Investment | |||||||||
Partners LLC | 300,000 | 50 | 300,000 | 300,000 | |||||
Total | 300,000 | 300,000 | 300,000 | ||||||
(b) | Investments which exceeds 10% of the issued share capital are : |
Name of Company | Description | Proportion held | ||
TCW / ICICI Investment | Ordinary shares | 50% | ||
Partners LLC |
3. | Expenses written back | March 31, | March 31, | |||
2003 | 2002 | |||||
USD | USD | |||||
Overprovision of prior year professional | | 41,000 | ||||
fees written back | ||||||
Performance fees receivable written off | | (8,538 | ) | |||
|
|
|||||
Previous year expenses written back (net) | | 32,462 | ||||
4. | Receivables | March 31, | March 31, | |||
2003 | 2002 | |||||
USD | USD | |||||
Prepayment and accrued interest | 79,837 | 3,141 | ||||
|
|
|||||
Total | 79,837 | 3,141 | ||||
|
|
5. | Share Capital | March 31, | March 31, | ||
2003 | 2002 | ||||
USD | USD | ||||
Authorised | |||||
5,000,000 Ordinary shares of USD 10 each | 50,000,000 | 50,000,000 | |||
|
|
||||
Issued and fully paid | |||||
40,000 Ordinary shares of USD 10 each | 400,000 | 400,000 | |||
|
|
53
notes to the financial statements |
Continued |
6. | Payables | March 31, | March 31, | |||
2003 | 2002 | |||||
USD | USD | |||||
Accruals | 1,719 | 7,623 | ||||
|
|
|||||
1,719 | 7,623 | |||||
|
|
7. | Taxation The Company has received a Certificate of Mauritian tax residence from the Commissioner of Income Tax in Mauritius, which entitles it to certain reliefs pursuant to the treaties concluded between Mauritius and the investee countries for the avoidance of double taxation. Capital gains are exempt from Mauritian tax and any dividends paid by the Company to shareholders will be exempt in Mauritius from any withholding tax. The Company is liable to pay income tax on its net income at a rate of 15% effective from the year ended March 31, 2003. The Company, however, had allowable losses at March 31, 2003 of USD 3,418 and, therefore, no provision for tax has been made for the current year. |
8. |
Financial
Instruments |
|
The carrying amount of investments, receivables, cash and cash equivalents and payables approximate to their fair values. Financial assets and liabilities which are accounted for at historical cost are carried out at values which differ from their fair values. It is not practicable within the constraints of timeliness and cost to determine the fair values of certain financial assets and liabilities with sufficient reliability. | ||
9. |
Reporting
currency |
|
The financial statements are presented in US Dollar, which is considered to be the Companys principal trading currency. |
54
ICICI PRUDENTIAL LIFE INSURANCE COMPANY LIMITED |
Directors | Board Governance Committee | Board Investment Committee |
K.V.
Kamath, Chairman Mark Tucker Lalita D. Gupte Danny Bardin Kalpana Morparia Chanda Kochhar M.P. Modi R. Narayanan Shikha Sharma, Managing Director |
Danny
Bardin, Chairman Lalita D. Gupte Shikha Sharma |
Lalita
D. Gupte, Chairperson Danny Bardin Shikha Sharma V. Rajagopalan Sandeep Batra Puneet Nanda |
Risk
Management and Audit Committee M.P. Modi, Chairman Danny Bardin Kalpana Morparia |
||
|
||
Joint
Auditors Bharat S. Raut & Co. Chartered Accountants S.R. Batliboi & Co. Chartered Accountants |
Registered
Office ICICI Prulife Towers 1089, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025. |
|
to the members |
We are pleased to present the Third Annual Report to the Members alongwith the audited Statement of Accounts for the financial year ended March 31, 2003.
Operational Review
The year under review witnessed all the 12 private life insurers becoming fully operational. With the increased competitive activities it is estimated that the private life insurers have captured 10% of the market in terms of First Year Premium. Despite this increased competition, we are pleased to inform you that the Company has consolidated its position as the leading private life insurer in India, with the Annualized Premium growing more than three fold over the previous year.
A summary of the financial results for the year ended March 31, 2003 are as under :
Particulars | Current Year | Previous Period | |||
(March 31, 2003) | (March 31, 2002) | ||||
No. of new Policies (in 000) | 244 | 98 | |||
Rs. Million | |||||
Premium Income | 4,176 | 1,163 | |||
Sum Assured in force | |||||
| Basic Policy | 51,095 | 15,394 | ||
| Total (Basic + Riders) | 87,605 | 27,573 | ||
Annualized Premium | |||||
| Regular | 2,378 | 680 | ||
| Single | 1,570 | 576 | ||
| APE (Regular + 10% of single) | 2,535 | 738 |
Surplus / (Deficit) in Revenue / Profit & Loss Accounts before transfer from Shareholders fund :
Rs. Million | ||||
Participating | (706 | ) | (770 | ) |
Non-participating | (30 | ) | (104 | ) |
Annuities participating | (221 | ) | (175 | ) |
Linked | (363 | ) | (15 | ) |
Linked - Pension | (263 | ) | | |
Shareholders | 112 | 191 | ||
|
|
|||
Total | (1471 | ) | (873 | ) |
|
|
Customer First
Our customer centric approach has been the key reason for our success. Continuing with our Customer First philosophy, we have significantly expanded our presence to 29 operational Branches (2001-2002 : 16), with the Advisor force growing to over 18,000. We have also strengthened our Alternate Distribution channels, i.e. Bancassurance, Corporate Agents and Direct Marketing, making purchase of insurance more accessible. We are pleased to inform that the Bancassurance and Direct Marketing channels have contributed to over 18% of the Annualized Premium during the year.
Products
We were amongst the first to identify the emerging opportunity in the Pension segment and launched two linked pension products LifeTime Pension and LifeLink Pension, which have been well received in the market. This has resulted in significant market share gains in the pension segment. We have also launched a complete range of Group Solutions to meet the needs of corporate customers.
Linked products, which offer more flexibility and transparency to the customers, have been in focus during the year. We offer the most comprehensive suite of products to our customers, and the diversified product mix achieved during the year is as under :
Product type | Mix in terms of APE | |||
2002-2003 | 2001-2002 | |||
Participating | 35 | % | 61 | % |
Non-participating | 3 | % | 9 | % |
Annuities participating | 10 | % | 27 | % |
Linked | 28 | % | 3 | % |
Linked Pension | 24 | % | | |
|
||||
Total | 100 | % | 100 | % |
|
In our commitment towards delivering a superior customer experience, we have embarked on a Six Sigma Quality program, which is being implemented in the areas of customer enrolment, policy issuance and servicing.
Asset Liability Management
The Company has put in place an Asset-Liability Management (ALM) framework for its investment related risks. As part of this, the Company has hedged the single premium non-participating portfolio by duration matching. On the participating portfolio, the Company has adopted a strategy, which includes investments in Equities with an index-based strategy. The asset under management for the linked portfolio comprises of more than 30% of the funds, for which the Company has minimal ALM risk.
Dividend
Since the Company has incurred a loss, the Directors are unable to recommend any dividend for this financial year.
Rural and Social Sector Obligations
The Company has achieved the rural and social sector obligations by writing 29,376 policies pertaining to the rural sector and by covering 17,964 lives from economically vulnerable or backward classes of society under our social sector group policies.
Increase in Share Capital
The company issued 235,000,000 equity shares of Rs. 10 each at par amounting to Rs. 2,350 million in the year under review, taking the total paid-up capital to Rs. 4,250 million.
55
directors report |
Continued |
Public Deposits
During the year under review, the Company has not accepted any deposit under Section 58A of the Companies Act, 1956.
Corporate Governance
We are committed to achieving the highest standards of corporate governance. We continue to adopt the best practices in corporate governance. The composition of the Board of Directors includes two independent Directors. The Board Committees have been set-up to oversee and review the functions of the executive management.
Directors
Chanda Kochhar and R. Narayanan were appointed as additional Directors during the year. They would retire at the ensuing Annual General Meeting, and being eligible, offers themselves for re-appointment.
In accordance with the provisions of the Companies Act, 1956 Kalpana Morparia and M.P. Modi shall retire by rotation at the ensuing Annual General Meeting. They being eligible, offer themselves for re-appointment.
Auditors
The Joint Statutory Auditors, M/s. Bharat S. Raut & Company, Chartered Accountants and M/s. S.R. Batliboi & Company, Chartered Accountants, retire at the ensuing Annual General Meeting and offer themselves for re-appointment. The Company has obtained a certificate as required under Section 224 (1B) of the Companies Act, 1956 to the effect that their re-appointment, if made, would be in conformity with the limits specified in that Section.
As recommended by the Risk Management and Audit Committee, the Board has proposed their appointment, as joint statutory auditors for the financial year 2003-2004. You are requested to consider their appointment.
Particulars of Employees
As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the annexure to the Directors Report.
Additional Information
Information in accordance with the provisions of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are as follows:
Particulars | Current Year | Previous Period | ||
(March 31, 2003) | (March 31, 2002) | |||
Conservation of Energy | Not Applicable | Not Applicable | ||
Technology Absorption | Not Applicable | Not Applicable | ||
Foreign Exchange Earnings & Outgo | ||||
Earnings in Rupees million | 1 | 1 | ||
Outgo in Rupees million | 17 | 14 |
Directors Responsibility Statement
Your Directors confirm that :
1. | in the preparation of the annual accounts, the applicable accounting standards have been followed; |
2. | the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that period; |
3 | the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities and; |
4. | the Directors have prepared the annual accounts on a going concern basis. |
Acknowledgements
We would like to place on record our sincere appreciation for the faith
and confidence reposed by our esteemed policyholders, shareholders, banks,
financial institutions, ICICI Bank group and Prudential group.
We would also like to express our gratitude for the valuable advice, guidance
and support received from time to time from the Insurance Regulatory &
Development Authority, the Reserve Bank of India, the auditors and the
statutory authorities.
We would also like to place on record our appreciation on the contribution
made by all the employees, advisers and partners from alternative channels
to the excellent performance that the Company has achieved during the
year and look forward to their continued involvement, commitment and dedication
to enable it to reach greater heights in the life insurance industry.
For and on behalf of the Board | |
K.V. KAMATH | |
Mumbai, April 22, 2003 | Chairman |
56
auditors report |
to the members of ICICI Prudential Life Insurance Company Limited |
We have audited the attached Balance Sheet of ICICI Prudential Life Insurance Company Limited (the Company) as at March 31, 2003, and the related Policyholders Revenue Account, the Shareholders Profit & Loss Account, of the Company for the year ended on that date, annexed thereto, and the Receipts and Payments Account for the year ended on that date.
These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
The Balance Sheet, the Policyholders Revenue Account and the Shareholders Profit & Loss Account have been drawn up in accordance with the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors Report of Insurance Companies) Regulations 2002 read with Section 211 of the Companies Act, 1956.
We report thereon as follows :
In our opinion and to the best of our information and according to the information and explanations given to us :
- in the case of the Balance Sheet, of the state of affairs of the Company at March 31, 2003;
- in the case of the Policyholders Revenue Account, of the surplus/ deficit for the year ended on that date;
- in the case of the Shareholders Profit & Loss Account, of the loss for the year ended on that date; and
- in the case of the Receipts and Payments Account, of the receipts and payments for the year ended on that date.
Further, according to the information and explanations given to us and to the best of our knowledge and belief we certify that :
For
BHARAT S. RAUT & CO. Chartered Accountants |
For
S.R. BATLIBOI & CO. Chartered Accountants |
|
AKEEL
MASTER Partner Mumbai, April 22, 2003 |
PER
HEMAL SHAH A Partner Mumbai, April 22, 2003 |
|
57
balance sheet | ||
as at March 31, 2003 |
Registration No. and Date of Registration with the IRDA : Regn. No. 105 dated 24.11.2000
Schedule | (Rs. in 000s) | March 31, | |||
2002 | |||||
SOURCES OF FUNDS | |||||
SHAREHOLDERS FUNDS : | |||||
SHARE CAPITAL | 1 | 4,250,000 | 1,900,000 | ||
Credit / (Debit) Fair Value | |||||
Change Account - Net | (10,707 | ) | | ||
4,239,293 | 1,900,000 | ||||
POLICYHOLDERS FUNDS : | |||||
POLICY LIABILITIES | |||||
Participating Business | 1,510,513 | 580,079 | |||
Non-Participating Business | 958,284 | 534,361 | |||
Annuities Participating | 657,206 | 216,654 | |||
Linked | 32,135 | 935 | |||
Linked Pension | 45,808 | | |||
Linked Group Gratuity | 405 | | |||
INSURANCE RESERVES | |||||
Linked Group Gratuity | 22 | | |||
Provision for linked liabilities | 2,081,732 | 75,374 | |||
5,286,105 | 1,407,403 | ||||
Total | 9,525,398 | 3,307,403 | |||
APPLICATION OF FUNDS | |||||
INVESTMENTS | |||||
Shareholders | 2 | 1,281,324 | 515,930 | ||
Policyholders | 2A | 3,299,385 | 1,325,790 | ||
Asset held to cover linked liabilities | 2B | 2,081,732 | 75,374 | ||
FIXED ASSETS | 3 | 414,229 | 281,947 | ||
Deferred Tax Asset (Net) | 102,346 | 102,346 | |||
CURRENT ASSETS | |||||
Cash and Bank Balances | 4 | 320,378 | 107,010 | ||
Advances and Other Assets | 5 | 210,064 | 119,755 | ||
Less : Current Liabilities & Provisions | 6 | 709,121 | 273,995 | ||
NET CURRENT ASSETS | (178,679 | ) | (47,229 | ) | |
Profit & Loss Account - Debit balance | 2,525,061 | 1,053,247 | |||
(Share Holders Account) | |||||
Total | 9,525,398 | 3,307,403 | |||
NOTES TO ACCOUNTS | 11 |
Schedules referred to herein form an integral part of the Balance Sheet.
profit and loss account | ||
for the year ended March 31, 2003 |
Schedule | (Rs. in 000s) | March 31, | |||
2002 | |||||
Shareholders' Account | |||||
(Non-technical Account) | |||||
Amount transferred to : | |||||
Policyholders Account | |||||
(Technical) Participating | 706,428 | 927,171 | |||
Policyholders Account | |||||
(Technical) Non-Participating | 30,027 | 124,697 | |||
Policyholders Account (Technical) | |||||
Annuities Participating | 221,272 | 175,169 | |||
Policyholders Account | |||||
(Technical) Linked | 362,573 | 14,769 | |||
Policyholders Account | |||||
(Technical) Linked Pension | 263,484 | | |||
Total (A) | 1,583,784 | 1,241,806 | |||
Income From Investments | |||||
(a) Interest & Dividend (Gross) | 62,019 | 107,292 | |||
(b) Profit on sale of investments (Net) | 57,172 | 112,347 | |||
Fees for professional services | 1,397 | 1,011 | |||
Other Income | 19 | 58 | |||
Total (B) | 120,607 | 220,708 | |||
Operating Expenses | |||||
Employees remuneration & welfare benefits | 1,648 | 2,974 | |||
Rent, Rates & Taxes | | 5 | |||
Travel, conveyance & vehicle running expenses | 49 | 341 | |||
Legal and professional fees | 22 | 6,057 | |||
Sales Promotion | 4,543 | 692 | |||
Sale / write off of Fixed Assets | 802 | | |||
Others | 1,527 | 861 | |||
Depreciation | 47 | 142 | |||
Total (C) | 8,638 | 11,072 | |||
Profit / (Loss) before Tax | (1,471,814 | ) | (1,032,170 | ) | |
Provision for Taxation (Current Year ) - Deferred | | (18,811 | ) | ||
Profit / (Loss) after Tax | (1,471,814 | ) | (1,050,981 | ) | |
APPROPRIATIONS | |||||
Balance at the beginning of the year | (1,053,247 | ) | 2,259 | ||
Provision for Taxation (Previous Period) - Deferred | | (4,525 | ) | ||
Profit / (Loss) carried to Balance Sheet | (2,525,061 | ) | (1,053,247 | ) | |
NOTES TO ACCOUNTS | 11 | ||||
Schedules refer to herein form an integral part of the Shareholders Account. |
As per our report of even date. | ||||
For
BHARAT S. RAUT & CO. Chartered Accountants |
For
S.R. BATLIBOI & CO. Chartered Accountants |
|||
AKEEL MASTER | PER HEMAL SHAH | K.V. KAMATH | M.P. MODI | S.P. SUBHEDAR |
Partner | A Partner | Chairman | Director | Director |
Mumbai, April 22, 2003 | SHIKHA
SHARMA Managing Director |
SANDEEP
BATRA Chief Financial Officer & Company Secretary |
V.
RAJAGOPALAN Appointed Actuary |
58
revenue account |
for the year ended March 31, 2003 |
(Rs. in 000s) |
Non- | Annuities | Linked | |||||||||||||
Particulars | Schedule | Parti- | parti- | Partici- | Linked | Group | |||||||||
cipating | cipating | pating | Linked | Pension | Gratuity | Total | |||||||||
Premiums earned net | |||||||||||||||
(a) Premium | 7 | 1,112,197 | 430,188 | 433,425 | 1,567,258 | 624,746 | 8,429 | 4,176,243 | |||||||
(b) Reinsurance ceded | (787 | ) | (1,624 | ) | (75 | ) | (342 | ) | | | (2,828 | ) | |||
Income from Investments | |||||||||||||||
(a) Interest & Dividend (Gross) | 73,871 | 60,955 | 24,743 | 183 | 47 | | 159,799 | ||||||||
(b) Profit on sale / redemption of | |||||||||||||||
investments (Net) | 21,300 | 27,567 | 13,624 | 109 | 36 | | 62,636 | ||||||||
Linked Income | | | | 19,376 | 7,145 | | 26,521 | ||||||||
Fees and Charges | 1,456 | 80 | 191 | 3 | | | 1,730 | ||||||||
Total (A) | 1,208,037 | 517,166 | 471,908 | 1,586,587 | 631,974 | 8,429 | 4,424,101 | ||||||||
Commission | 8 | 227,798 | 16,432 | 33,283 | 55,968 | 31,190 | 5 | 364,676 | |||||||
Operating Expenses related to | |||||||||||||||
Insurance Business | 9 | 743,787 | 93,747 | 214,252 | 405,741 | 293,710 | | 1,751,237 | |||||||
Provision for Taxation (Current Year) Deferred | | | | | | | | ||||||||
Total (B) | 971,585 | 110,179 | 247,535 | 461,709 | 324,900 | 5 | 2,115,913 | ||||||||
Benefits Paid | 10 | 12,446 | 13,091 | 5,093 | 644 | 283 | | 31,557 | |||||||
Liability against Life policies in force | 930,434 | 423,923 | 440,552 | 31,200 | 45,808 | 405 | 1,872,322 | ||||||||
Transfer to Linked Fund | | | | 1,455,607 | 524,467 | 7,997 | 1,988,071 | ||||||||
Total (C) | 942,880 | 437,014 | 445,645 | 1,487,451 | 570,558 | 8,402 | 3,891,950 | ||||||||
SURPLUS / (DEFICIT) (D) = (A)-(B)-(C) | (706,428 | ) | (30,027 | ) | (221,272 | ) | (362,573 | ) | (263,484 | ) | 22 | (1,583,762 | ) | ||
APPROPRIATIONS | |||||||||||||||
Transfer from Shareholders Account | 706,428 | 30,027 | 221,272 | 362,573 | 263,484 | | 1,583,784 | ||||||||
Balance being funds for future appropriations | | | | | | 22 | 22 | ||||||||
NOTES TO ACCOUNTS | 11 | ||||||||||||||
Non- | Annuities | Linked | |||||||||||||
Particulars | Schedule | Parti- | parti- | Partici- | Linked | Group | |||||||||
cipating | cipating | pating | Linked | Pension | Gratuity | Total | |||||||||
Premiums earned net | |||||||||||||||
(a) Premium | 7 | 380,548 | 483,421 | 223,662 | 76,122 | | | 1,163,753 | |||||||
(b) Reinsurance ceded | (216 | ) | (89 | ) | (6 | ) | (30 | ) | | | (341 | ) | |||
Income from Investments | |||||||||||||||
(a) Interest Gross | | 16,997 | | | | | 16,997 | ||||||||
(b) Profit on sale / redemption of | |||||||||||||||
investments (Net) | | 11,727 | | | | | 11,727 | ||||||||
Linked Income | | | | 1,270 | | | 1,270 | ||||||||
Fees and Charges | 298 | 48 | 242 | | | | 588 | ||||||||
Total (A) | 380,630 | 512,104 | 223,898 | 77,362 | | | 1,193,994 | ||||||||
Commission | 8 | 104,964 | 13,121 | 25,159 | 1,474 | | | 144,718 | |||||||
Operating Expenses related to | |||||||||||||||
Insurance Business | 9 | 567,886 | 104,053 | 157,217 | 19,325 | | | 848,475 | |||||||
Provision for Taxation (Current Year) Deferred | (82,974 | ) | (11,365 | ) | | (2,158 | ) | | | (96,497 | ) | ||||
Total (B) | 589,876 | 105,809 | 182,375 | 18,641 | | | 896,701 | ||||||||
Benefits Paid | 10 | 4,112 | 2,412 | | 2 | | | 6,526 | |||||||
Liability against Life policies in force | 556,910 | 508,089 | 216,652 | 935 | | | 1,282,586 | ||||||||
Transfer to Linked Fund | | | | 72,553 | | | 72,553 | ||||||||
Total (C) | 561,022 | 510,501 | 216,652 | 73,490 | | | 1,361,665 | ||||||||
SURPLUS / (DEFICIT) (D) = (A)-(B)-(C) | (770,268 | ) | (104,206 | ) | (175,129 | ) | (14,769 | ) | | | (1,064,372 | ) | |||
APPROPRIATIONS | |||||||||||||||
Insurance reserve at the beginning of the year | (182,717 | ) | (23,862 | ) | (40 | ) | | | | (206,619 | ) | ||||
Provision for Taxation (Previous Year) - Deferred | 25,814 | 3,371 | | | | | 29,185 | ||||||||
(156,903 | ) | (20,491 | ) | (40 | ) | | | | (177,434 | ) | |||||
Transfer from Shareholders Account | 927,171 | 124,697 | 175,169 | 14,769 | | | 1,241,806 | ||||||||
Balance being funds for future appropriations | | | | | | | | ||||||||
NOTES TO ACCOUNTS | 11 | ||||||||||||||
Schedules referred to herein form an integral part of the Policyholders Revenue Account.
As
per our report of even date. |
||||
For
BHARAT S. RAUT & CO. Chartered Accountants |
For
S.R. BATLIBOI & CO. Chartered Accountants |
|||
AKEEL
MASTER Partner |
PER
HEMAL SHAH A Partner |
K.V.
KAMATH Chairman |
M.P.
MODI Director |
S.P.
SUBHEDAR Director |
Mumbai, April 22, 2003 | SHIKHA
SHARMA Managing Director |
SANDEEP
BATRA Chief Financial Officer & Company Secretary |
V.
RAJAGOPALAN Appointed Actuary |
59
schedules | ||
forming part of the financial statements |
(Rs. in 000s) | ||||
March 31, 2003 | March 31, 2002 | |||
SCHEDULE 1 | ||||
SHARE CAPITAL | ||||
Authorised Capital | ||||
Equity Shares of Rs. 10 each | 6,000,000 | 2,300,000 | ||
|
|
|||
Issued, Subscribed and Called up Capital | ||||
Equity Shares of Rs. 10 each Fully Paid Up | 4,250,000 | 1,900,000 | ||
|
|
|||
Total | 4,250,000 | 1,900,000 | ||
|
|
|||
Of the above issued share capital as of March 31, 2003, 314,499,993 shares (Previous year : 140,599,993 shares) of Rs. 10 each are held by the holding company, ICICI Bank Limited and 7 shares (Previous year : 7 shares) of Rs.10 each are held by ICICI Bank Limited through its nominees. |
PATTERN
OF SHAREHOLDING
[As certified by the Management]
Shareholder | March 31, 2003 | March 31, 2002 | ||||||
Number of | % of | Number of | % of | |||||
Shares | Holding | Shares | Holding | |||||
Promoters | ||||||||
Indian | 314,500,000 | 74 | 140,600,000 | 74 | ||||
Foreign | 110,500,000 | 26 | 49,400,000 | 26 | ||||
|
|
|
|
|||||
Total | 425,000,000 | 100 | 190,000,000 | 100 | ||||
|
|
|
|
SCHEDULE 2 | March 31, 2003 | March 31, 2002 | ||
INVESTMENTS SHAREHOLDERS | ||||
LONG TERM INVESTMENTS | ||||
Government securities including Treasury Bills * | 391,431 | 327,887 | ||
(Market Value Current year : Rs. 397,032 thousands) | ||||
(Market Value Previous year : Rs. 346,259 thousands) | ||||
Other Investments : | ||||
Debentures / Bonds | 129,861 | 96,862 | ||
(Market Value Current year: Rs. 129,369 thousands) | ||||
(Market Value Previous year : Rs. 100,711 thousands) | ||||
Investments in Infrastructure and Social Sector | 384,609 | 56,936 | ||
(Market Value Current year : Rs. 388,252 thousands) | ||||
(Market Value Previous year : Rs. 57,495 thousands) | ||||
Other than Approved Investments : | ||||
Debentures / Bonds | 33,212 | | ||
(Market Value Current year : Rs. 33,739 thousands) | ||||
(Market Value Previous year : Rs. Nil) | ||||
SHORT TERM INVESTMENTS | ||||
Government securities | 52,822 | | ||
(Market Value Current year : Rs. 53,250 thousands) | ||||
(Market Value Previous year : Rs. Nil) | ||||
Other Investments : | ||||
Debentures / Bonds | 101,277 | | ||
(Market Value Current year : Rs. 101,744 thousands) | ||||
(Market Value Previous year : Rs. Nil) | ||||
Other than Approved Investments : | ||||
Mutual Fund units at Market value (Previous year at book value) | 188,112 | 34,245 | ||
(Book Value Current year : Rs. 188,023 thousands) | ||||
(Market Value Previous year : Rs. 34,290 thousands) | ||||
Total | 1,281,324 | 515,930 | ||
In India | 1,281,324 | 515,930 | ||
Total | 1,281,324 | 515,930 | ||
* Includes Rs. 12,342 thousands of securities under Section 7 of Insurance Act, 1938 (Previous year : Nil) (Refer Note 3.10 of Schedule 11).
60
schedules | |
forming part of the financial statements | Continued |
(Rs. in 000s) |
March 31, 2003 | ||||||||||||||
Non- | Linked | |||||||||||||
Particulars | Partici- | partici- | Annuities | Linked | Group | |||||||||
pating | pating | Participating | Linked | Pension | Gratuity | Total | ||||||||
LONG TERM INVESTMENTS | ||||||||||||||
Government securities including Treasury Bills | 1,189,827 | 583,186 | 571,786 | 31,613 | 45,411 | 502 | 2,422,325 | |||||||
(Market Value Rs. 2,656,117 thousands) | ||||||||||||||
Other Investments : | ||||||||||||||
Debentures / Bonds | 50,848 | 110,619 | | | | | 161,467 | |||||||
(Market Value Rs. 171,107 thousands) | ||||||||||||||
Debentures / Bonds Infrastructure and social sector | 157,606 | 79,576 | | | | | 237,182 | |||||||
(Market Value Rs. 255,501 thousands) | ||||||||||||||
Equity Shares | 185,411 | | 86,289 | | | | 271,700 | |||||||
(Historical Costs Rs. 281,683 thousands) | ||||||||||||||
Equity shares infrastructure and social sector | 13,135 | | 6,460 | | | | 19,595 | |||||||
(Historical Costs Rs. 20,317 thousands) | ||||||||||||||
Long term fixed deposit | | 50,000 | | | | | 50,000 | |||||||
Other than Approved Investments : | ||||||||||||||
Debentures / Bonds | | 129,724 | | | | | 129,724 | |||||||
(Market Value : Rs. 140,539 thousands) | ||||||||||||||
Equity Shares | 7,392 | | | | | | 7,392 | |||||||
(Historical Costs Rs. 7,483 thousands) | ||||||||||||||
Total | 1,604,219 | 953,105 | 664,535 | 31,613 | 45,411 | 502 | 3,299,385 | |||||||
In India | 1,604,219 | 953,105 | 664,535 | 31,613 | 45,411 | 502 | 3,299,385 | |||||||
Total | 1,604,219 | 953,105 | 664,535 | 31,613 | 45,411 | 502 | 3,299,385 | |||||||
March 31, 2002 | ||||||||||||||
Non- | Linked | |||||||||||||
PARTICULARS | Partici- | partici- | Annuities | Linked | Group | |||||||||
pating | pating | Participating | Linked | Pension | Gratuity | Total | ||||||||
LONG TERM INVESTMENTS | ||||||||||||||
Government securities and Treasury Bills | 342,700 | 390,116 | 116,759 | 968 | | | 850,543 | |||||||
(Market Value Rs. 896,178 thousands) | ||||||||||||||
Other Investments : | ||||||||||||||
Debentures / Bonds | | | 50,000 | | | | 50,000 | |||||||
(Market Value : Rs. 52,000 thousands) | ||||||||||||||
Investments in infrastructure and social sector | 187,387 | 81,154 | 49,924 | | | | 318,465 | |||||||
(Market Value : Rs. 327,416 thousands) | ||||||||||||||
Equity Shares | | | | | | | | |||||||
(Nil Investments) | ||||||||||||||
Investments in infrastructure and social sector | | | | | | | | |||||||
(Nil Investments) | ||||||||||||||
Long term fixed deposit | | | | | | | | |||||||
(Nil Investments) | ||||||||||||||
Other than Approved Investments : | ||||||||||||||
Debentures / Bonds | 50,000 | 56,782 | | | | | 106,782 | |||||||
(Market Value Current year : Rs. 109,940 thousands) | ||||||||||||||
Equity Shares | | | | | | | | |||||||
(Nil Investments) | ||||||||||||||
Total | 580,087 | 528,052 | 216,683 | 968 | | | 1,325,790 | |||||||
In India | 580,087 | 528,052 | 216,683 | 968 | | | 1,325,790 | |||||||
Total | 580,087 | 528,052 | 216,683 | 968 | | | 1,325,790 | |||||||
61
schedules | |
forming part of the financial statements | Continued |
(Rs. in 000s) |
SCHEDULE
2B
ASSETS
HELD TO COVER LINKED LIABILITIES
March 31, 2003 | ||||||||||||||||||||
Linked Funds | Linked Pension Funds | Linked Group Gratuity | ||||||||||||||||||
Short | ||||||||||||||||||||
Maxi- | Maxi- | Term | ||||||||||||||||||
Particulars | Balancer | Protector | miser | Balancer | Protector | miser | Balanced | Income | Debt | Total | ||||||||||
LONG TERM INVESTMENTS | ||||||||||||||||||||
Government Securities | 44,129 | 482,113 | 6,886 | 22,350 | 148,316 | 3,230 | | | | 707,024 | ||||||||||
(Historical Cost Rs. 698,774 thousands) | ||||||||||||||||||||
Other Investments | ||||||||||||||||||||
Equity Shares | 54,020 | | 125,129 | 26,878 | | 40,667 | | | | 246,694 | ||||||||||
(Historical Cost Rs. 249,821 thousands) | ||||||||||||||||||||
Debentures / Bonds | 27,826 | 383,153 | 8,220 | 13,339 | 111,349 | 2,702 | | | | 546,589 | ||||||||||
(Historical Cost Rs. 546,132 thousands) | ||||||||||||||||||||
Investments in Infrastructure and Social Sector | ||||||||||||||||||||
Equity Shares | 1,253 | | 3,133 | 492 | | 868 | | | | 5,746 | ||||||||||
(Historical Cost Rs. 6,235 thousands) | ||||||||||||||||||||
Debentures/ Bonds | 12,429 | 138,112 | | 9,373 | 47,245 | | | | | 207,159 | ||||||||||
(Historical Cost Rs. 209,706 thousands) | ||||||||||||||||||||
Other than Approved Investments | ||||||||||||||||||||
Equity Shares | 1,445 | | 3,469 | 650 | | 1,053 | | | | 6,617 | ||||||||||
(Historical Cost Rs. 6,822 thousands) | ||||||||||||||||||||
Debentures / Bonds | 3,234 | 31,360 | | 1,666 | 12,740 | | | | | 49,000 | ||||||||||
(Historical Cost Rs. 48,423 thousands) | ||||||||||||||||||||
SHORT TERM INVESTMENTS | ||||||||||||||||||||
Other Investments | | 35,040 | | | 11,680 | | | | | 46,720 | ||||||||||
(Historical Cost Rs. 46,719 thousands) | ||||||||||||||||||||
Net Current Assets | 23,274 | 147,652 | 13,502 | 14,138 | 51,397 | 8,223 | 6,776 | 843 | 378 | 266,183 | ||||||||||
Total | 167,610 | 1,217,430 | 160,339 | 88,886 | 382,727 | 56,743 | 6,776 | 843 | 378 | 2,081,732 | ||||||||||
In India | 167,610 | 1,217,430 | 160,339 | 88,886 | 382,727 | 56,743 | 6,776 | 843 | 378 | 2,081,732 | ||||||||||
Total | 167,610 | 1,217,430 | 160,339 | 88,886 | 382,727 | 56,743 | 6,776 | 843 | 378 | 2,081,732 | ||||||||||
March 31, 2002 | ||||||||
Particulars | Linked Funds | |||||||
Balancer | Protector | Maximiser | Total | |||||
LONG TERM INVESTMENTS | ||||||||
Government Securities | 2,453 | 20,445 | 1,074 | 23,972 | ||||
(Historical Cost Rs. 23,721 thousands) | ||||||||
Other Investments | ||||||||
Equity Shares | 3,332 | | 10,175 | 13,507 | ||||
(Historical Cost Rs. 13,868 thousands) | ||||||||
Debentures / Bonds | 823 | 6,940 | 588 | 8,351 | ||||
(Historical Cost Rs. 13,868 thousands) | ||||||||
Investments in Infrastructure and Social Sector | ||||||||
Debentures / Bonds | 2,201 | 19,076 | | 21,277 | ||||
(Historical Cost Rs. 21,270 thousands) | ||||||||
Net Current Assets | 982 | 6,281 | 1,004 | 8,267 | ||||
Total | 9,791 | 52,742 | 12,841 | 75,374 | ||||
In India | 9,791 | 52,742 | 12,841 | 75,374 | ||||
Total | 9,791 | 52,742 | 12,841 | 75,374 | ||||
62
schedules | |
forming part of the financial statements | Continued |
(Rs. in 000s) |
SCHEDULE 3 FIXED ASSETS
PARTICULARS | COST / GROSS BLOCK | DEPRECIATION | NET BLOCK | |||||||||||||||||
Sales / | Upto | Sales / | As at | As at | ||||||||||||||||
Opening | Adjust- | Closing | Previous | For The | Adjust- | March 31, | March 31, | |||||||||||||
Balance | Additions | ments | Balance | year | Year | ments | To Date | 2003 | 2002 | |||||||||||
Leasehold Improvement | 107,641 | 81,478 | *6,809 | 195,928 | 9,651 | 19,465 | *1,252 | 30,368 | 165,560 | 97,990 | ||||||||||
Information Technology | ||||||||||||||||||||
Equipment | 44,056 | 52,330 | (113 | ) | 96,272 | 13,188 | 22,832 | (22 | ) | 35,998 | 60,274 | 30,868 | ||||||||
Software | 62,064 | 32,875 | (1,205 | ) | 93,735 | 21,194 | 29,862 | (488 | ) | 50,568 | 43,167 | 40,870 | ||||||||
Networks | 21,244 | 15,927 | *(6,809 | ) | 30,362 | 4,472 | 6,800 | *(1,252 | ) | 10,020 | 20,342 | 16,772 | ||||||||
Furniture & Fixtures | 33,390 | 26,908 | | 60,298 | 11,267 | 16,710 | | 27,977 | 32,321 | 22,123 | ||||||||||
Office Equipment | 77,640 | 37,842 | (7 | ) | 115,475 | 17,363 | 26,826 | (7 | ) | 44,182 | 71,293 | 60,277 | ||||||||
Sub-total | 346,035 | 247,360 | (1,325 | ) | 592,070 | 77,135 | 122,495 | (517 | ) | 199,113 | 392,957 | 268,900 | ||||||||
Capital Work-in-Progress | 21,272 | 13,047 | ||||||||||||||||||
Total | 414,229 | 281,947 | ||||||||||||||||||
Previous Year | 85,557 | 260,478 | | 346,035 | 6,941 | 70,194 | | 77,135 | 268,900 | |||||||||||
March 31, | March 31, | |||
2003 | 2002 | |||
SCHEDULE 4 | ||||
CASH AND BANK BALANCES | ||||
Cash (including cheques in hand) | 139,769 | 73,229 | ||
Bank Balance | ||||
(a) Deposit Account : | ||||
Short-term (due within 12 months of the | ||||
date of balance sheet) | 65,111 | 15,000 | ||
(b) Current Account | 110,799 | 101 | ||
Money at Call & Short Notice with banks # | 4,700 | 18,680 | ||
Total | 320,378 | 107,010 | ||
CASH & BANK BALANCES | ||||
In India | 320,378 | 107,010 | ||
Total | 320,378 | 107,010 | ||
# Includes Rs. Nil, (Previous year : Rs. 6.4 million) relating to Non-participating business. | ||||
SCHEDULE 5 | ||||
ADVANCES AND OTHER ASSETS | ||||
ADVANCES | ||||
Prepayments | 5,220 | 342 | ||
Advance tax paid and taxes deducted at source | 2,033 | 746 | ||
Deposits | 57,792 | 46,162 | ||
Rent & other advances / deposits | 6,076 | 8,420 | ||
Other receivables | 2,522 | 125 | ||
Loan against policies | 21 | | ||
Total (A) | 73,664 | 55,795 | ||
March 31, | March 31, | |||
2003 | 2002 | |||
SCHEDULE 5 | ||||
ADVANCES AND OTHER ASSETS (Contd.) | ||||
OTHER ASSETS | ||||
Income accrued on investments / deposits | 88,111 | 51,237 | ||
Outstanding Premiums | 47,289 | 11,723 | ||
Deposit with Reserve Bank of India (refer to | ||||
note 3.10 of Schedule 11) | 1,000 | 1,000 | ||
Total (B) | 136,400 | 63,960 | ||
Total (A+B) | 210,064 | 119,755 | ||
SCHEDULE 6 | ||||
CURRENT LIABILITIES & PROVISIONS | ||||
Agents Balances | 6,564 | 655 | ||
Sundry creditors | 3,531 | 5,329 | ||
Expenses Payable | 216,920 | 88,455 | ||
Reinsurance Premium Payable | 2,199 | 282 | ||
Due to Holding company | 8,064 | 6,146 | ||
TDS Payable | 16,050 | 6,706 | ||
Unarranged Overdraft | | 14,208 | ||
Premium & other Liabilities | 316,226 | 137,061 | ||
Premium received in advance | 66,761 | 4,756 | ||
Claims Outstanding | 8,736 | 719 | ||
Outstanding Purchases (Investments) | 41,790 | | ||
Other Liabilities | 10,013 | 4,760 | ||
Provision for Leave Encashment | 12,267 | 4,918 | ||
Total | 709,121 | 273,995 | ||
63
schedules | |
forming part of the financial statements | Continued |
(Rs. in 000s) |
Non- | Annuities | Linked | Linked Group | |||||||||||
Particulars | Participating | participating | Participating | Linked | Pension | Gratuity | Total | |||||||
SCHEDULE 7 | ||||||||||||||
PREMIUM | ||||||||||||||
For the year ended March 31, 2003 | ||||||||||||||
First year Premiums | 776,889 | 45,104 | 257,119 | 458,344 | 552,935 | 8,429 | 2,098,820 | |||||||
Renewal Premiums | 335,308 | 16,830 | 171,382 | 11,656 | | | 535,176 | |||||||
Single Premiums | | 368,254 | 4,924 | 1,097,258 | 71,811 | | 1,542,247 | |||||||
Total Premium | 1,112,197 | 430,188 | 433,425 | 1,567,258 | 624,746 | 8,429 | 4,176,243 | |||||||
Premium Income from business written | ||||||||||||||
In India | 1,112,197 | 430,188 | 433,425 | 1,567,258 | 624,746 | 8,429 | 4,176,243 | |||||||
Total Premium | 1,112,197 | 430,188 | 433,425 | 1,567,258 | 624,746 | 8,429 | 4,176,243 | |||||||
For the year ended March 31, 2002 | ||||||||||||||
First year Premiums | 352,249 | 17,094 | 175,970 | 12,384 | | | 557,697 | |||||||
Renewal Premiums | 28,299 | 2,165 | 12 | | | | 30,476 | |||||||
Single Premiums | | 464,162 | 47,680 | 63,738 | | | 575,580 | |||||||
Total Premium | 380,548 | 483,421 | 223,662 | 76,122 | | | 1,163,753 | |||||||
Premium Income from business written | ||||||||||||||
In India | 380,548 | 483,421 | 223,662 | 76,122 | | | 1,163,753 | |||||||
Total Premium | 380,548 | 483,421 | 223,662 | 76,122 | | | 1,163,753 | |||||||
SCHEDULE 8 | ||||||||||||||
COMMISSION EXPENSES | ||||||||||||||
For the year ended March 31, 2003 | ||||||||||||||
Commission | ||||||||||||||
Direct First year Premiums | 204,181 | 11,484 | 22,035 | 49,609 | 30,818 | 5 | 318,132 | |||||||
Renewal Premiums | 23,617 | 1,111 | 11,180 | 506 | | | 36,414 | |||||||
Single Premiums | | 3,837 | 68 | 5,853 | 372 | | 10,130 | |||||||
Total Commission | 227,798 | 16,432 | 33,283 | 55,968 | 31,190 | 5 | 364,676 | |||||||
For the year ended March 31, 2002 | ||||||||||||||
Commission | ||||||||||||||
Direct First year Premiums | 102,862 | 5,522 | 24,304 | 1,263 | | | 133,951 | |||||||
Renewal Premiums | 2,102 | 155 | 1 | | | | 2,258 | |||||||
Single Premiums | | 7,444 | 854 | 211 | | | 8,509 | |||||||
Total Commission | 104,964 | 13,121 | 25,159 | 1,474 | | | 144,718 | |||||||
SCHEDULE 9 | ||||||||||||||
OPERATING EXPENSES | ||||||||||||||
For the year ended March 31, 2003 | ||||||||||||||
Employees remuneration & welfare benefits | 242,934 | 27,221 | 73,850 | 134,588 | 99,292 | | 577,885 | |||||||
Travel, conveyance and vehicle running expenses | 23,216 | 2,793 | 6,157 | 12,441 | 8,470 | | 53,077 | |||||||
Rents, rates & taxes | 59,143 | 6,461 | 15,048 | 28,363 | 17,893 | | 126,908 | |||||||
Repairs | 12,109 | 1,347 | 3,451 | 6,463 | 4,508 | | 27,878 | |||||||
Printing & stationery | 12,855 | 1,645 | 3,433 | 8,867 | 7,659 | | 34,459 | |||||||
Communication expenses | 29,935 | 4,588 | 7,492 | 14,702 | 11,900 | | 68,617 | |||||||
Legal & professional charges | 27,697 | 3,018 | 7,363 | 12,406 | 6,960 | | 57,444 | |||||||
Medical fees | 15,660 | 6,656 | 5,226 | 3,851 | 1,805 | | 33,198 | |||||||
Auditors fees : | ||||||||||||||
(a) as auditor | 317 | 19 | 186 | 249 | 317 | | 1,088 | |||||||
Advertisement and publicity | 132,773 | 13,102 | 41,162 | 81,890 | 60,050 | | 328,977 | |||||||
Interest & Bank Charges | 961 | 414 | 293 | 890 | 335 | | 2,893 | |||||||
Agents Training & Recruitment | 82,033 | 8,821 | 22,615 | 46,629 | 33,911 | | 194,009 | |||||||
Depreciation | 54,914 | 6,199 | 15,507 | 28,088 | 17,740 | | 122,448 | |||||||
Others | 49,240 | 11,463 | 12,469 | 26,314 | 22,870 | | 122,356 | |||||||
Total | 743,787 | 93,747 | 214,252 | 405,741 | 293,710 | | 1,751,237 | |||||||
For the year ended March 31, 2002 | ||||||||||||||
Employees remuneration & welfare benefits | 159,288 | 30,015 | 45,212 | 5,508 | | | 240,023 | |||||||
Travel, conveyance and vehicle running expenses | 18,354 | 3,538 | 4,543 | 483 | | | 26,918 | |||||||
Rents, rates & taxes | 50,342 | 10,480 | 11,251 | 1,397 | | | 73,470 | |||||||
Repairs | 11,172 | 2,342 | 2,527 | 308 | | | 16,349 | |||||||
Printing & stationery | 10,109 | 2,037 | 2,176 | 301 | | | 14,623 | |||||||
Communication expenses | 18,731 | 3,087 | 5,649 | 733 | | | 28,200 | |||||||
Legal & professional charges | 20,087 | 3,572 | 6,111 | 726 | | | 30,496 | |||||||
Medical fees | 7,113 | 1,659 | 2,769 | 186 | | | 11,727 | |||||||
Auditors fees : | | | | |||||||||||
(a) as auditor | 450 | 47 | 270 | 23 | | | 790 | |||||||
Advertisement and publicity | 139,256 | 23,280 | 36,712 | 4,664 | | | 203,912 | |||||||
Interest & Bank Charges | 448 | 204 | 84 | 203 | | | 939 | |||||||
Agents Training & Recruitment | 44,696 | 7,606 | 13,657 | 1,689 | | | 67,648 | |||||||
Depreciation | 46,309 | 8,131 | 14,121 | 1,491 | | | 70,052 | |||||||
Others | 41,531 | 8,055 | 12,129 | 1,613 | | | 63,328 | |||||||
Total | 567,886 | 104,053 | 157,211 | 19,325 | | | 848,475 | |||||||
64
schedules | |
forming part of the financial statements | Continued |
(Rs. in 000s) | ||||||||||||||||
Non- | Annuities | Linked | Linked Group | |||||||||||||
Particulars | Participating | participating | Participating | Linked | Pension | Gratuity | Total | |||||||||
SCHEDULE 10 | ||||||||||||||||
BENEFITS PAID | ||||||||||||||||
For the year ended March 31, 2003 | ||||||||||||||||
1. | Insurance Claims | |||||||||||||||
(a) | Claims by Death | 12,446 | 6,490 | 5,093 | 644 | 283 | | 24,956 | ||||||||
(b) | Claims by Maturity | | | | | | | | ||||||||
(c) | Other benefits | |||||||||||||||
Surrender | | 1,342 | | | | | 1,342 | |||||||||
Survival | | 5,259 | | | | | 5,259 | |||||||||
Total | 12,446 | 13,091 | 5,093 | 644 | 283 | | 31,557 | |||||||||
Benefits paid to claimants : | ||||||||||||||||
1. | In India | 12,446 | 13,091 | 5,093 | 644 | 283 | | 31,557 | ||||||||
Total Benefits paid | 12,446 | 13,091 | 5,093 | 644 | 283 | | 31,557 | |||||||||
For the year ended March 31, 2002 | ||||||||||||||||
1. | Insurance Claims | |||||||||||||||
(a) | Claims by Death | 4,112 | 2,412 | | 2 | | | 6,526 | ||||||||
(b) | Other benefits | | | | | | | | ||||||||
Total | 4,112 | 2,412 | | 2 | | | 6,526 | |||||||||
Benefits paid to claimants : | ||||||||||||||||
1. | In India | 4,112 | 2,412 | | 2 | | | 6,526 | ||||||||
Total Benefits paid | 4,112 | 2,412 | | 2 | | | 6,526 | |||||||||
forming part of the financial statements | Continued |
SCHEDULE
11 Significant accounting policies and notes forming part of the accounts for the year ended March 31, 2003 |
|
1. | Background : |
ICICI Prudential Life Insurance Company Limited (theKCompany) was incorporated on July 20, 2000. The principal shareholders of the Company are ICICI Bank Limited (74%) and Prudential Corporation Holding Ltd. of UK (26%). The Company is registered with the Insurance Regulatory and Development Authority (IRDA) and is in the business of underwriting life insurance policies. | |
The Companys life insurance business comprises of individual life & group business, including participating, non-participating, annuities, pension products and linked policies. Some of these policies have riders attached to them such as Accident and Disability Benefit, Level Term, Critical Illness and Major Surgical Assistance. | |
2. | Summary of significant accounting policies : |
2.1 | Basis of preparation |
The accompanying financial statements have been prepared under the historical cost convention, on the accrual basis of accounting, in compliance with the accounting standards issued by the Institute of Chartered Accountants of India (ICAI), to the extent applicable, and in accordance with the provisions of the Insurance Act, 1938, Insurance Regulatory and Development Authority Act, 1999, the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors Report of Insurance Companies) Regulations, 2002 (the Regulations), and the Companies Act, 1956 to the extent applicable. | |
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities as of the date of the financial statements. The estimates and assumptions used in the accompanying financial statements are based upon managements evaluation of the relevant facts and circumstances as of the date of the financial statements. | |
2.2 | Revenue recognition
|
2.3 | Claims |
Death & Surrender claims are accounted for on receipt of intimation. Maturity claims are accounted when due for payment. | |
2.4 | Acquisition Costs |
Acquisition costs are costs that vary with and are primarily related to the acquisition of new and renewal insurance contracts. Such costs are expensed in the year in which they are incurred. | |
2.5 | Liability
for Life policies in force |
Liability for life policies in force is determined by the Appointed Actuary on the basis of an annual review of the life insurance business, as per the gross premium method. The linked policies sold by the Company carry two types of liabilities unit liability representing the fund value of policies and non-unit liability for future expenses, meeting death claims, income taxes and cost of any guarantees. Actuarial policies and assumptions are given in note 3.2 below. | |
2.6 | Investments |
Investments
are recorded at cost, which includes brokerage, if any and excludes
broken period interest. |
65
schedules | |
forming part of the financial statements | Continued |
Classification Investments maturing within twelve months from balance sheet date and investments made with the specific intention to dispose of within twelve months from balance sheet date are classified as short-term. Investments other than short term are classified as long term investments. |
|
Valuation - non-linked
business
|
|
Valuation - linked
business All investments relating to linked business are valued at fair value in accordance with IRDA Investment (Amendment) Regulations 2001. Unrealized gains and losses are recognized in the schemes revenue account. |
|
2.7 | Fixed
assets and depreciation Fixed assets are stated at cost less accumulated depreciation. Cost includes the purchase price and any cost directly attributable to bringing the asset to its working condition for its intended use. Assets costing up to Rs 20,000 (Rupees twenty thousand) are fully depreciated in the year of acquisition. Depreciation is provided on Straight Line Method (SLM) prorata from the date of acquisition with reference to managements assessment of the estimated useful life for each class of asset as stated below. |
Asset Estimated useful life Leasehold improvements Renewable period of respective leases, subject to a maximum of 9 years. Communication networks and servers 4 years Computers and peripheral equipment 3 years Software 3 years Office Equipment 4 years Furniture & Fixtures 4 years
Hitherto the Company capitalized all improvements to software applications. However in view of the rapid advancement in technology and faster obsolescence the Company has changed the policy of capitalization and only significant improvements to software are capitalized with the insignificant improvements being charged off as software expenses. Had the Company followed previous years accounting policy the net deficit would have been lower by Rs. 1.45 million and the net block of fixed assets would have been higher by Rs. 1.45 million. | |
2.8 | Accounting
for leases |
Operating leases Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the leased term are classified as Operating Leases. Operating lease rentals are recognized as an expense over the lease period. |
|
2.9 | Staff Benefits |
|
|
2.10 | Foreign
Currency Transactions Transactions in foreign currency are accounted at the rate of exchange prevailing on the date of the transaction. Current assets and liabilities in foreign currency, if any, are translated at the year-end closing rates. The resulting exchange gain or loss, if any, is reflected in the profit and loss account / revenue account. |
2.11 | Taxation |
Current
taxes The Company provides for income tax on estimated taxable income in accordance with the provisions of the Income-tax Act, 1961 applicable to Life Insurance Companies as of date. These provisions are not entirely clear for newly incorporated life insurance companies. In case a tax liability arises due to the modification of the provisions applicable to life insurance companies, the same will have to be provided for in the year in which the liability is determined. |
|
Deferred
taxes Deferred tax assets and liabilities are determined as the tax effect of timing differences at the substantially enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the profit and loss account / the Revenue accounts in the year of change. Deferred tax assets are recognized subject to managements consideration of prudence in respect of their realisability. |
|
Deferred Tax Asset (Net) of Rs. 102 million in the Balance Sheet consist of unabsorbed losses (Previous Year : 102 million). | |
3. | Notes
to accounts : Statutory disclosures as required by the Regulations |
3.1 | Contingent
liabilities Contingent liabilities at March 31, 2003 - Rs. Nil ( Previous year : Rs. Nil) |
3.2 | Actuarial
method and assumptions The actuarial valuation liability on both participating and non-participating policies is calculated using the gross premium method. The gross premium reserves are calculated using assumptions for interest, mortality, expense and inflation and in the case of participating policies, the future bonuses together with allowance for taxation and allocation of profits to shareholders. These assumptions are determined as prudent estimates at the date of valuation with allowance for adverse deviations. Interest rates used for valuation are in the range from 4% to 7.75% per annum (Previous year - 6% to 9.15% per annum). Mortality rates used are based on the published LIC (1994-96) Ultimate Mortality Table adjusted to reflect expected experience and allowance for adverse deviation. |
The method of unearned premium for the unexpired portion of the risk has been adopted for the general fund liabilities of linked business and riders thereunder, Accident and Disability Benefit riders and One Year Renewable Group Term Insurance. TheKcharges under unit linked policies to meet future expenses are considered adequate. The unit liability in respect of linked business has been valued on the basis of the Net Asset Value of the units, to the credit of policyholders, as on the valuation date. | |
3.3 | Encumbrances
on assets As at March 31, 2003, the assets of the Company are free from all encumbrances. |
3.4 |
Capital Commitments The capital commitments made as at March 31, 2003, amount to Rs. 24.4 million (Previous year : Rs. 19.4 million). |
3.5 | Claims Claims settled and remaining unpaid for a period of more than six months as at March 31, 2003 amount to Rs. Nil. (Previous year : Rs. Nil). |
3.6 | Allocation of investment
s and investment income The investments are effected from the respective funds of the policyholders & shareholders and income thereon has been accounted accordingly. On a monthly basis ( Previous year : At the year end) the Company transfers assets from the shareholders account to the policyholders account to the extent required to cover the incremental liabilities for life policies in force. |
66
schedules | |
forming part of the financial statements | Continued |
3.7 |
Allocation of expenses Operating expenses relating to insurance business are allocated to specific business segments participating, non-participating, annuities and linked on the following consistently applied bases : |
||
|
|||
|
Number
of policies; |
||
|
Weighted
annualized first year premium income; |
||
|
Sum
assured; |
||
|
Total
premium income; |
||
|
Medical
cases; and |
||
|
Funds
under management. The method of allocation has been decided based on the nature of the expense and its logical co-relation with various business segments. The entire group gratuity business has been written on March 31, 2003 and hence, no expenses have been allocated to this segment. |
||
3.8 | Value of unsettled contracts Value of unsettled contracts relating to investments as at March 31, 2003 for : |
|
||
Linked Business | Non-linked Business | |
|
||
Purchases where | Rs. 14.41 million | Rs. 41.79 million |
deliveries are pending | (Previous year : | (Previous year : |
Rs. 3.7 million) | Rs. Nil) | |
Sales where receipts | Nil (Previous year : | Nil (Previous year : |
are overdue | Rs. Nil) | Rs. Nil) |
3.9 | Managerial
remuneration The details of the Managing Directors remuneration included in employee remuneration and welfare benefits are as follows : |
(Rs. in 000s) | |||||
Particulars | March 31, 2003 | March 31, 2002 | |||
Salary, perquisites and bonus | 9,123 | 7,426 | |||
Contribution to Provident Fund | 371 | 67 | |||
|
|
3.10 | Investments |
|
(Rs. in 000s) | |||||
March 31, 2003 | March 31, 2002 | ||||
Balance with Reserve Bank of India | 1,000 | 1,000 | |||
7.40% Govt. of India Securities in | |||||
CSGL Account with Deutsche Bank AG* | 12,342 | | |||
* This investment is in the custody of Deutsche Bank AG under intimation to IRDA. |
3.11 | Sector-wise
percentage of business Sector-wise break-up of policies outstanding at year-end is given below : |
Sector | March 31, 2003 | March 31, 2002 | |||
Rural | 12.02 | % | 7.05 | % | |
Urban | 87.98 | % | 92.95 | % |
3.12 | Risks
retained and reinsured Extent of risk retained and reinsured is given below : |
March 31, 2003 | March 31, 2002 | ||||
Risk retained | 95 | % | 96 | % | |
Risk reinsured | 5 | % | 4 | % | |
Other disclosures |
3.13 | Operating
lease commitments The Company takes premises, both commercial and residential on lease. The minimum lease payments to be made in future towards non-cancelable lease agreements are as follows : |
(Rs. in 000s) | |||||
March 31, 2003 | March 31, 2002 | ||||
Not later than one year | 96,492 | 73,755 | |||
Later than one year not later | |||||
than five years | 184,870 | 176,425 | |||
Later than five years | 107,423 | 139,588 |
3.14 | Details
of related parties and transactions with related parties Related parties and nature of relationship |
Nature of relationship | Name of the related party | |
Holding Company | ICICI Bank Limited | |
Substantial Interest | Prudential Corporation Holding Limited | |
Fellow Subsidiary | ICICI Securities and Finance Company Limited | |
ICICI Brokerage Services Limited | ||
ICICI Securities Holding, Inc. | ||
ICICI Securities, Inc. | ||
ICICI Venture Funds Management Company Limited | ||
ICICI Home Finance Company Limited | ||
ICICI International Limited | ||
ICICI WebTrade Limited | ||
ICICI Investment Management Company Limited | ||
ICICI Trusteeship Services Limited | ||
ICICI Lombard General Insurance Company Limited |
67
schedules | |
forming part of the financial statements | Continued |
Under common control | ICICI Infotech Limited | |
Reclamation Properties Private Limited | ||
Reclamation Realty Private Limited | ||
Reclamation Real Estate Company Private Limited | ||
ICICI Knowledge Park Limited | ||
ICICI Information Technology Fund | ||
ICICI Equity Fund VCF | ||
ICICI Technology Incubator Fund | ||
ICICI Infotech, Inc. | ||
ICICI Infotech Pte. Limited | ||
ICICI Infotech Pty | ||
ICICI West Bengal Infrastructure Development Corporation Limited | ||
ICICI Kinfra Limited | ||
ICICI Eco-net Internet & Tech Fund | ||
ICICI Emerging Sector Fund | ||
ICICI Property Trust | ||
TCW ICICI investment Partners LLC | ||
ICICI OneSource Limited | ||
Managing Director | Shikha Sharma | |
Details
of significant transactions with Related parties The following represents significant transactions between the Company and related parties. |
Name of the related party | Description | Total
value of Transactions during the year 2002-2003 |
Receivables/ (Payables) at March 31, 2003 |
Total
value of Transactions during the year 2001-2002 |
Receivables/ (Payables) at March 31, 2002 |
||
ICICI Bank Limited | Payment
for sharing of common services
and facilities including leased
premises. The Company has
entered into an agreement for
business support. |
7,3973 | (8,063 | ) | 45,745 | (7,948 | ) |
The
Company has sold group term policy
to ICICI Bank. |
1,048 | ||||||
ICICI Lombard General Insurance Company Limited | The Company has taken general insurance policies from ICICI Lombard General Insurance Company Limited as a cover for burglary, fire & fidelity and also medical insurance for employees of the Company. | 8,622 | 364 | ||||
Prudential Corporation Holding Limited | Fees for professional services rendered. | 1,011 | |||||
ICICI Eco-net Internet & Tech Fund | Towards development of website. | 1,000 | |||||
Shikha Sharma, Managing Director | Managerial Remuneration | 9,494 | 7,493 | (3,741 | ) | ||
ICICI OneSource | The Company has sold group term policy to ICICI One Source. | 565 | |||||
ICICI Infotech Limited | The Company is in use of the data centre and other common technology of ICICI Infotech Limited. The Company has also appointed ICICI Infotech as consultant for development and implementation of software. | 12,783 | (1,818 | ) | 11,490 | (2,968 | ) |
ICICI Home Finance Company Limited | Payment for Identifying locations for setting up branches in various parts of India. | 1,142 | 1,621 | ||||
ICICI Securities & Finance Company Limited | Interest Income from short term & call money deposits. | 668 |
68
schedules | |
forming part of the financial statements | Continued |
3.15 | Segmental Reporting The segmental information has been disclosed based on the segment identified under the regulations. Segment-wise information of current assets & current liabilities to the extent identifiable are given below : |
(Rs. in 000s) | |||||||||
Business Segments | Current Assets | Current Liabilities | |||||||
|
|||||||||
March 31, 2003 | March 31, 2002 | March 31, 2003 | March 31, 2002 | ||||||
Shareholders | 105,829 | 69,327 | | | |||||
Annuities Par | 15,890 | 408 | 43,012 | 11 | |||||
Participating | 55,198 | 10,592 | 5,817 | 708 | |||||
Non-participating | 22,285 | 9,883 | 936 | | |||||
Linked | 4,593 | 29 | 653 | | |||||
Gratuity Linked | 4 | | | | |||||
Pension Linked | 1,412 | | 109 | | |||||
Non-Identifiable | 325,231 | 136,526 | 658,594 | 273,277 | |||||
Total | 530,442 | 226,765 | 709,121 | 273,995 | |||||
Segment-wise information of non-cash items being amortisation of premium included in interest income on debt instruments of non-linked business is tabled below : | |||||||||
(Rs. in 000s) | |||||||||
Business Segments | March 31, 2003 | March 31, 2002 | |||||||
Shareholders | 13,250 | 12,100 | |||||||
Annuities Par | 2,640 | ||||||||
Participating | 6,570 | ||||||||
Non-participating | 10,020 | 1,100 | |||||||
Linked | 40 | ||||||||
Total | 32,520 | 13,200 | |||||||
Fixed Assets are not identifiable to any particular business segment. |
3.16 | Balance sheet of Linked Business as at March 31, 2003 | (Rs. in 000s) | |||||||||||||||||||
Linked Funds | Linked Pension Funds | Linked Group Gratuity Funds | |||||||||||||||||||
Short Term | |||||||||||||||||||||
Balancer | Protector | Maximiser | Balancer | Protector | Maximiser | Balanced | Income | Debt | Total | ||||||||||||
Source of Funds | |||||||||||||||||||||
Policy Holders Contribution | 165,360 | 1,177,931 | 160,904 | 88,604 | 376,558 | 57,423 | 6,776 | 843 | 378 | 2,034,777 | |||||||||||
Revenue Account | 2,250 | 39,500 | (566) | 282 | 6,169 | (680) | | | | 46,955 | |||||||||||
Total | 167,610 | 1,217,431 | 160,338 | 88,886 | 382,727 | 56,743 | 6,776 | 843 | 378 | 2,081,732 | |||||||||||
Application of Funds | |||||||||||||||||||||
Investments | |||||||||||||||||||||
Government Securities | 44,129 | 482,113 | 6,886 | 22,350 | 148,316 | 3,230 | | | | 707,024 | |||||||||||
Equities | 56,718 | | 131,731 | 28,020 | | 42,588 | | | | 259,057 | |||||||||||
Debentures & Bonds | 43,489 | 552,626 | 8,220 | 24,377 | 171,334 | 2,702 | | | | 802,748 | |||||||||||
Certificate of Deposit | | 35,040 | | | 11,680 | | | | | 46,720 | |||||||||||
144,336 | 1,069,779 | 146,837 | 74,747 | 331,330 | 48,520 | | | | 1,815,549 | ||||||||||||
Current Assets | |||||||||||||||||||||
Money at call | 3,500 | 3,400 | 2,300 | 3,200 | | 2,900 | | | | 15,300 | |||||||||||
Bank balance in current account | 260 | 279 | 328 | 235 | 268 | 366 | | | | 1,736 | |||||||||||
Income accrued on investments | 2,853 | 31,124 | 534 | 1,398 | 8,173 | 211 | | | | 44,293 | |||||||||||
Dividend Receivable | 45 | | 104 | 23 | | 34 | | | | 206 | |||||||||||
Unit collection account | 17,907 | 114,154 | 13,055 | 10,849 | 43,305 | 6,406 | 6,776 | 843 | 378 | 213,673 | |||||||||||
Outstanding sale contracts | 1,428 | | 2,526 | 622 | | 989 | | | | 5,565 | |||||||||||
Other assets | 437 | | 894 | 390 | | 463 | | | | 2,184 | |||||||||||
26,430 | 148,957 | 19,741 | 16,717 | 51,746 | 11,369 | 6,776 | 843 | 378 | 282,957 | ||||||||||||
Current Liabilities | |||||||||||||||||||||
Outstanding purchase contracts | 2,903 | | 5,974 | 2,465 | | 3,067 | | | | 14,409 | |||||||||||
Other current liabilities | 253 | 1,305 | 266 | 113 | 349 | 79 | | | | 2,365 | |||||||||||
3,156 | 1,305 | 6,240 | 2,578 | 349 | 3,146 | | | | 16,774 | ||||||||||||
Net current assets | 23,274 | 147,652 | 13,501 | 14,139 | 51,397 | 8,223 | 6,776 | 843 | 378 | 266,183 | |||||||||||
Total | 167,610 | 1,217,431 | 160,338 | 88,886 | 382,727 | 56,743 | 6,776 | 843 | 378 | 2,081,732 | |||||||||||
69
schedules | |
forming part of the financial statements | Continued |
3.17 | Revenue Account for Linked Business for the year ended March 31, 2003 and Linked pension business for the period ended March 31, 2003 | ||||||||||||||
(Rs. in 000s) | |||||||||||||||
|
|||||||||||||||
Linked Funds | Linked Pension Funds | ||||||||||||||
Balancer | Protector | Maximiser | Balancer | Protector | Maximiser | Total | |||||||||
|
|||||||||||||||
INCOME | |||||||||||||||
Interest Income | 2,348 | 30,920 | 564 | 703 | 4,820 | 120 | 39,475 | ||||||||
Dividend Income | 214 | | 618 | 64 | | 111 | 1,007 | ||||||||
Profit / (Loss) on Sale of Investment | 420 | 8,736 | 300 | 156 | 430 | 121 | 10,163 | ||||||||
Unrealized Gains / (Loss) | (145) | 3,364 | (1,065) | (330) | 1,816 | (774) | 2,866 | ||||||||
Total Income (A) | 2,837 | 43,020 | 417 | 593 | 7,066 | (422) | 53,511 | ||||||||
EXPENSES | |||||||||||||||
Fund Management Expenses | 450 | 1,226 | 559 | 133 | 162 | 110 | 2,640 | ||||||||
Fund Administrative Expenses | 584 | 4,691 | 722 | 178 | 735 | 148 | 7,058 | ||||||||
Total Expenses (B) | 1,034 | 5,917 | 1,281 | 311 | 897 | 258 | 9,698 | ||||||||
Net Income For the Year (A-B) | 1,803 | 37,103 | (864) | 282 | 6,169 | (680) | 43,813 | ||||||||
Add : Revenue Account at the | |||||||||||||||
beginning of the year | 447 | 2,397 | 298 | | | | 3,142 | ||||||||
Revenue Account at the end of the year | 2,250 | 39,500 | (566) | 282 | 6,169 | (680) | 46,955 | ||||||||
The entire group gratuity business has been written on March 31, 2003and hence, no income accrued towards the same. |
3.18 | Balance sheet of Linked Business as at March 31, 2002 | ||||||||
(Rs. in 000s) | |||||||||
|
|||||||||
Balancer | Protector | Maximiser | Total | ||||||
Source of Funds | |||||||||
Policy Holders Contribution | 9,344 | 50,345 | 12,543 | 72,232 | |||||
Revenue Account | 447 | 2,397 | 298 | 3,142 | |||||
|
|
||||||||
Total | 9,791 | 52,742 | 12,841 | 75,374 | |||||
Application of Funds | |||||||||
Investments | |||||||||
Government Securities | 2,453 | 20,445 | 1,074 | 23,972 | |||||
Equities | 3,332 | | 10,175 | 13,507 | |||||
Debentures & Bonds | 3,024 | 26,016 | 588 | 29,628 | |||||
Certificate of Deposit | | | | | |||||
|
|
||||||||
8,809 | 46,461 | 11,837 | 67,107 | ||||||
Current Assets | |||||||||
Money at call | 750 | 1,350 | 2,620 | 4,720 | |||||
Bank balance in current account | 47 | 5 | 82 | 134 | |||||
Income accrued on investments | 143 | 1,279 | 56 | 1,478 | |||||
Unit collection account | 610 | 3,735 | 1,188 | 5,533 | |||||
Outstanding sales contract | | | | | |||||
Other assets | 42 | | 230 | 272 | |||||
|
|
||||||||
1,592 | 6,369 | 4,176 | 12,137 | ||||||
Current Liabilities | |||||||||
Outstanding purchases | 593 | | 3,152 | 3,745 | |||||
Other current liabilities | 17 | 88 | 20 | 125 | |||||
|
|
||||||||
610 | 88 | 3,172 | 3,870 | ||||||
|
|
||||||||
Net current assets | 982 | 6,281 | 1,004 | 8,267 | |||||
|
|
||||||||
Total | 9,791 | 52,742 | 12,841 | 75,374 | |||||
|
|||||||||
Policies in respect of linked pension funds & linked group gratuity funds were written during the year. Hence, no prior year comparative are given. |
3.19 | Revenue Account for Linked Business for the period ended March 31, 2002 | ||||||||
(Rs. in 000s) | |||||||||
Balancer | Protector | Maximiser | Total | ||||||
INCOME | |||||||||
Interest Income | 157 | 983 | 141 | 1,281 | |||||
Profit / (Loss) on Sale of Investment | 372 | 1,287 | 458 | 2,117 | |||||
Unrealized Gains / (Loss) | (41) | 342 | (255) | 46 | |||||
Total Income (A) | 488 | 2,612 | 344 | 3,444 | |||||
EXPENSES | |||||||||
Fund Management Expenses | 17 | 95 | 19 | 131 | |||||
Fund Administrative Expenses | 24 | 120 | 27 | 171 | |||||
Total Expenses (B) | 41 | 215 | 46 | 302 | |||||
Revenue Account at the end of the period (A-B) | 447 | 2,397 | 298 | 3,142 | |||||
Policies in respect of
linked pension funds & linked group gratuity funds were written
during the year. Hence, no prior year comparative are given. |
|||||||||
3.20 | Previous year comparatives Previous year figures have been regrouped and reclassified wherever necessary to conform to current year presentation. |
||||||||
K.V. KAMATH | M.P. MODI | S.P. SUBHEDAR |
Chairman | Director | Director |
SHIKHA SHARMA | SANDEEP BATRA | V. RAJAGOPALAN |
Managing Director | Chief Financial Officer & | Appointed Actuary |
Company Secretary |
70
receipts & payments account | |
for the year ended March 31, 2003 |
(Rs. in 000s) | ||||||||
March 31, 2003 | March 31, 2002 | |||||||
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Cash Receipts from customers : | ||||||||
Premium Income | 4,202,682 | 1,152,569 | ||||||
Other Income | 25,873 | 1,294 | ||||||
Fees from professional services | 1,397 | 2,011 | ||||||
Premium & other receipts | (28,975) | 4,200,977 | 127,491 | 1,283,365 | ||||
Cash paid towards Operating Activities : | ||||||||
Expenses | (1,907,131) | (920,661) | ||||||
Advances & Deposits | (11,202) | (17,841) | ||||||
Loan Against Policies | (21) | (1,918,354) | | (938,502) | ||||
Net cash from operating activities : | 2,282,623 | 344,863 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of fixed assets | (255,579) | (210,262) | ||||||
Investment : | ||||||||
G-Sec & Debentures | (3,739,321) | (645,642) | ||||||
Equities | (505,272) | (10,034) | ||||||
Mutual Funds | (153,778) | (34,245) | ||||||
Fixed Deposit | (100,111) | | ||||||
Call Deposit | 3,400 | (4,495,082) | (23,400) | (713,321) | ||||
Interest received | 181,118 | 96,449 | ||||||
Profit on Sale of Investment | 129,970 | 311,088 | 126,191 | 222,640 | ||||
Net cash from investing activities : | (4,439,573) | (700,943) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from issuance of share capital | 2,350,000 | 400,000 | ||||||
Net cash used in financing activities : | 2,350,000 | 400,000 | ||||||
Net increase in Cash and cash equivalents | 193,049 | 43,920 | ||||||
Cash and cash equivalents at beginning of the year | 59,256 | 15,337 | ||||||
Cash and cash equivalents at end of the year | 252,305 | 59,257 | ||||||
71
Statement
pursuant to Part IV to the Companies Act, 1956 Balance Sheet Abstract and Companys General Business Profile |
1. | Registration Details | |||||||||||||
Registration No. | 1 | 2 | 7 | 8 | 3 | 7 | State Code | 1 | 1 | |||||
Balance Sheet Date | 3 | 1 | 0 | 3 | 2 | 0 | 0 | 3 | |||||
Date | Month | Year |
2. |
Capital Raised during the Year | ||||||||||||||||||
(Amount in Rupees Thousands) | |||||||||||||||||||
Public Issue | Bonus Issue | ||||||||||||||||||
Rights Issue | Private Placement | ||||||||||||||||||
2 | 3 | 5 | 0 | 0 | 0 | 0 | |||||||||||||
3. | Position
of Mobilisation and Deployment of Funds (Amount in Rupees Thousands) |
||||||||||||||||||
Total Liabilities | Total Assets | ||||||||||||||||||
Sources of Funds | |||||||||||||||||||
Paid-up Capital | Reserves and Surplus | ||||||||||||||||||
4 | 2 | 5 | 0 | 0 | 0 | 0 | |||||||||||||
Secured Loans | Unsecured Loans | ||||||||||||||||||
Application of Funds | |||||||||||||||||||
Net Fixed Assets | Investments | ||||||||||||||||||
Net Current Assets | Miscellaneous Expenditure | ||||||||||||||||||
Accumulated Losses | |||||||||||||||||||
4. | Performance
of Company (Amount in Rupees Thousands) |
||||||||||||||||||
Total Turnover | Total Expenditure | ||||||||||||||||||
Loss before Tax | Loss after Tax | ||||||||||||||||||
Earning per Share in Rupees | Dividend | ||||||||||||||||||
5. | Generic
Names of Principal Products/Services of the Company |
||||||||||||||||||
Item
Code No. (ITC code) |
| ||||||||||||||||||
Product Description : Financial Services | LIFE INSURANCE |
Notes: | The Company being a life Insurance Company the accounts of the Company are not required to be made in accordance with Schedule VI. Further, the Insurance Act, 1938, requires the accounts of the Company to be split between policyholders' and shareholders' funds. In view of the above it is not possible to give the information required in Part III and Part IV of the schedule. |
72
ICICI LOMBARD GENERAL INSURANCE COMPANY LIMITED |
3RD ANNUAL REPORT AND ACCOUNTS 2002-2003 |
Directors | Auditors | Registered Office |
K. V. Kamath,
Chairman R. Athappan B. V. Bhargava Dileep Chokshi James Dowd Chandran Ratnaswami H. N. Sinor Lalita D. Gupte Kalpana Morparia S. Mukherji Sandeep Bakhshi, Managing Director & CEO |
Bharat S.
Raut & Co. Chartered Accountants |
ICICI Bank
Towers Bandra-Kurla Complex Mumbai - 400 051 |
to the members |
Your Directors have pleasure in presenting the Third Annual Report of the Company with the audited Statement of Accounts for the year ended March 31, 2003.
FINANCIAL HIGHLIGHTSRs. in million | ||||
Fiscal 2003 | Fiscal 2002 | |||
No. of policies | 98,293 | 9,148 | ||
Gross written premium | 2,152.2 | 281.3 | ||
Earned premium | 272.3 | 14.2 | ||
Profit /(loss) before tax | 41.9 | (111.3) | ||
Profit /(loss) after tax | 33.0 | (84.8) |
DIVIDEND
The Directors are pleased to inform you that the Company has become profitable in its first full year of operations. However, in view of the accumulated losses of Rs. 59.8 million, the Directors do not recommend any dividend.
OPERATIONAL REVIEW
The Company has focused on building a profitable portfolio. The fire insurance business which has low loss ratios comprises 61% of the Companys portfolio as against an industry average of 24%.
As a measure of prudent risk management, the Company has entered into reinsurance arrangements with leading re-insurers including Munich Re, Swiss Re and General Insurance Corporation. The Companys strong reinsurance programme is a key strength and a source of comfort to customers. The Company views its re-insurers as providers of contingent capital and a vital constituency to be served along with its customers and shareholders.
The Company has a customer-centric approach in all its operations. The key customer service parameters viz. promptness in issuance of documents and settlement of claims, continue to be priority areas for the Company.
Keeping in mind the growing sophistication of the Indian consumer, the Company is focusing on Technology-driven solutions and over-the-counter (OTC) products. The Company offers online solutions in the area of marine, motor and travel insurance and OTC products for personal accident, home and merchants cover. The Company also provides online intimation of claims through its website which has resulted in improved efficiency and savings in operating costs.
The penetration of general insurance in India at around 0.6% of GDP is amongst the lowest in the world. The Company believes that the retail segment would be a major contributor to growth provided the insurance sector is able to offer products through a cost effective distribution system. The Company proposes to forge alliances with Government agencies, banks, NGOs and corporates, leverage customer databases and use technology to take a wide range of products to the retail segment.
AUDIT COMMITTEE
Pursuant to the provisions of Section 292A of the Companies Act, 1956, the Board at its Sixth Meeting held on September 18, 2002 had constituted an Audit Committee of Directors. In view of resignation of Directors and appointment of new Directors on the Board of the Company, the Audit Committee was reconstituted from time to time. The Audit Committee presently comprises S. Mukherji, James Dowd and Dileep Chokshi.
PUBLIC DEPOSITS
During the year under review, the Company has not accepted any deposit under Section 58-A of the Companies Act, 1956.
DIRECTORS
H.N. Sinor was nominated by ICICI Bank as Director of the Company effective July 30, 2002.
Byron G. Messier and Farid Gulmohamed, who were on the Board since March 2002, tendered their resignations as Directors effective January 29, 2003 and October 29, 2002 respectively. The Board placed on record its sincere appreciation for the contribution made by them during their tenure as the Directors of the Company.
The Board appointed Dileep Chokshi and R. Athappan as additional Directors of the Company effective October 29, 2002 and James F. Dowd (representative of Lombard Canada Limited) as an additional Director of the Company effective January 29, 2003. They would hold office upto the date of the ensuing Annual General Meeting of the Company but are eligible for appointment.
In terms of the provisions of the Articles of Association of the Company, Kalpana Morparia and S. Mukherji would retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.
AUDITORS
The Auditors, M/s. Bharat S. Raut & Co., Chartered Accountants, Mumbai, will retire at the ensuing Annual General Meeting. The Board at its Meeting held on April 21, 2003 has proposed the appointment of M/s. Bharat S. Raut & Co., Chartered Accountants and M/s. Lodha & Co., Chartered Accountants as Joint Auditors to audit the accounts of the Company for the financial year ending March 31, 2004. You are requested to consider their appointment.
FOREIGN EXCHANGE EARNING AND EXPENDITURE | ||
Foreign exchange earnings | Rs. 8.4 million | |
Foreign exchange expenditure | Rs. 113.4 million |
PERSONNEL AND OTHER MATTERS
As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the annexure to the Directors Report.
73
directors report | ||
Continued |
Since your Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors confirm that :
1. |
in the preparation of
the annual accounts, the applicable accounting standards had been
followed along with proper explanation relating to material departures; |
2. |
the Directors have selected
such accounting policies and applied them consistently and made judgements
and estimates that are reasonable and prudent so as to give a true
and fair view of the state of affairs of the Company at the end of
the financial year and of the profit or loss of the Company for that
period; |
3. |
the Directors have taken
proper and sufficient care for the maintenance of adequate accounting
records in accordance with the provisions of |
4. | the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and the Directors have prepared the annual accounts on a going concern basis. |
ACKNOWLEDGEMENTS
Your Company is grateful to the Insurance Regulatory and Development Authority and Reserve Bank of India for their support and advice.
The Company would like to express its gratitude for the unstinted support and guidance received from ICICI Bank and other ICICI group companies, Lombard Canada Limited and Fairfax Financial Holdings Limited.
The Directors would also like to place on record their appreciation for the commitment, hard work and team effort shown by the employees of the Company.
For and on behalf of the Board
K.V. KAMATH
Chairman
to the members of ICICI Lombard General Insurance Company Limited |
We have audited the attached Balance Sheet of ICICI Lombard General Insurance Company Limited (the Company) as at March 31, 2003, and the related Fire, Marine and Miscellaneous Insurance Revenue Accounts (collectively known as the Revenue Accounts), the Profit and Loss Account of the Company for the year ended, on that date annexed thereto and the Receipts and Payments Account for the year ended on that date.
These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
The Balance Sheet, the Revenue Accounts and the Profit and Loss Account, have been drawn up in accordance with the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors Report of Insurance Companies) Regulations 2002 read with Section 211 of the Companies Act, 1956.
We report thereon as follows :
In our opinion and to the best of our information and according to the information and explanations given to us :
| in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2003; |
| in the case of the Revenue Accounts, of the loss for the year ended March 31, 2003; |
| in the case of the Profit & Loss Account, of the profit for the year ended March 31, 2003; |
| in the case of the Receipts and Payments Account, of the receipts and payments for the year ended March 31, 2003. |
Further, according to the information and explanations given to us and to the best of our knowledge and belief, we certify that :
For
BHARAT S. RAUT & CO. Chartered Accountants |
|
Mumbai, April 21, 2003 | AKEEL
MASTER Partner |
74
balance sheet | |||||
as at March 31, 2003 | |||||
Schedule | (Rs. in 000s) | March
31, 2002 |
|||
SOURCES OF FUNDS | |||||
Share Capital | 5 | 1,095,980 | 1,094,422 | ||
Fair value change account | 420 | | |||
Total | 1,096,400 | 1,094,422 | |||
APPLICATION OF FUNDS | |||||
Investments | 6 | 2,100,085 | 1,128,990 | ||
Loans | 7 | 25,000 | | ||
Fixed assets | 8 | 44,861 | 23,314 | ||
Deferred tax asset | 28,600 | 33,873 | |||
Current assets | |||||
Cash and bank balances | 9 | 326,749 | 125,792 | ||
Advances and other assets | 10 | 562,141 | 248,011 | ||
Sub-Total (A) | 888,890 | 373,803 | |||
Current liabilities | 11 | 1,780,393 | 411,343 | ||
Provision | 12 | 270,472 | 147,024 | ||
Sub-Total (B) | 2,050,865 | 558,367 | |||
Net current assets (C) = (A- B) | (1,161,975) | (184,564) | |||
Debit balance in profit and loss account | 59,829 | 92,809 | |||
Total | 1,096,400 | 1,094,422 | |||
Schedules referred to herein form an integral part of the Balance Sheet.
profit and loss account | |||||||
for the year ended March 31, 2003 | |||||||
(Rs. in 000s) | March
31, 2002 |
||||||
1. | Operating profit/(loss) | ||||||
(a) | Fire insurance | (47,099) | (571) | ||||
(b) | Marine insurance | (14,395) | (3) | ||||
(c) | Miscellaneous insurance | (8,921) | (130,120) | ||||
2. | Income from investments | ||||||
(a) | Interest/Dividend Gross | 88,825 | 51,996 | ||||
(b) | Profit/Loss on sale of investments (net) | 27,239 | 643 | ||||
3. | Other Income | 479 | 14 | ||||
Total (A) | 46,128 | (78,041) | |||||
4. | Other expenses | ||||||
(a) | Expenses other than those | ||||||
related to insurance business | |||||||
Employees remunerations | |||||||
and welfare benefits | 2,654 | 12,595 | |||||
Travel, conveyance and | |||||||
vehicle running expenses | | 3,065 | |||||
Training expenses | | 1,574 | |||||
Rents, rates and taxes | | 9,704 | |||||
Legal and professional charges | | 2,196 | |||||
Others | 63 | 2,538 | |||||
(b) | Preliminary expenses written off | 1,558 | 1,558 | ||||
Total (B) | 4,275 | 33,230 | |||||
Profit before tax | 41,853 | (111,271) | |||||
Provisionfor taxation: | |||||||
(a) | Current tax expense | 3,600 | 2,750 | ||||
(b) | Deferred tax expense | 5,273 | 8,873 | (29,200) | |||
Profit after tax | 32,980 | (84,821) | |||||
Balance of loss brought forward from previous period | 92,809 | 12,661 | |||||
Deferred tax of earlier year | | (4,673) | |||||
92,809 | 7,988 | ||||||
Loss carried forward to Balance Sheet. | 59,829 | 92,809 | |||||
As per our report attached of even date | For and on behalf of the Board | |
For BHARAT S. RAUT & CO. Chartered Accountants |
K.V. KAMATH Chairman |
KALPANA MORPARIA
Director |
AKEEL MASTER Partner |
S. MUKHERJI Director |
SANDEEP BAKHSHI
Managing Director & CEO |
Mumbai, April 21, 2003 | RAKESH JAIN Head Finance & Accounts |
RAJESH CHAWATHE
Company Secretary |
75
revenue accounts | |
for the year ended March 31, 2003 |
(Rs. in 000s) | ||||||||||||||||||
Particulars | Schedule | Fire | Marine | Miscellaneous | Total | |||||||||||||
Year | Period | Year | Period | Year | Period | Year | Period | |||||||||||
ended | ended | ended | ended | ended | ended | ended | ended | |||||||||||
March 31, | March 31, | March 31, | March 31, | March 31, March 31, | March 31, | March 31, | ||||||||||||
2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | |||||||||||
1. | Premium earned (Net) | 1 | 74,442 | 2,054 | 16,877 | 15 | 181,026 | 12,080 | 272,345 | 14,149 | ||||||||
2. | Profit/(Loss) on sale of Investments (Net) | 2,301 | 4 | 426 | | 4,980 | 47 | 7,707 | 51 | |||||||||
3. | Others Foreign exchange gain/(loss) | | | 82 | | 1,437 | | 1,519 | | |||||||||
4. | Interest/Dividend on Investments Gross | 7,505 | 317 | 1,390 | 1 | 16,240 | 3,834 | 25,135 | 4,152 | |||||||||
Total (A) | 84,248 | 2,375 | 18,775 | 16 | 203,683 | 15,961 | 306,706 | 18,352 | ||||||||||
1. | Claims incurred (Net) | 2 | 15,107 | 1,232 | 19,658 | 10 | 143,474 | 16,640 | 178,239 | 17,882 | ||||||||
2. | Commission | 3 | (142,594) | (31,570) | (3,719) | (2) | (25,795) | (8,804) | (172,108) | (40,376) | ||||||||
3. | Operating Expenses related to insurance business | 4 | 258,834 | 33,284 | 17,231 | 11 | 143,425 | 86,745 | 419,490 | 120,040 | ||||||||
4. | Others premium deficiency | | | 3,000 | | (51,500) | 51,500 | (48,500) | 51,500 | |||||||||
Total (B) | 131,347 | 2,946 | 33,170 | 19 | 212,604 | 146,081 | 377,121 | 149,046 | ||||||||||
Operating Profit/(Loss) (C) = (A - B) | (47,099) | (571) | (14,395) | (3) | (8,921) | (130,120) | (70,415) | (130,694) | ||||||||||
APPROPRIATIONS | ||||||||||||||||||
Transfer to shareholders account | (47,099) | (571) | (14,395) | (3) | (8,921) | (130,120) | (70,415) | (130,694) | ||||||||||
Total (C) | (47,099) | (571) | (14,395) | (3) | (8,921) | (130,120) | (70,415) | (130,694) | ||||||||||
As required by Section 40C(2) of the Insurance Act, 1938, we certify that, to the best of our knowledge and according to the information and explantions given to us, and so far as appears from our examination of the Companys books of accounts, all expenses of management, wherever incurred, whether directly or indirectly, have been fully debited in the Revenue Accounts as expense.
Schedules referred to herein form an integral part of the Revenue Accounts.
As per our report attached of even date | For and on behalf of the Board | |
For BHARAT S. RAUT & CO. Chartered Accountants |
K.V. KAMATH Chairman |
KALPANA
MORPARIA Director |
AKEEL MASTER Partner |
S. MUKHERJI Director |
SANDEEP BAKHSHI Managing Director & CEO |
Mumbai, April 21, 2003 | RAKESH JAIN Head Finance & Accounts |
RAJESH CHAWATHE Company Secretary |
76
schedules | ||
forming part of the financial statements | Continued |
Schedule
1
Premium Earned (net)
(Rs. in '000s) ------------------------------------------------------------------------------------------------------------------- Particulars Fire Marine ----------------------------------------------------------------- Marine Cargo Marine-Others Marine-Total ------------------- ------------------- ------------------- ------------------- Year Period Year Period Year Period Year Period ended ended ended ended ended ended ended ended Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, 2003 2002 2003 2002 2003 2002 2003 2002 -------- -------- -------- -------- -------- -------- -------- -------- Premium from direct business written 1,281,908 112,326 61,420 40 30,035 - 91,455 40 Add : Premium on reinsurance accepted 33,075 - - - - - - - Less : Premium on reinsurance ceded 1,107,230 96,833 25,660 8 28,752 - 54,412 8 Less: Service tax 44,448 2,494 2,037 2 290 - 2,327 2 Net premium 163,305 12,999 33,723 30 993 - 34,716 30 Adjustment for change in reserve for unexpired risks 88,863 10,945 16,846 15 993 - 17,839 15 Total premium earned (net) 74,442 2,054 16,877 15 - - 16,877 15 ------------------------------------------------------------------------------------------------------------------------------------- Particulars Miscellaneous ----------------------------------------------------------------------------------------------------------- Motor Engineering Worksmen Public/Product Personal Compensation Liability Accident ------------------- ------------------ ------------------ ------------------- ------------------ Year Period Year Period Year Period Year Period Year Period ended ended ended ended ended ended ended ended ended ended Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Premium from direct business written 28,143 102,894 227,828 22,159 4,480 100 13,468 239 53,980 8,786 Add : Premium on reinsurance accepted - - 2,176 - - - 22 - 284 - Less : Premium on reinsurance ceded 13,951 22,853 169,887 17,401 903 22 10,291 53 36,524 6,434 Less: Service tax 1,331 4,899 11,542 1,016 201 4 435 11 1,187 328 Net premium 12,861 75,142 48,575 3,742 3,376 74 2,764 175 16,553 2,024 Adjustment for change in reserve for unexpired risks (51,385) 66,679 24,129 3,087 2,296 64 1,238 144 8,650 2,054 Total premium earned (net) 64,246 8,463 24,446 655 1,080 10 1,526 31 7,903 (30) --------------------------------------------------------------------------------------------------------------------------------------- Particulars ------------------------------------------------------------------------------------------ Health Aviation Others Total Total Insurance Miscellaneous ------------------- ------------------- ------------------- ------------------- ------------------- Year Period Year Period Year Period Year Period Year Period ended ended ended ended ended ended ended ended ended ended Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, 2003 2002 2003 2003 2002 2003 2002 2003 2002 2003 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Premium from direct business written 134,138 19,820 13,833 - 267,365 14,893 743,235 168,891 2,116,598 281,257 Add : Premium on reinsurance accepted - - - - 2 - 2,484 - 35,559 - Less : Premium on reinsurance ceded 25,544 3,775 12,591 - 193,738 14,060 463,429 64,598 1,625,071 161,439 Less: Service tax 6,133 944 616 - 13,580 447 35,025 7,649 81,800 10,145 Net premium 102,461 15,101 626 - 60,049 386 247,265 96,644 445,286 109,673 Adjustment for change in reserve for unexpired risks 42,712 12,249 327 - 38,272 287 66,239 84,564 172,941 95,524 Total premium earned (net) 59,749 2,852 299 - 21,777 99 181,026 12,080 272,345 14,149SCHEDULE - 2
(Rs. in '000s) ------------------------------------------------------------------------------------------------------------------- Particulars Fire Marine ----------------------------------------------------------------- Marine Cargo Marine-Others Marine-Total ------------------- ------------------- ------------------- ------------------- Year Period Year Period Year Period Year Period ended ended ended ended ended ended ended ended Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, 2003 2002 2003 2002 2003 2002 2003 2002 -------- -------- -------- -------- -------- -------- -------- -------- Claims paid-Direct 52,504 23 14,144 - - - 14,144 - Add : Re-insurance Accepted - - - - - - - - Less : Re-insurance Ceded 47,177 23 2,986 - - - 2,986 - Net Claims paid 5,327 - 11,158 - - - 11,158 - Add : Claims Outstanding at the end of the year 11,012 1,232 8,408 10 102 - 8,510 10 Less : Claims Outstanding at the beginning of the year 1,232 - 10 - - - 10 - Total claims incurred 15,107 1,232 19,556 10 102 - 19,658 10 SCHEDULE - 2 Claims Incurred (net) (Rs. in '000s) ------------------------------------------------------------------------------------------------------------------------------------- Particulars Miscellaneous --------------------------------------------------------------------------------------------------------- Motor Engineering Worksmen Public/Product Personal Compensation Liability Accident ------------------- ------------------ ------------------ ------------------- ------------------ Year Period Year Period Year Period Year Period Year Period ended ended ended ended ended ended ended ended ended ended Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Claims paid-Direct 54,383 5,688 15,899 3 1 - - - 7,903 - Add : Re-insurance Accepted - - - - - - - - 100 - Less : Re-insurance Ceded 10,877 1,137 12,158 1 - - - - 6,734 - Net Claims paid 43,506 4,551 3,741 2 1 - - - 1,269 - Add : Claims Outstanding at the end of the year 18,061 9,142 8,899 492 112 - 391 24 680 - Less : Claims Outstanding at the beginning of the year 9,142 - 492 - - - 24 - - - Total claims incurred 52,425 13,693 12,148 494 113 - 367 24 1,949 - SCHEDULE - 2 Claims Incurred (net) (Rs. in '000s) ----------------------------------------------------------------------------------------------------------------------------------------- Particulars ---------------------------------------------------------------------------------------- Health Aviation Others Total Total Insurance Miscellaneous ------------------- ------------------- ------------------- ------------------- ------------------- Year Period Year Period Year Period Year Period Year Period ended ended ended ended ended ended ended ended ended ended Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Claims paid-Direct 2003 2002 2003 2003 2002 2003 2002 2003 2002 2003 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Add : Re-insurance 72,892 1,279 - - 4,898 - 155,976 6,970 222,624 6,993 Accepted Less : Re-insurance - - - - - - 100 - 100 - Ceded Net Claims paid 14,578 256 - - 1,952 - 46,299 1,394 96,462 1,417 Add : Claims 58,314 1,023 - - 2,946 - 109,777 5,576 126,262 5,576 Outstanding at the end of the year Less : Claims Outstanding 13,526 1,258 214 - 2,878 148 44,761 11,064 64,283 12,306 at the beginning of the year Total claims incurred 1,258 - - - 148 - 11,064 - 12,306 - 70,582 2,281 214 - 5,676 148 143,474 16,640 178,239 17,882
schedules | ||
forming part of the financial statements | Continued |
(Rs. in '000s) ------------------------------------------- ----------------------------------------------------------- Particulars Fire Marine ---------------------------------------------------------- Marine Cargo Marine-Others Marine-Total ------------------------------------------- ------------------ ------------------ ------------------ Year Period Year Period Year Period Year Period ended ended ended ended ended ended ended ended Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, 2003 2002 2003 2002 2003 2002 2003 2002 ------------------------------------------- ------------------ ------------------ ------------------ Commission paid-Direct 135 - 216 - - - 216 - Add: Re-insurance Accepted 1,478 - - - - - - - Less: Commission received on Re-Insurance Ceded 144,207 31,570 2,651 2 1,284 - 3,935 2 ------------------------------------------- ------------------ ------------------ ------------------ Net Commission (142,594) (31,570) (2,435) (2) (1,284) - (3,719) (2) ------------------------------------------- ------------------ ------------------ ------------------ Commission (Rs. in '000s) ----------------------------------------------------------------------------------------------------------------------------- Particulars Miscellaneous --------------------------------------------------------------------------------------------------- Motor Engineering Worksmen Public/Product Personal Compensation Liability Accident ------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ Year Period Year Period Year Period Year Period Year Period ended ended ended ended ended ended ended ended ended ended Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002 ------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ Commission paid-Direct 88 4,699 97 - - - 1 - - - Add: Re-insurance Accepted - - - - - - 6 - - - Less: Commission received on Re-Insurance Ceded 911 4,900 9,968 4,235 85 1,981 714 11 2,632 1,362 ------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ Net Commission (823) (201) (9,871) (4,235) (85) (1,981) (707) (11) (2,632) (1,362) ------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ Commission (Rs. in '000s) --------------------------------------------------------------------------------------------------------------------------- Particulars ----------------------------------------------------------------------------- Health Aviation Others Total Total Insurance Miscellaneous -------------------------------------------- ------------------ ------------------ ------------------ ------------------ Year Period Year Period Year Period Year Period Year Period ended ended ended ended ended ended ended ended ended ended Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, 2003 2002 2003 2003 2002 2003 2002 2003 2002 2003 -------------------------------------------- ------------------ ------------------ ------------------ ------------------ Commission paid-Direct - - - - 1,026 - 1,212 4,699 1,563 4,699 Add: Re-insurance Accepted - - - - 71 - 77 - 1,555 - Less: Commission received on Re-Insurance Ceded 2,854 944 382 - 9,538 70 27,084 13,503 175,226 45,075 -------------------------------------------- ------------------ ------------------ ------------------ ------------------ Net Commission (2,854) (944) (382) - (8,441) (70) (25,795) (8,804) (172,108) (40,376) -------------------------------------------- ------------------ ------------------ ------------------ ------------------SCHEDULE - 4
(Rs. in '000s) ------------------------------------------- ------------------------------------------------------------ Particulars Fire Marine ---------------------------------------------------------- Marine Cargo Marine-Others Marine-Total ------------------------------------------- ------------------ ------------------ ------------------ Year Period Year Period Year Period Year Period ended ended ended ended ended ended ended ended Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, 2003 2002 2003 2002 2003 2002 2003 2002 ------------------------------------------- ------------------ ------------------ ------------------ Employees' remuneration & welfare benefits 73,576 15,055 3,525 5 1,724 - 5,249 5 Travel, conveyance and vehicle running expenses 21,260 3,541 1,019 1 498 - 1,517 1 Training expenses 2,363 1,178 113 - 55 - 168 - Rents, rates & taxes 33,289 7,288 1,595 3 780 - 2,375 3 Repairs 6,074 759 291 1 142 - 433 1 Printing & stationery 3,267 254 157 - 77 - 234 - Communication 9,358 1,364 448 - 219 - 667 - Legal & professional charges 37,175 2,061 980 1 479 - 1,459 1 Auditors' fees, expenses etc (a) as auditor 367 158 18 - 9 - 27 - (b) Tax audit 95 4 5 - 2 - 7 - Advertisement and publicity 60,409 312 2,894 - 1,415 - 4,309 - Interest & Bank Charges 1,702 471 82 - 40 - 122 - Miscellaneous expenses 3,811 108 154 - 75 - 229 - Depreciation 6,088 731 292 - 143 - 435 - ------------------------------------------- ------------------ ------------------ ------------------ Total 258,834 33,284 11,573 11 5,658 - 17,231 11 ------------------------------------------- ------------------ ------------------ ------------------ ------------------------------------------------------------------------------------------------------------------------------ Particulars Miscellaneous ---------------------------------------------------------------------------------------------------- Motor Engineering Worksmen Public/Product Personal Compensation Liability Accident ------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ Year Period Year Period Year Period Year Period Year Period ended ended ended ended ended ended ended ended ended ended Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002 ------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ Employees' remuneration & welfare benefits 1,615 18,665 13,075 2,898 257 13 773 32 3,098 1,160 Travel, conveyance and vehicle running expenses 467 5,118 3,778 682 74 3 223 7 895 272 Training expenses 52 2,567 420 227 8 1 25 2 99 91 Rents, rates & taxes 731 8,672 5,917 1,403 116 6 350 15 1,402 561 Repairs 133 734 1,079 146 21 1 64 2 256 58 Printing & stationery 72 723 581 49 11 - 34 1 138 19 Communication 205 2,142 1,663 263 33 1 98 3 394 105 Legal & professional charges 3,945 8,651 3,634 389 71 2 215 4 861 144 Auditors' fees, expenses etc (a) as auditor 8 171 65 30 1 - 4 - 15 13 (b) Tax audit 2 4 17 1 - - 1 - 4 - Advertisement and publicity 1,326 18,013 10,736 60 211 - 635 - 2,544 24 Interest & Bank Charges (61) 1,287 302 90 6 1 18 1 72 36 Miscellaneous expenses 71 106 572 21 11 - 34 - 136 9 Depreciation 134 804 1,082 140 21 1 64 2 256 56 ------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ Total 8,700 67,657 42,921 6,399 841 29 2,538 69 10,170 2,548 ------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ ----------------------------------------------------------------------------------------------------------------------------- Particulars ------------------------------------------------------------------------------ Health Aviation Others Total Total Insurance Miscellaneous ------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ Year Period Year Period Year Period Year Period Year Period ended ended ended ended ended ended ended ended ended ended Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, Mar. 31, 2003 2002 2003 2003 2002 2003 2002 2003 2002 2003 ------------------------- ------------------ ------------------ ------------------ ------------------ ------------------ Employees' remuneration & welfare benefits 7,699 2,587 794 - 15,346 1,980 42,657 27,335 121,482 42,395 Travel, conveyance and vehicle running expenses 2,225 609 229 - 4,434 466 12,325 7,157 35,102 10,699 Training expenses 247 202 26 - 493 155 1,370 3,245 3,901 4,423 Rents, rates & taxes 3,483 1,252 359 - 6,943 959 19,301 12,868 54,965 20,159 Repairs 636 130 66 - 1,267 100 3,522 1,171 10,029 1,931 Printing & stationery 342 44 35 - 681 33 1,894 869 5,395 1,123 Communication 979 234 101 - 1,952 179 5,425 2,927 15,450 4,291 Legal & professional charges 2,140 323 221 - 4,265 247 15,352 9,760 53,986 11,822 Auditors' fees, expenses etc (a) as auditor 39 27 4 - 77 21 213 262 607 420 (b) Tax audit 10 1 1 - 20 1 55 7 157 11 Advertisement and publicity 6,321 54 652 - 12,600 41 35,025 18,192 99,743 18,504 Interest & Bank Charges 178 81 18 - 355 62 888 1,558 2,712 2,029 Miscellaneous expenses 337 19 35 - 672 14 1,868 169 5,908 277 Depreciation 637 126 66 - 1,270 96 3,530 1,225 10,053 1,956 ------------------------------------------- ------------------ ----------------- ------------------ ------------------ Total 25,273 5,689 2,607 - 50,375 4,354 143,425 86,745 419,490 120,040 ------------------------------------------- ------------------ ----------------- ------------------ ------------------
78
schedules | ||
forming part of the financial statements | Continued |
SCHEDULE 5 | ||||
Share Capital | ||||
(Rs. in 000s) | ||||
Particulars | As at | As at | ||
March 31, | March 31, | |||
2003 | 2002 | |||
Authorised capital | 1,100,000 | 1,100,000 | ||
110,000,000 (Previous year: 110,000,000) equity shares of Rs. 10 each | ||||
Issued capital | 1,100,000 | 1,100,000 | ||
110,000,000 (Previous year: 110,000,000) equity shares of Rs. 10 each | ||||
Subscribed capital | 1,100,000 | 1,100,000 | ||
110,000,000 (Previous year: 110,000,000) equity shares of Rs. 10 each | ||||
Called up capital | 1,100,000 | 1,100,000 | ||
110,000,000 (Previous year: 110,000,000) equity shares of Rs. 10 each | ||||
Less: Preliminary expenses | ||||
(to the extent not written off) | 4,020 | 5,578 | ||
Total | 1,095,980 | 1,094,422 | ||
Note:
Of the above issued share capital as of March 31, 2003, 81,399,300 shares (Previous year: 81,399,300 shares) of Rs. 10 each are held by the holding company, ICICI Bank Limited and 700 shares (Previous year: 700 shares) of Rs. 10 each are held by ICICI Bank Limited through its nominees.
SCHEDULE 5A
Share Capital
Pattern of shareholding
[As certified by the management]
Shareholder | As at March 31, 2003 | As at March 31, 2002 | |||||
Number of | % of | Number of | % of | ||||
Shares | Holding | Shares | Holding | ||||
Promoters | |||||||
Indian | 81,400,000 | 74% | 81,400,000 | 74% | |||
Foreign | 28,600,000 | 26% | 28,600,000 | 26% | |||
Total | 110,000,000 | 100% | 110,000,000 | 100% | |||
SCHEDULE 6 Investments
(Rs. in 000s) | |||
Particulars | As at | As at | |
March 31, | March 31, | ||
2003 | 2002 | ||
Long term investments | |||
Government securities and government | |||
guaranteed bonds including treasury bills (Note 3) | 413,834 | 288,427 | |
Other approved securities | 32,303 | 88,632 | |
Other investments | |||
Debentures/ Bonds (Note 4) | 303,852 | 274,172 | |
Investments in infrastructure and social sector | 139,987 | 147,493 | |
Other than Approved Investments | 128,489 | | |
Short term investments | |||
Government securities and government | |||
guaranteed bonds including treasury bills | 534,187 | 132,155 | |
Other investments | |||
a) Equity shares | 15,133 | | |
b) Mutual Fund units | 102,820 | | |
c) Debentures/ Bonds | 275,552 | 147,435 | |
Investments in infrastruture and social sector | 153,928 | 50,676 | |
Total investments | 2,100,085 | 1,128,990 | |
Notes: 1. | Aggregate book value of investments (other than listed equities) is Rs. 2,084,952,216 (Previous year: Rs 1,128,989,720). | |
2. | Aggregate market value of investments (other than listed equities) is Rs. 2,129,266,022 (Previous year: Rs. 1,146,917,650). | |
3. | Includes investment pursuant to Section 7 of Insurance Act, 1938 Rs 10,000,000. | |
4. | Includes investment at cost in ICICI Bank Limited Rs. 48,873,541 (Previous year: Rs. 33,765,208). |
SCHEDULE 7 Loans
(Rs. in 000s) | ||||
Particulars | As at | As at | ||
March 31, | March 31, | |||
2003 | 2002 | |||
Security-wise Classification | ||||
Secured | ||||
(a) | On mortgage of property (aa) In India | 25,000 | | |
Total | 25,000 | | ||
Borrower-wise Classification | ||||
(a) | Others (Body corporate) | 25,000 | | |
Total | 25,000 | | ||
Performance-wise Classification | ||||
(a) | Loans classified as standard (aa) In India | 25,000 | | |
Total | 25,000 | | ||
Maturity-wise Classification | ||||
(a) | Short Term | 25,000 | | |
Total | 25,000 | | ||
79
schedules | ||
forming part of the financial statements | Continued |
SCHEDULE 8
Fixed Assets
Cost/ Gross Block | Depreciation | Net Block | ||||||||||||||||||
Particulars | April 1, | March 31, | April 1, | For the | On Sales/ | March 31, | March 31, | March 31, | ||||||||||||
2002 | Additions | Deletions | 2003 | 2002 | Year | Adjust- | 2003 | 2003 | 2002 | |||||||||||
ments | ||||||||||||||||||||
Buildings | | 4,251 | | 4,251 | | 30 | | 30 | 4,221 | | ||||||||||
Furniture & Fittings | | 5,562 | | 5,562 | | 166 | | 166 | 5,396 | | ||||||||||
Information Technology Equipment | 7,778 | 8,490 | | 16,268 | 870 | 2,921 | | 3,791 | 12,477 | 6,908 | ||||||||||
Computer Software | 16,477 | 9,332 | | 25,809 | 1,257 | 6,255 | | 7,512 | 18,297 | 15,220 | ||||||||||
Office Equipment | 678 | 2,656 | 26 | 3,308 | 20 | 681 | 2 | 699 | 2,609 | 658 | ||||||||||
Total | 24,933 | 30,291 | 26 | 55,198 | 2,147 | 10,053 | 2 | 12,198 | 43,000 | 22,786 | ||||||||||
Work in Progress | 1,861 | 528 | ||||||||||||||||||
Grand Total | 24,933 | 30,291 | 26 | 55,198 | 2,147 | 10,053 | 2 | 12,198 | 44,861 | 23,314 | ||||||||||
Previous year | 1,151 | 23,782 | | 24,933 | 37 | 2,110 | | 2,147 | 22,786 | | ||||||||||
SCHEDULE 9 | ||||
Cash and Bank Balances | ||||
(Rs. in 000s) | ||||
Particulars | As at | As at | ||
March 31, | March 31, | |||
2003 | 2002 | |||
Cheques in hand (including stamps) | 165,966 | 32,223 | ||
Bank balances | ||||
(a) | Deposit account s- short-term | |||
(due within 12 months) | 55,000 | 30,000 | ||
(b) | Current accounts | 105,783 | 13,569 | |
Money at call and short notice | ||||
(a) | With other institutions | | 50,000 | |
Total | 326,749 | 125,792 | ||
SCHEDULE 10 |
Advances and Other Assets | |||||
(Rs. in 000s) | |||||
Particulars | As at | As at | |||
March 31, | March 31, | ||||
2003 | 2002 | ||||
Advances | |||||
Reserve deposits with reinsurance companies | | 9,196 | |||
Prepayments | 774 | | |||
Advance tax paid and taxes deducted at | |||||
source (net of provisions for tax) | 13,264 | 1,671 | |||
Others | |||||
- Sundry deposit | 7,935 | 6,056 | |||
- Advances to/receivables | |||||
from Employees | 791 | 792 | |||
|
|
||||
8,726 | 6,848 | ||||
|
|
||||
Total (A) | 22,764 | 17,715 | |||
|
|
||||
Other Assets | |||||
Income accrued on investments/deposits | 33,919 | 28,057 | |||
Outstanding premiums | 41,316 | 109,766 | |||
Due from other entities carrying on | |||||
insurance business (including reinsurers) | 462,743 | 91,443 | |||
Deposit with Reserve Bank of India | 1,000 | 1,000 | |||
[Pursuant to Section 7 of Insurance Act, 1938] | |||||
Others | |||||
- Deposit with IRDA | 91 | 30 | |||
- Interest accrued on loans | 308 | | |||
|
|||||
399 | 30 | ||||
|
|
||||
Total (B) | 539,377 | 230,296 | |||
|
|
||||
Total (A+B) | 562,141 | 248,011 | |||
|
|
SCHEDULE 11 | ||||||
Current Liabilities | ||||||
(Rs. in 000s) | ||||||
Particulars | As at | As at | ||||
March 31, | March 31, | |||||
2003 | 2002 | |||||
Agents balances | 45 | 1,195 | ||||
Balances due to other insurance companies | 563,411 | 118,938 | ||||
Premiums received in advance | 557,618 | 196,870 | ||||
Unallocated premium | 16,852 | 592 | ||||
Sundry creditors | 95,168 | 35,162 | ||||
Unearned commission | 182,500 | | ||||
Due to holding company | 77,000 | 14,742 | ||||
Claims outstanding | 270,764 | 36,571 | ||||
Due to Officers/Directors | | | ||||
Others | ||||||
(a) | Statutory dues | 13,976 | ||||
(b) | Salary payable | 39 | ||||
(c) | Miscellaneous | 128 | ||||
(d) | Collections- | |||||
environment relief fund | 2,892 | |||||
17,035 | 7,273 | |||||
|
||||||
Total | 1,780,393 | 411,343 | ||||
|
(Rs. in 000s) | |||
Particulars | As at | As at | |
March 31, | March 31, | ||
2003 | 2002 | ||
For unexpired risk | 267,472 | 95,524 | |
For premium deficiency | 3,000 | 51,500 | |
Total | 270,472 | 147,024 | |
80
schedules | ||
forming part of the financial statements | Continued |
SCHEDULE 13
SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2003
1. BACKGROUND
ICICI Lombard General Insurance Company Limited (the Company) was incorporated on OctoberI30, 2000. The principal shareholders of the Company are ICICI Bank Limited (74%) and Lombard Canada Limited (a subsidiary of Fairfax Financial Holdings Limited) (26%). The Company received the license to undertake General Insurance business on AugustI3, 2001 from the Insurance Regulatory and Development Authority (IRDA).
2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The accompanying financial statements have been prepared under the historical cost convention, on the accrual basis of accounting, in compliance with the accounting standards issued by the Institute of Chartered Accountants of India (ICAI), to the extent applicable, and in accordance with the provisions of the Insurance Act, 1938, Insurance Regulatory and Development Authority Act, 1999, the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors Report of Insurance Companies) Regulations, 2002 (the Regulations), the Companies Act, 1956 to the extent applicable, and current practices within the insurance industry in the country.
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying financial statements are based upon managements evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying financial statements.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1 Revenue recognition Premium income
Premium earned is recognised as income over the period of risk or the contract period based on 1/365 method, whichever is appropriate.
Income from reinsurance business
Commission income on reinsurance ceded is recognised over the contract period.
During the current year, the Company has changed its accounting policy relating to recognition of reinsurance commission income. In the previous year, the Company used to recognise commission income upfront on cession of reinsurance business. Consequent to the change in accounting policy, the commission income, transfer to shareholders account are lower by Rs. 182,500Ithousand, operating loss is higher by Rs. 182,500 thousand, profit before taxes is lower by Rs. 182,500 thousand and the unearned commission income is higher by Rs. 182,500 thousand. Profit commission under re-insurance treaties is recognised on receipt of intimation from the reinsurer.
Income earned on investments
Interest income on investments is recognised on an accrual basis. Dividend income is recognised when the right to receive dividend is established.
Realised gain/loss on securities is the difference between the sale consideration and the amortised cost in the books of the Company as on the date of sale.
3.2 Reinsurance premium
Reinsurance premium ceded is recognised over the period of contract/ period of risk.
3.3 Reserve for unexpired risk
Reserve for unexpired risk is recognised net of reinsurance and represents premium towards risks to be covered in succeeding accounting period subject to minimum as required under Section 64IV(1)I(ii)I(b) of the Insurance Act, 1938.
3.4 Claims
Claims (net of reinsurance) are accounted for as and when intimated/ reported.
Amounts received/receivable and paid/payable from the coinsurers, proportionate to the risk shared, are recognised together with the claim. Provision for claims are based on individual case estimates received. The estimates are regularly reviewed and updated as additional information on the estimated claims becomes known and any resulting adjustments are included in the revenue accounts.
Provision is also made at year end for claims Incurred But Not Reported (IBNR) and claims Incurred But Not Enough Reported (IBNER) based on actuarial estimate duly certified by a qualified actuary.
3.5 Acquisition costs
Acquisition costs are those costs that vary with, and are primarily costs related to the acquisition of new and renewal insurance contracts viz. commission, policy issue expenses etc. These costs are expensed in the year in which they are incurred.
3.6 Premium deficiency
Premium deficiency represents the amount by which sum of expected claim costs, related expenses and maintenance costs exceeds the sum of related premiums carried forward to the subsequent accounting period and the reserve for unexpired risks.
3.7 Investments
Investments are recorded at cost and includes brokerage, transfer charges, stamps etc, if any, and excludes interest paid on purchases.
Classification
Investments maturing within twelve months from balance sheet date and investments made with the specific intention to dispose off within twelve months from balance sheet date are classified as short term investments.
All other investments are classified as long term investments.
Valuation
All debt securities are considered as held to maturity and accordingly stated at historical cost subject to amortisation of premium or accretion of discount on a straight line basis over the holding/maturity period.
Other investments comprise of equity shares and units of mutual fund. Listed equity shares are stated at fair value being the last quoted closing price as at the balance sheet date. Mutual fund investments are stated at fair value being the closing net asset value as at the balance sheet date. Unrealized gain/loss arising on account of such valuation is taken to equity under the head Fair value change account.
3.8 Fixed assets and depreciation
Fixed assets are stated at cost less accumulated depreciation. Depreciation is provided on a straight-line basis pro-rata for the period of use at the rates prescribed in Schedule XIV to the Companies Act, 1956 except in the cases setout below where depreciation is provided at a rate higher than those prescribed under Schedule XIV to the Companies Act, 1956.
Depreciation on information technology equipments is provided @25 percent.
Depreciation on computer software is provided @20 percent except for expenditure below Rs. 500,000, which is fully depreciated in the year incurred.
Other assets individually costing less than Rs. 5,000 are fully depreciated in the year in which they are acquired.
3.9 Retirement benefits
The Company makes a contribution to the recognised provident fund at prescribed rates which is charged to revenue accounts.
Provision for gratuity for employees is made on the basis of the amount determined by actuarial valuation and is charged to revenue accounts.
The Companys liability in respect of leave encashment is also determined on the basis of actuarial valuation and is charged to the revenue accounts.
3.10 Foreign currency transactions
Foreign currency transactions are recorded at the rates of exchange prevailing on the date of the transaction. Foreign exchange denominated current assets and liabilities are translated at the year-end exchange rates. Exchange rate differences resulting from foreign exchange transactions settled during the year, including year-end translation of current assets and liabilities are recognised in the revenue accounts.
81
schedules | ||
forming part of the financial statements | Continued |
3.11 Taxation Current tax
The Company provides for income tax on estimated taxable income in accordance with the provisions of the Income Tax Act, 1961.
Deferred tax
Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences that result between the profit offered for income taxes and the profit as per the Companys financial statements.
Deferred tax assets and liabilities are measured using the tax rate and tax laws that have been enacted or substantively enacted by the balance sheet date and accounted for under the liability method. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the profit and loss account in the period of change.
Deferred tax assets are recognized subject to managements consideration of prudence in respect of their realisability.
3.12 Miscellaneous expenditure
Preliminary expenses are amortised over a period of five years from the date of incorporation.
4. NOTES TO ACCOUNTS
4.1 Statutory disclosures as required by the IRDA regulations
4.1.1 Contingent liabilities
Contingent liabilities at March 31, 2003 is Rs. Nil (Previous year: Rs. Nil)
4.1.2 The assets of the Company are free from all encumbrances.
4.1.3 Estimated amount of contracts remaining to be executed on fixed assets and not provided for (net of advances) is Rs. 5,435 thousand (Previous year : Rs. 3,900 thousand).
4.1.4 Claims
Claims, less reinsurance, paid to claimants in / outside India are as under :
(Rs. in 000s) | |||
Particulars | For
the year ended March 31, 2003 |
For
the period ended March 31, 2002 |
|
In India | 126,262 | 5,576 | |
Outside India | Nil | Nil | |
Claims outstanding include claims for IBNR cases. These have been estimated by a qualified actuary appointed by the Company. The Company being in the nascent stage of its operations, the qualified actuary has used suitable alternative methods for each product category.
Ageing of claims
Ageing of claims is set out in the table below :
(Rs. in 000s) | ||
Particulars | For
the year ended March 31, 2003 |
For
the period ended March 31, 2002 |
More than six months | 29,756 | Nil |
Others | 241,008 | 12,306 |
Claims settled and remaining unpaid for more than six months: Rs. Nil (Previous year: Rs. Nil)
4.1.5 Premium
Premium, less reinsurance, written from business in/outside India is given below :
(Rs. in 000s) | |||
Particulars | For
the year ended March 31, 2003 |
For
the period ended March 31, 2002 |
|
In India | 445,286 | 109,673 | |
Outside India | Nil | Nil | |
The Company has recognised one percent (Previous year: Ten percent) of the premium earned under Miscellaneous - Engineering class of business based on varying risk pattern. The risk pattern is determined based on underwriting estimates, which are in turn based on project related information received from the customers. The Company
perceives significant risk for terrorism, and accordingly reserve for unexpired risks has been created at 100% of inward premium. Value of contracts in relation to investments for :
Purchases where deliveries are pending Rs. 54,166Ithousand (Previous year: Nil); and
Sales where payments are outstanding Rs. 54,200 thousand (Previous year: Nil).
All investments are made in accordance with the Insurance Act, 1938 and Insurance Regulatory and Development Authority (Investment) Regulations, 2000 and are performing investments.
An amount of Rs. 2,892 thousand (Previous year Rs. 228 thousand) collected towards Environment Relief fund under Public Liability Policies has been disclosed under current liabilities and the same is invested in Government Securities.
Historical cost of investments that are valued on fair value basis is Rs. 117,533 thousand (Previous year: Rs. Nil).
4.1.6 As at March 31, 2003, the Company had assets amounting to Rs. 11,000 thousand (Previous year: Rs. 1,000 thousand), deposited with the Reserve Bank of India, as required under Section 7 of the Insurance Act, 1938.
4.1.7 Allocation of income and expenses Allocation of investment income
Investment income has been allocated between revenue accounts and profit and loss account on the basis of the ratio of average policyholders funds to average shareholders funds respectively based on average of funds at the beginning of the year and at the end of the year.
Allocation amongst revenue accounts is on the basis of policyholders funds viz. unexpired risk, premium deficiency and outstanding claims. Average policyholders funds comprise reserves for unexpired risks, premium deficiency and outstanding claims.
Average shareholders funds comprise share capital less accumulated losses and miscellaneous expenditure not written off.
Allocation of expenses
Operating expenses relating to insurance business are allocated to specific classes of business on the following basis:
Expenses that are directly identifiable to the business class are allocated on actual basis;
Other expenses, that are not directly identifiable, are broadly allocated on gross written premium;
The method of allocation has been decided based on the nature of the expense and its logical correlation with the classes of business.
4.1.8 Sector-wise details of the policies are given below :
(Rs. in 000s) | |||||||
|
|||||||
Sector | As at March 31, | As at March31, | |||||
2003 | 2002 | ||||||
Rs. | % | Rs. | % | ||||
|
|||||||
Rural | 47,536 | 2.21 | 2,258 | 0.83 | |||
Urban | 2,104,623 | 97.79 | 278,999 | 99.17 | |||
4.1.9 Extent of risksretained andreinsured is set out below : | |||||||||
Particulars | Basis | As at March 31, | As at March 31, | ||||||
2003 | 2002 | ||||||||
Retention | Ceded | Retention | Ceded | ||||||
Fire | Total sum insured | 14% | 86% | 9% | 91% | ||||
Marine Cargo | Value at risk | 57% | 43% | 80% | 20% | ||||
Miscellaneous | |||||||||
- Engineering | Total sum insured | 25% | 75% | 18% | 82% | ||||
- Motor | Total sum insured | 80% | 20% | 80% | 20% | ||||
- Workmen Compensation | Value at risk | 80% | 20% | 80% | 20% | ||||
- Public Liability | Value at risk | 25% | 75% | 80% | 20% | ||||
- Personal Accident | Value at risk | 32% | 68% | 13% | 87% | ||||
- Health | Value at risk | 80% | 20% | 80% | 20% | ||||
- Others | Value at risk | 25% | 75% | 44% | 56% | ||||
|
82
schedules | ||
forming part of the financial statements | Continued |
4.1.10 Details of managerial remuneration are as under :
(Rs. in 000s) | ||
For the year | For the period | |
Particulars | ended March | ended March |
31, 2003 | 31, 2002 | |
Salaries and allowances | 3,449 | Nil |
Contribution to provident and other funds | 245 | Nil |
Perquisites | 436 | Nil |
Notes : Perquisites as stated above are based on actual payment.
Managerial remuneration as stated above does not include gratuity and leave encashment payable as the same cannot be ascertained on an individual basis.
The managerial remuneration is as per the terms of appointment as approved by the IRDA.
In the previous year, the Managing Director(s) drew their remuneration from the holding company and hence no managerial remuneration is paid or payable to the Managing Director.
4.2 Other disclosures
4.2.1 Segmental reporting
Primary reportable segments
The Companys primary reportable segments are business segments which have been identified in accordance with AS 17 Segment Reporting read with the Regulations. The income and expenses attributable to the business segments are allocated as mentioned in paragraph 4.1.7 above.
Segmental Assets & Liabilities
(Rs. in 000s) | |||||||||
Current Liabilities | Current | ||||||||
Assets | |||||||||
Segment | Year | Claims | Un- | Out- | |||||
Unearned | Out- | allocated | standing | ||||||
Commission | standing | Premium | Premium | ||||||
Fire | 2002-03 | 128,010 | 137,569 | | 37,402 | ||||
Fire | 2001-02 | | (18,842) | | (109,765) | ||||
Engg | 2002-03 | 27,206 | 38,767 | 642 | 3,869 | ||||
Engg | 2001-02 | | (1,767) | (592) | | ||||
Marine Cargo | 2002-03 | 1,766 | 12,103 | | 14 | ||||
Marine Cargo | 2001-02 | | (12) | | | ||||
Marine Hull | 2002-03 | 884 | 3,394 | | | ||||
Marine Hull | 2001-02 | | | | | ||||
Motor | 2002-03 | 1,047 | 24,715 | | | ||||
Motor | 2001-02 | | (11,563) | | | ||||
Wc | 2002-03 | 127 | 141 | | | ||||
Wc | 2001-02 | | | | | ||||
Liabilities | 2002-03 | 1,398 | 1,679 | | | ||||
Liabilities | 2001-02 | | | | | ||||
PA | 2002-03 | 6,392 | 2,733 | 6 | | ||||
PA | 2001-02 | | (254) | | | ||||
Aviation | 2002-03 | 813 | 9,819 | | | ||||
Aviation | 2001-02 | | | | | ||||
Others | 2002-03 | 11,336 | 22,939 | 16,203 | 31 | ||||
Others | 2001-02 | | (2,558) | | | ||||
Health | 2002-03 | 3,520 | 16,905 | | | ||||
Health | 2001-02 | | (1,574) | | | ||||
Total Amount | 2002-03 | 182,500 | 270,764 | 16,851 | 41,316 | ||||
Total Amount | 2001-02 | | (36,570) | (592) | (109,765) | ||||
Note : Figure given in brackets represent the previous year figure.
Fixed assets, Investments & other current assets & liabilities are not identifiable to any business segment.
Secondary reportable segments
There are no reportable geographical segments since the Company provides services to customers in the Indian market only and does not distinguish any reportable regions within India.
4.2.2 Related party
Related parties, nature of relationship and description of transactions
Name of the | Nature of | Description of transactions |
related Party | relationship | |
ICICI Bank Limited | Holding Company | The Company has taken space on rentals in the building of ICICI Bank for which it is paying rentals at market rates. In addition ICICI Bank Limited has set up a common platform for the group for sharing of common services and facilities including technology. The Company is using the expertise and technology of ICICI Bank Call Center. The Company has sold policies to ICICI Bank Limited. The Company has received premium and paid claims on this account. |
ICICI Venture Funds Management Company Limited | Fellow Subsidiary | The Company has sold policies to ICICI Venture Funds Management Company Limited. The Company has received premium and paid claims on this account. |
ICICI Securities Limited | Fellow Subsidiary | The Company has sold policies to ICICI Securities Limited. The Company has received premium and paid claims on this account. |
ICICI Prudential Life Insurance Company Limited | Fellow Subsidiary | The Company has sold policies to ICICI Prudential Life Insurance Company Limited. The Company has received premium and paid claims on this account. |
ICICI Home Finance Company Limited | Fellow Subsidiary | The Company has sold policies to ICICI Home Finance Company Limited. The Company has received premium and paid claims on this account. In addition to this the Company shared the cost of advertisements with ICICI Home Finance Company Limited. |
Key Management Personnel (with whom transactions have taken place) | K.V. Kamath, Chairman Kalpana Morparia, Director Sandeep Bakhshi, Managing Director & CEO |
The Company has issued policies to them. |
Relatives of key managerial personnel (with whom transactions have taken place) | Mona Bakhshi, Wife of Managing Director & CEO | The Company has issued policies to her. |
83
schedules | ||
forming part of the financial statements | Continued |
Details of transactions with related parties for the year ended March 31, 2003 are given below :
(Rs. in 000s) | ||||||||
Particulars | With | With | With Key | Relatives of | ||||
Holding | Fellow | Management | Key Manage- | |||||
Company | Subsidiaries | Personnel | ment Personnel | |||||
Income | ||||||||
Premium Income | 163,754 | 42,535 | 160 | 0.1 | ||||
(25,478) | (76) | | | |||||
Income from | 6,741 | | | | ||||
Interest & Dividend | (3,434) | (9,510) | | | ||||
Expenses | ||||||||
Claim Payments | 58,003 | 1,320 | | | ||||
(1,310) | | | | |||||
Salary to Deputation | 10,334 | | | | ||||
Staff | (4,896) | | | | ||||
Establishment & | 65,385 | 5,000 | | | ||||
Other Expenditure | (41,246) | | | | ||||
Figures in brackets represent previous year figures. |
Balances with related parties at March 31, 2003, are as under: | ||||
(Rs. in 000s) | ||||
Particulars | With Holding | With Fellow | ||
Company | Subsidiaries | |||
Assets | ||||
Fixed Assets | | | ||
(817) | | |||
Investments | 48,873 | | ||
(33,765) | | |||
Cash & Bank Balances | 130,782 | | ||
(43,043) | (1,584) | |||
Income accrued on | ||||
investments | 584 | | ||
(376) | | |||
Liabilities | ||||
Capital | 814,000 | | ||
(814,000) | | |||
Advance Premium | 159,648 | 18,644 | ||
(20,541) | (1,926) | |||
Others Liabilities | 84,267 | 296 | ||
(15,167) | | |||
Figures in brackets representprevious year figures. |
4.2.3 Deferred taxes
The major components of temporary differences that account for deferred tax assets and liabilities are as under :
(Rs. in 000s) | |||||||
|
|||||||
As at March 31, 2003 | As at March 31, 2002 | ||||||
|
|
||||||
Deferred | Deferred | Deferred | Deferred | ||||
tax asset | tax liability | tax asset | tax liability | ||||
Carried forward business loss | 17,253 | | | | |||
Timing differences on account of: | |||||||
Reserve for Unexpired Risks | 11,288 | | 33,873 | | |||
Depreciation | 59 | | | | |||
Total | 28,600 | | 33,873 | | |||
Net deferred tax asset/(liability) | 28,600 | | 33,873 | | |||
Deferred tax expense/(income) recognised in the Profit and loss account | 5,273 | | (29,200) | | |||
4.2.4 Prior year figures have been regrouped, reclassified wherever necessary, to conform with current year classifications.
For and on behalf of the Board | ||
K.V. KAMATH Chairman |
KALPANA
MORPARIA Director |
|
S. MUKHERJI Director |
SANDEEP BAKHSHI Managing Director & CEO |
|
Mumbai, April 21, 2003 | RAKESH JAIN Head Finance & Accounts |
RAJESH CHAWATHE Company Secretary |
84
receipts & payments account | ||
for the year ended March 31, 2003 |
(Rs. in 000s) | |||||||||
Year ended | Year ended | ||||||||
March 31, 2003 | March 31, 2002 | ||||||||
CASH FLOW FROM OPERATING ACTIVITIES | |||||||||
Cash receipts from customers : | |||||||||
| Premium (net of reinsurance premium paid) | 1,299,366 | 273,531 | ||||||
| Commission | 258,413 | 12,871 | ||||||
| Other receipts | 479 | 1,558,258 | 2,277 | 288,679 | ||||
|
|
||||||||
Cash paid towards operating activities | |||||||||
| Claims paid (net of reinsurance claims recovered) | (180,956) | (6,969) | ||||||
| Commission paid | (4,268) | (3,504) | ||||||
| Tax Paid & Other Advances | (6,090) | | ||||||
| Expenses | (280,232) | (471,546) | (122,478) | (132,951) | ||||
|
|
||||||||
Net cash from operating activities | 1,086,712 | 155,728 | |||||||
CASH FLOW FROM INVESTING ACTIVITIES | |||||||||
| Purchase of fixed assets | (31,624) | (31,624) | (24,310) | (24,310) | ||||
|
|
||||||||
Investment : | |||||||||
| Purchase of securities | (5,334,212) | (1,405,384) | ||||||
| Short term deposit with Bank | (55,000) | (80,000) | ||||||
| Deposit with RBI | | (1,000) | ||||||
| Loans | (25,000) | | ||||||
| Interest received (net of TDS) | 124,835 | 31,860 | ||||||
| Repayment of deposits | 80,000 | | ||||||
| Proceeds from sale of investment | 4,380,246 | (829,131) | 268,898 | (1,185,626) | ||||
|
|
||||||||
Net cash from investing activities | (860,755) | (1,209,936) | |||||||
CASH FLOW FROM FINANCING ACTIVITIES | |||||||||
| Proceeds from issuance of share capital | | 1,099,993 | ||||||
Net cash used in financing activities | | 1,099,993 | |||||||
Net increase/(decrease) in cash and cash equivalents | 225,957 | 45,785 | |||||||
Cash and cash equivalents at the beginning of the period | 45,792 | 7 | |||||||
Cash and cash equivalents at end of the period | 271,749 | 45,792 |
As per our report attached of even date | For and on behalf of the Board | |
For BHARAT S. RAUT & CO. | K.V. KAMATH | KALPANA MORPARIA |
Chartered Accountants | Chairman | Director |
AKEEL MASTER | S. MUKHERJI | SANDEEP BAKHSHI |
Partner | Director | Managing Director & CEO |
RAKESH JAIN | RAJESH CHAWATHE | |
Mumbai, April 21, 2003 | Head Finance & Accounts | Company Secretary |
85
Statement pursuant to Part IV, Schedule VI to the Companies Act, 1956 Balance Sheet Abstract and Companys General Business Profile |
1. | Registration Details | |||||||||||||
Registration No. | 1 | 1 | - | 1 | 2 | 9 | 4 | 0 | 8 | State Code | 1 | 1 |
Balance Sheet Date | 3 | 1 | 0 | 3 | 2 | 0 | 0 | 3 | |||||
Date | Month | Year |
2. |
Capital Raised during the year | ||||||||||||||||||
(Amount in Rupees Thousands) | |||||||||||||||||||
Public Issue | Bonus Issue | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
Rights Issue | Private Placement | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
3. | Position of Mobilisation and Deployment of Funds | ||||||||||||||||||
(Amount in Rupees Thousands) | |||||||||||||||||||
Total Liabilities | Total Assets | ||||||||||||||||||
Sources of Funds | |||||||||||||||||||
Paid-up Capital | Reserves and Surplus | ||||||||||||||||||
1 | 0 | 9 | 5 | 9 | 8 | 0 | |||||||||||||
Secured Loans | Unsecured Loans | ||||||||||||||||||
Application of Funds | |||||||||||||||||||
Net Fixed Assets | Investments | ||||||||||||||||||
Net Current Assets | Miscellaneous Expenditure | ||||||||||||||||||
Accumulated Losses | |||||||||||||||||||
4. | Performance
of Company (Amount in Rupees thousands) |
||||||||||||||||||
Turnover | Total Expenditure | ||||||||||||||||||
Profit (Loss) before Tax | Profit (Loss) after Tax | ||||||||||||||||||
Earning per Share in Rupees | Dividend Rate % | ||||||||||||||||||
5. | Generic
Names of Principal Products/Services of the Company (as per monetary terms) |
||||||||||||||||||
Production
Description : General
Insurance |
|||||||||||||||||||
Item Code No. : Not Applicable |
For and on behalf of the Board | ||
K.V. KAMATH | KALPANA MORPARIA | |
Chairman | Director | |
S. MUKHERJI | SANDEEP BAKHSHI | |
Director | Managing Director & CEO | |
RAKESH JAIN | RAJESH CHAWATHE | |
Mumbai, April 21, 2003 | Head Finance & Accounts | Company Secretary |
Note :
The Company being a general insurance company, the accounts of the Company are not required to be made in accordance with Schedule VI. Further, the Insurance Act, 1938, requires the accounts of the Company to be split between policyholders and shareholders. In view of the above, it is not possible to give the information required in Part 3 and Part 4 of this schedule.
86
section 217 | ||
Statement of Particulars of Employees pursuant to the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 and forming part of the Directors’ Report for the year ended March 31, 2003 |
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Remuneration | Expe- | Date of | ||||||||
Received | rience | Commencement | ||||||||
Name and Age (in years) | Desig. / Nature of Duties | (Rs.) | (in years) | of Employment | Last Employment | |||||
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|
|||||
Nicholas Helms () (49) | Head - Commercial Lines | 656,781 | 32 | 12-Nov-2001 | CGU General Insurance | |||||
Rakesh Jain (32) | Head - Finance & Accounts | 2,454,741 | 8 | 01-Jan-2002 | ICICI Limited | |||||
Sandeep Bakhshi (42) | Managing Director & CEO | 4,130,103 | 19 | 01-Apr-2002 | ICICI Limited | |||||
Subhash Dhavale () (57) | Head - Internal Audit & Grievance Resolution | 2,670,947 | 32 | 05-Apr-2002 | ICICI Securities Limited | |||||
S. Gopalakrishnan (40) | Head - Investment | 2,621,231 | 19 | 02-May-2001 | BNP Paribas Equities India Pvt. Limited | |||||
Sudhir Salian (32) | Head - Strategy | 2,464,360 | 9 | 01-Jan-2002 | ICICI Limited | |||||
|
|
|
|
|
|
|||||
Notes : | |
1. | Remuneration as above includes salary, taxable allowances, LTA, Value of perquisites as per the Income-Tax Rules, 1962 and Companys Contribution to Provident Fund, Pension Fund. |
2. | The nature of employment is contractual. |
3. | The employees mentioned above are not the relatives of any Director of the Company. |
4. | All the employees with () mark were employed for part of the year. |
87
ICICI HOME FINANCE COMPANY LIMITED |
4TH ANNUAL REPORT AND ACCOUNTS 2002-2003
Directors | Company Secretary | Auditors | Registered and |
Chanda Kochhar Chairperson | Rajendra Patil | N. M. Raiji & Co. | Corporate Office |
Kalpana Morparia | Chartered Accountants | ICICI Bank Towers | |
Nachiket Mor | Bandra-Kurla Complex | ||
M. N. Gopinath | Mumbai - 400 051 | ||
Amitabh Chaturvedi | |||
V. Vaidyanathan Managing Director & CEO | |||
Rajiv Sabharwal Chief Operating Officer | |||
directors report |
to the members |
Your Directors have pleasure in presenting the Fourth Annual Report of the Company with the audited Statement of Accounts for the year ended March 31, 2003.
APPROPRIATIONS
The Profit and Loss Account shows profit before taxation of Rs. 405.8 million (Previous year Rs.126.3 million) after provision of Rs.64.5 million (Previous year Rs. 14.3 million) towards bad and doubtful debts and after taking into account all expenses including depreciation of Rs. 4.3 million (previous year Rs.2.75 million) on fixed assets. The net profit for the year is Rs. 286.5 million (Previous year Rs. 95.8 million).
After taking into account the balance of Rs.69.3 million (previous year Rs. 7.4 million) brought forward from the previous year and after adjusting deferred tax liability at the beginning of the year, the disposable profit is Rs.355.7 million (previous year Rs.102.6 million). Given the strong financial performance, the Board approved two interim dividend distributions amounting to Rs.230.0 million resulting in an aggregate dividend rate of 20%. Your Directors have not recommended any final dividend for the year and have appropriated the disposable profit as follows:
(Rupees Million) | ||||
2002-2003 | 2001-2002 | |||
Special Reserve created and maintained | ||||
in terms of Section 36(1)(viii) of the | ||||
Income-tax Act, 1961 | 104.03 | 33.33 | ||
Transfer to General Reserve | 21.48 | | ||
Dividend on Equity Shares | 230.00 | | ||
Dividend on Preference Shares | 0.04 | 0.01 | ||
Tax on Dividend | 0.01 | | ||
Leaving balance to be carried | ||||
forward to next year | 0.18 | 69.29 |
PUBLIC DEPOSITS
During the year under review, the Company has not accepted any deposit from the public.
OPERATIONAL REVIEW
Your Company received Outlook Moneys first Dream Home Award for 2001-2002 for its excellent performance in the housing finance industry.
Your Company continued to serve as the focal point for marketing, distribution and servicing of home loan products of ICICI Bank. During the year under review, the Company has launched other innovative products features like free property insurance, free home search, etc. The Company has also hosted various exhibitions to interact with and market products to focused customer segments and has also increased its presence in the fee income segment through both corporate and retail property services groups.
Your Company also continued to expand its geographical reach and at the same time penetrated deeper into existing markets. It has used the hub and spoke distribution strategy towards this end, which ensured deeper penetration and larger market share. It distributes home loans in over 300 locations across the country. As on March 31, 2003, a total loan of Rs.11235.87 million is outstanding which comprises of Rs.11211.86 million as housing loan and other loan of Rs.24.01 million.
PROSPECTS
The housing finance sector demonstrated a healthy growth trend during the year.
The incentive for the housing sector has been retained under the Finance Bill 2003 by permitting the income-tax benefit on interest on housing loan upto the existing limit of Rs.1,50,000 p.a. and extending the Section 80I(B) benefits to developers. This will increase the demand for houses and further add to the housing stock.
The competition among banks, housing finance companies and financial institutions and lower cost of funds had led to a drop in interest rates. However, your Company is confident of continuing its good performance in future due to its aggressive marketing strategies, wide branch network and relationships with the builders and customers.
DIRECTORS
In terms of the provisions of the Articles of Association of the Company, M. N. Gopinath and Amitabh Chaturvedi would retire at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment.
AUDITORS
The Auditors, M/s. N. M. Raiji & Co., Chartered Accountants, Mumbai, will retire at the ensuing Annual General Meeting. The Board, at its Meeting held on April 22, 2003, has proposed their appointment as Auditors to audit the accounts of the Company for the financial year ending March 31, 2004. You are requested to consider their appointment.
AUDIT COMMITTEE
The Audit Committee, constituted pursuant to the provisions of Section 292A of the Companies Act, 1956, comprises of the following Directors as its Members:
Chanda Kochhar,
Chairperson
M. N. Gopinath
V. Vaidyanathan, Managing Director & CEO
FOREIGN EXCHANGE EARNING AND EXPENDITURE
During 2002-2003, expenditure in foreign currencies amounted to Rs.0.2 million (previous year 0.9 million) on account of travelling expenses of the officials
88
directors report | ||
Continued |
of the Company. There was no earning in foreign currencies during the year under review.
PERSONNEL AND OTHER MATTERS
There are no employees within the purview of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.
Since your Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence, have not been given.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors confirm :
(a) | that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; |
(b) | that the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period; |
(c) | that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and |
(d) | that the Directors had prepared the annual accounts on a going concern basis. |
ACKNOWLEDGEMENTS
Your Company is grateful to the National Housing Bank for their continued support and advice. The Company is also grateful to its clients and bankers for their continued support.
The Company would like to express its gratitude for the unstinted support and guidance received from ICICI Bank Limited, the parent organisation, and also from other group companies.
The Directors would also like to express their sincere thanks and appreciation to all the employees for their commendable teamwork, exemplary professionalism and enthusiastic contribution during the year.
For and on behalf of the Board
CHANDA
KOCHHAR
Chairperson
Mumbai, April 22, 2003
89
auditors report | ||
to the members of ICICI Home Finance Company Limited |
We have audited the attached Balance Sheet of ICICI HOME FINANCE COMPANY LIMITED as at March 31, 2003 and the annexed Profit and Loss Account of the Company for the year ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis-statements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As required by the Manufacturing and Other Companies (Auditors Report) Order, 1988 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act , 1956, we enclose in the Annexure a Statement on the matters specified in the paragraphs 4 and 5 of the said Order.
Further to our comments in the Annexure referred to above, we report that :
1. | we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit; |
2. | in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; |
3. | the Balance Sheet and the Profit and Loss Account, dealt with by this report are in agreement with the books of account; | |
4. | in our opinion, the Balance Sheet and the Profit and Loss Account dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; | |
5. | on the basis of the written representations received from the Directors of the Company, none of the Directors are disqualified as on March 31, 2003 from being appointed as Director under Section 274 (1) (g), of the Companies Act, 1956; | |
6. | in our opinion and to the best of our information and according to the explanations give to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in the conformity with the accounting principles generally accepted in India: | |
(i) | in the case of the Balance Sheet of the state of affairs of the Company as at March 31, 2003; | |
(ii) | in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and | |
(iii) | in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. | |
For N.M. Raiji & CO. | |
Chartered Accountants | |
JAYESH M. GANDHI | |
Mumbai, April 22, 2003 | Partner |
annexure to the auditors report |
referred to in paragraph (1) of our report of even date |
1. | The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets. Physical verification of fixed assets has been carried out by the management during the year. No discrepancies were noticed on such verification. |
2 | None of the fixed assets have been revalued during the year. |
3. | The Company has taken unsecured loans from its holding Company, a Company which is also a party listed in the register maintained under Section 301 of the Companies Act, 1956. The rate of interest and terms of these loan are not, prima facie, prejudicial to the interest of the Company. |
4. | The Company has not given loans, secured or unsecured to Companies, firms or other parties listed in the register maintained under Section 301 and/or to the Companies under the same management as defined under Section 370 (1B) of the Companies Act, 1956. |
5. | The parties to whom loans and advances in the nature of loans have been granted by the Company, are generally repaying the principal amounts as stipulated and are also generally regular in the payment of interest. The Company has also granted loans to employees, who are repaying the principal amount as stipulated and regular in payment of interest. |
6. | In our opinion and according to information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business with regard to purchase of fixed assets. |
7. | The Company being a Housing Finance Company (HFC), Section 58A of the Companies Act, 1956 is not applicable. During the year, the Company has not accepted any deposits from the public coming under the purview of the Housing Finance Companies (NHB) Directions, 1989 and 2001. In our opinion, the Company has complied with the provisions of the Housing Finance Companies (NHB) directions, 1989 and 2001 in respect of deposits accepted in earlier years. |
8. | The Company has an internal audit system, which is commensurate with the size and the nature of its business. |
9. | In our opinion and according to the information and explanations given to us, there are no transactions of purchase of goods and materials and sale of goods, materials and services, made in pursuance of contracts or arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 and aggregating during the year to Rs. 50,000 or more in respect of each party .The Company provides services to the parties entered in register maintained under Section 301 of the Companies Act, 1956 and aggregating to Rs. 50,000 in respect of each party. Considering the specialised nature of services provided, the market prices of such services are not readily available and hence the prices charged for the services could not be compared. |
10. | As per the records maintained by the Company, the provident fund dues have been generally deposited with the appropriate authorities. As informed to us, Employees State Insurance Act is not applicable to the Company. |
11. | There are no undisputed amounts payable in respect of income tax, sales tax and customs duty outstanding as at March 31, 2003, for a period of more than six months from the date they became payable. |
12. | According to the information and explanations given to us and the records of the Company examined by us, no personal expenses have been charged to revenue account, other than those payable under contractual obligations or in accordance with generally accepted business practice. |
13. | Adequate documents and records are generally maintained in cases where the Company has granted loans and other credit facilities on the basis of security by way of property. |
14. | The clauses (iii) to (vi), (xii), (xiv), (xvi), (xx) of 4A, 4B, 4C and (iii) and (iv) of 4D of the Manufacturing and Other Companies (Auditors Report) Order, 1988 are not applicable to the Company. |
For N.M. Raiji & CO. | |
Chartered Accountants | |
JAYESH M. GANDHI | |
Mumbai, April 22, 2003 | Partner |
90
balance sheet |
as at March 31, 2003 | ||||||||
March 31, | ||||||||
Schedule | (Rs. in 000s) | 2002 | ||||||
I. | SOURCES OF FUNDS | |||||||
Shareholders Funds | ||||||||
A. Share Capital | I | 1,550,000.00 | 1,550,000.00 | |||||
B. Reserves and Surplus | II | 167,041.68 | 110,634.84 | |||||
|
|
|||||||
1,717,041.68 | 1,660,634.84 | |||||||
Loan Funds | ||||||||
Unsecured Loans | III | 10,956,916.17 | 14,569,947.69 | |||||
|
|
|||||||
12,673,957.85 | 16,230,582.53 | |||||||
|
|
|||||||
II. | APPLICATION OF FUNDS | |||||||
Fixed Assets | IV | |||||||
A. Gross Block | 90,555.99 | 54,867.03 | ||||||
B. Less: Depreciation | 16,248.25 | 4,681.67 | ||||||
|
|
|||||||
C. Net Block | 74,307.74 | 50,185.36 | ||||||
Investments | V | 73,256.24 | 78,085.84 | |||||
Loans and Other Credit Facilities | VI | 11,134,312.82 | 15,821,448.81 | |||||
Current Assets, Loans | ||||||||
and Advances | VII | |||||||
A. Current Assets | 847,645.89 | 780,171.50 | ||||||
B. Loans and Advances | 1,160,397.55 | 225,977.69 | ||||||
|
|
|||||||
2,008,043.44 | 1,006,149.19 | |||||||
|
|
|||||||
Less: | ||||||||
Current Liabilities and Provisions: | VIII | |||||||
A. Current Liabilities | 491,215.41 | 731,169.88 | ||||||
B. Provisions | 239,423.18 | 27,902.99 | ||||||
|
|
|||||||
730,638.59 | 759,072.87 | |||||||
|
|
|||||||
Net Current Assets and Advances | 1,277,404.85 | 247,076.32 | ||||||
Deferred Tax Assets/(Liability) | ||||||||
[refer note 2(c)] | 84,105.82 | (7,988.15) | ||||||
Miscellaneous Expenditure | IX | 30,570.38 | 41,774.35 | |||||
|
|
|||||||
12,673,957.85 | 16,230,582.53 | |||||||
|
|
|||||||
Notes forming part of the Accounts | ||||||||
and Accounting Policies | XIII |
profit and loss account |
for the year ended March 31, 2003 | |||||
March 31, | |||||
Schedule | (Rs. in 000s) | 2002 | |||
INCOME | |||||
Income from Operations | X | 1,953,005.22 | 1,767,645.44 | ||
Other Income | XI | 25,256.11 | 3,143.89 | ||
|
|
||||
1,978,261.33 | 1,770,789.33 | ||||
|
|
||||
EXPENDITURE | |||||
Interest, Other Financial Charges & | |||||
Expenses on Borrowings | 1,465,415.95 | 1,292,459.00 | |||
Employee Cost | |||||
Salary | 4,268.69 | 63,787.66 | |||
Contribution to Provident and | |||||
Other Funds | 549.93 | 7,289.73 | |||
Staff Welfare Expenses | 888.50 | 6,089.78 | |||
Establishment and Other Expenses | XII | 30,639.59 | 256,011.25 | ||
Depreciation | 4,324.18 | 2,752.07 | |||
Provision & Write off Against | |||||
Non-Performing Assets | 36,490.48 | 14,251.15 | |||
Provision against standard assets | 28,042.82 | | |||
Preliminary and Share Issue | |||||
Expenses Written Off | 1,800.68 | 1,800.68 | |||
|
|
||||
1,572,420.82 | 1,644,441.32 | ||||
|
|
||||
Profit before Taxation | 405,840.52 | 126,348.01 | |||
Provision for Taxation | 211,483.06 | 23,150.00 | |||
Deferred Tax Credit | 92,093.97 | (7,412.19) | |||
|
|
||||
Profit after Taxation | 286,451.43 | 95,785.82 | |||
Add: Balance brought forward | |||||
from previous year | 69,296.88 | 7,423.23 | |||
Less: Adjustment on account of | |||||
deferred tax liability at the | |||||
beginning of the year | | 575.96 | |||
|
|
||||
Disposable Profit | 355,748.31 | 102,633.09 | |||
|
|
||||
APPROPRIATIONS | |||||
Special Reserve - in terms of | |||||
Section 36(1)(viii) of the | |||||
Income-tax Act, 1961 | 104,027.03 | 33,328.75 | |||
Dividend | |||||
on Equity Shares - Interim | |||||
(subject to tax) | 230,000.00 | | |||
on Preference Shares - proposed | 45.12 | 7.99 | |||
General Reserve | 21,483.86 | | |||
Balance Carried to Balance Sheet | 192.30 | 69,296.35 | |||
|
|
||||
355,748.31 | 102,633.09 | ||||
|
|
||||
Earnings per Share | |||||
(Equity shares, par value Rs.10 each) | |||||
Basic (Rs.) | 2.49 | 0.83 | |||
Diluted (Rs.) | 1.85 | 0.62 | |||
Notes forming part of the Accounts | |||||
and Accounting Policies | XIII |
As per our Report attached | For and on behalf of the Board | |
For N. M. RAIJI & CO. | CHANDA KOCHHAR | |
Chartered Accountants | Chairperson | |
J. M. GANDHI | V. VAIDYANATHAN | |
Partner | Managing Director & CEO | |
RAJENDRA PATIL | SANJAY SINGHVI | |
Mumbai, April 22, 2003 | Company Secretary | Head - Finance & Accounts |
91
schedules | ||
forming part of the Accounts |
March 31, | ||||
(Rs. in 000s) | 2002 | |||
SCHEDULE I | ||||
SHARE CAPITAL | ||||
Authorised | ||||
225,000,000 Equity Shares of Rs.10 each | 2,250,000.00 | 2,250,000.00 | ||
75,000,000 Preference Shares of Rs.10 each | 750,000.00 | 750,000.00 | ||
|
|
|||
3,000,000.00 | 3,000,000.00 | |||
|
|
|||
Issued, Subscribed and Paid up | ||||
115,000,000 Equity Shares of Rs.10 each fully paid up | 1,150,000.00 | 1,150,000.00 | ||
40,000,000 0.01% Fully Convertible Cumulative Preference Shares | 400,000.00 | 400,000.00 | ||
of Rs. 10 each fully paid up - Refer Note 2(b) of Notes to Accounts | ||||
(All shares are held by ICICI Bank Limited, the holding company and its nominees) | ||||
1,550,000.00 | 1,550,000.00 | |||
|
|
|||
SCHEDULE II | ||||
RESERVES AND SURPLUS | ||||
General Reserve | 21,483.86 | | ||
Surplus in Profit and Loss Account | 192.30 | 69,296.35 | ||
Special Reserve created and maintained in terms of | 145,365.52 | 41,338.49 | ||
Section 36(1)(viii) of the Income Tax Act, 1961. | ||||
167,041.68 | 110,634.84 | |||
|
|
|||
SCHEDULE III | ||||
LOAN FUNDS (Unsecured) | ||||
Loans from Holding Company | 3,614,569.43 | 4,628,999.99 | ||
(includes subordinated debts of Rs. 1,929,652,778; March 02 Rs. 1,930,000,000) | ||||
Loans from Banks | 5,739,818.29 | 8,269,170.88 | ||
Fixed Deposits | 1,602,528.45 | 1,660,776.82 | ||
(includes deposits from banks Rs. 3,252,198,350; March 02 Rs. 336,198,350 and | ||||
corporate Rs. 134,398,420; March 02 Rs. 149, 347,038) | ||||
Short Term Loans and Advances from Corporates | | 11,000.00 | ||
10,956,916.17 | 14,569,947.69 | |||
|
|
SCHEDULE IV
FIXED ASSETS | (Rs. in 000s) | |||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Gross Block | Depreciation | Net Block | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Assets | March 31, | Additions | Deductions | March 31, | For the | Upto March | March 31, | March 31, | ||||||||
2002 | during the year | 2003 | Year | 31, 2003 | 2003 | 2002 | ||||||||||
|
|
|
|
|
|
|
|
|
||||||||
Computer and Software | 31,214.83 | 38,809.99 | | 70,024.82 | 10,228.13 | 14,823.83 | 55,200.99 | 26,619.13 | ||||||||
Office Equipments | 874.26 | 287.84 | | 1,162.10 | 49.83 | 76.90 | 1,085.20 | 847.19 | ||||||||
Motor Car | 1,110.27 | | 420.62 | 689.65 | 69.34 | 98.91 | 590.74 | 1,080.70 | ||||||||
Motor Car (Operating Lease) | | 17,502.73 | | 17,502.73 | 1,152.83 | 1,152.83 | 16,349.90 | | ||||||||
Furniture | 816.52 | 360.17 | | 1,176.69 | 66.46 | 95.78 | 1,080.91 | 787.20 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
34,015.88 | 56,960.73 | 420.62 | 90,555.99 | 11,566.57 | 16,248.25 | 74,307.74 | 29,334.22 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Capital Work in Progress/ | ||||||||||||||||
Capital advances | 20,851.16 | | 20,851.16 | | | | | 20,851.16 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total | 54,867.03 | 56,960.73 | 21,271.77 | 90,555.99 | 11,566.57 | 16,248.25 | 74,307.74 | 50,185.36 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Previous Year | 8,037.83 | 25,972.06 | | 54,867.03 | 3,935.30 | 4,681.67 | 50,185.36 | |||||||||
|
|
|
|
|
|
|
|
92
schedules | ||
forming part of the Accounts | Continued |
March 31, | ||||
(Rs. in 000s) | 2002 | |||
SCHEDULE V | ||||
INVESTMENTS - AT COST | ||||
Long Term Investment | ||||
10 Shares of Rs. 10 each of ICICI Venture Fund | 0.10 | 0.10 | ||
Management Company Limited (Unquoted) | ||||
Investment in Pass thru Certificate | 1,022.73 | | ||
Short Term Investment | ||||
Government Securities (364 days T-Bill) (Quoted) | 72,233.41 | 78,085.74 | ||
(Face Value as at March 31, 2003 Rs. 76.00 | ||||
million; as at March 31, 2002 - Rs. 83.25 million) | ||||
73,256.24 | 78,085.84 | |||
|
|
|||
Market Value of Quoted Investments | 72,360.00 | 78,178.01 | ||
SCHEDULE VI | ||||
LOAN AND OTHER CREDIT FACILITIES | ||||
(Secured) | ||||
Housing Loans | ||||
Considered Good | 11,134,312.82 | 15,821,448.81 | ||
Considered Doubtful | 101,553.87 | 26,971.51 | ||
Less: Provisions | 101,553.87 | 26,971.51 | ||
|
|
|||
11,134,312.82 | 15,821,448.81 | |||
|
|
SCHEDULE VII | |||||
CURRENT ASSETS, LOANS AND ADVANCES | |||||
A. | Current Assets | ||||
Interest Accrued on Loans | 101,380.28 | 149,722.83 | |||
Sundry Debtors (Unsecured & | |||||
Considered Good) | |||||
Debts outstanding for more | |||||
than six months | 1,295.12 | 8,458.94 | |||
Securities Held as Stock-in-trade | |||||
(at cost or market value | |||||
whichever is less) : | |||||
2,017,159.302 (Previous year - | |||||
68,273.141) units in Liquid scheme | |||||
of Prudential ICICI Mutual Fund | 30,000.00 | 951.23 | |||
Cash and bank balances : | |||||
Balances with Scheduled Banks | |||||
- in current accounts | 633,170.49 | 538,508.65 | |||
- in deposit accounts | 81,800.00 | 82,529.85 | |||
|
|
||||
847,645.89 | 780,171.50 | ||||
|
|
||||
B. | Loans and Advances | ||||
(Recoverable in cash or in kind | |||||
or for value to be received - | |||||
Considered Good) | |||||
Loans to Staff | 84,141.31 | 47,948.69 | |||
Other Advances and Deposits | 804,951.18 | 135,795.00 | |||
Advance Income Tax | 271,305.06 | 42,234.00 | |||
(Unsecured, except Loans to Staff & | |||||
Loan against Fixed Deposit which is | |||||
secured) | |
|
|||
1,160,397.55 | 225,977.69 | ||||
|
|
March 31, | |||||
(Rs. in 000s) | 2002 | ||||
SCHEDULE VIII | |||||
CURRENT LIABILITIES AND PROVISIONS | |||||
A. | Current liabilities | ||||
Sundry Creditors (from other than Small | |||||
Scale Inds. Undertaking) | 387,244.01 | 51,397.38 | |||
Interest Accrued But Not Due | 92,769.84 | 60,408.45 | |||
Other Liabilities | 11,201.56 | 619,364.05 | |||
|
|
||||
491,215.41 | 731,169.88 | ||||
|
|
||||
B. | Provisions | ||||
Provision for tax | 239,378.06 | 27,895.00 | |||
Proposed Dividend (Including Corporate | |||||
Dividend Tax) | 45.12 | 7.99 | |||
|
|
||||
239,423.18 | 27,902.99 | ||||
|
|
SCHEDULE IX | ||||
MISCELLANEOUS EXPENDITURE | ||||
(to the extent not written off or adjusted) | ||||
Preliminary and Share issue expenses | 12,996.17 | 14,796.85 | ||
Deferred Revenue expenditure | 17,574.21 | 26,977.50 | ||
|
|
|||
30,570.38 | 41,774.35 | |||
|
|
|||
SCHEDULE X | ||||
INCOME FROM OPERATIONS | ||||
Interest Income | 1,577,222.98 | 1,593,730.59 | ||
Income from the securitisation of Loans | 325,408.42 | | ||
(Refer note 2 (i) Schedule XIII) | ||||
Fee income | 50,373.82 | 173,914.85 | ||
|
|
|||
1,953,005.22 | 1,767,645.44 | |||
|
|
|||
SCHEDULE XI | ||||
OTHER INCOME | ||||
Interest Received | 17,534.82 | 729.85 | ||
Profit on sale of current investments | 973.45 | | ||
Miscellaneous Income | 6,747.84 | 2,414.04 | ||
|
|
|||
25,256.11 | 3,143.89 | |||
|
|
|||
SCHEDULE XII | ||||
ESTABLISHMENT AND OTHER EXPENSES | ||||
Advertisement Expenses | 1,550.11 | 14,937.37 | ||
Customer Acquisition Expenses | 97.00 | 81,744.74 | ||
Professional and Legal Expenses | 13,175.98 | 43,078.33 | ||
Rent | 768.00 | 28,135.08 | ||
Communication Expenses | 1,851.36 | 17,597.07 | ||
Travelling and Conveyance | 2,378.14 | 12,657.99 | ||
Loss on Sale of Fixed Assets | 37.32 | | ||
Printing and Stationery | 1,689.87 | 9,721.35 | ||
Computer and Software Expenses | 409.84 | 10,784.34 | ||
Audit fees | 321.51 | 252.52 | ||
Deferred Revenue Expenditure Written Off | 115.56 | 2,129.49 | ||
Miscellaneous Expenses | 8,244.90 | 34,972.97 | ||
|
|
|||
30,639.59 | 256,011.25 | |||
|
|
93
schedules | ||
forming part of the Accounts | Continued |
SCHEDULE XIII
NOTES FORMING PART OF THE ACCOUNTS AND SIGNIFICANT ACCOUNTING POLICIES
1. Significant
Accounting Policies
The accounts
are prepared in accordance with the accounting principles generally
accepted in India and the directions issued by the National Housing
Bank from time to time.
a) | Revenue Recognition |
Interest Income on housing loan is accounted for on accrual basis, other than interest on non-performing assets and charges for delayed payments and cheque bouncing, if any, which is accounted for on cash basis. Further, interest income accounted in the past for Non-Performing Assets is also reversed. Fees are recognised on due basis. | |
b) | Investments |
Investments have been classified as long-term and short-term investments. Long-term investments have been valued at cost and short-term investments have been valued at cost or market value whichever is lower. | |
c) | Expenses |
All expenses are provided for on accrual basis. | |
d) | Preliminary and Share Issue Expenses |
Preliminary and share issue expenses are amortised over a period of ten years. | |
e) | Deferred Revenue Expenditure |
i) | Advertisement expenditure and, expenditure incurred on Business Process Re-engineering, the benefit of which is expected over a subsequent period(s) is treated as Deferred Revenue Expenditure and amortised over the period of thirty six months. | |
ii) | The initial expenses on borrowings are amortised over the tenure of the borrowing facility. | |
f) | Depreciation |
Depreciation on assets is charged on Straight Line Method at the rates prescribed in Schedule XIV of the Companies Act, 1956, except in case of Computer Software where depreciation is provided @ 20% per annum. | |
g) | Deferred Tax |
The tax effects of significant temporary differences are reflected through a deferred tax Asset/ Liability, which has been reflected in the Balance Sheet and the corresponding effect of the same is given in the Profit and Loss Account. | |
h) | Provision for Non-Performing Assets |
Provisions against Non-Performing Assets (NPAs) are made based on norms decided by the management, which are more conservative as compared to the prudential norms prescribed by NHB. | |
2. | Notes to Accounts |
a) | Home Loans given by the Company are secured by the underlying property. |
b) | The Preference Shares were issued in two tranches. The first tranch of Preference Shares for Rs.25 crore was allotted on December 28, 2001 and are convertible into equity shares at the option of the Preference Shareholder after completion of one year but before completion of three years from the date of allotment in the ratio of 1:1. However, the said Preference Shares shall be compulsorily and automatically convertibleNinto one Fully Paid-up Equity Share for every one Preference Share of Rs.10 held on December 27, 2004. The second tranch of Preference Shares for Rs.15 crore was allotted on March 14, 2002 and are convertible into equity shares at the option of the Preference Shareholder after completion of one year but before completion of seven years from the date of allotment in the ratio of 1:1. However, the said Preference Shares shall be compulsorily and automatically convertible into one Fully Paid-up Equity Share for every one Preference Share of Rs.10 held on March 14, 2009. |
c) | The break-up of deferred tax assets and liabilities into major components is as follows: |
(Rs. in 000s) | |||||
March 31, 2003 | March 31, 2002 | ||||
Deferred Tax Assets | |||||
Provision for Doubtful Debts | |||||
& income from securitisation | 97,918.31 | 1,356.19 | |||
Leave Encashment Liability | 981.25 | | |||
Less: Deferred Tax Liability | |||||
Depreciation | 9,059.87 | 2,972.48 | |||
Miscellaneous Expenditure ( to | |||||
the extent not written off) | 5,733.88 | 6,371.86 | |||
Net Deferred Tax Asset/(Liability) | 84,105.82 | (7,988.15) | |||
d) | Capital commitment for purchases of assets Rs. Nil (Previous Rs. 2200 thousand). | ||||
e) | Commitment towards part disbursement of sanctions is amounting Rs.177,121.99 thousand (Previous year Rs. 700,127 thousand). | ||||
f) | Earnings Per Share : | ||||
The
numerators and denominators used to calculate Basic and Diluted
Earnings Per Share: |
|||||
As at March | As at March | ||||
31, 2003 | 31, 2002 | ||||
Profit attributable to the Equity | |||||
Shareholders (Rs. In thousand) | 286,406.31 | 95,777.83 | |||
Weighted average number of | |||||
Equity Shares outstanding | |||||
during the year (Nos.) | 115,000,000 | 115,000,000 | |||
Diluted number of Equity Shares (Nos.) | 155,000,000 | 155,000,000 | |||
Nominal value of Equity Shares (Rs.) | 10 | 10 | |||
Basic Earnings Per Share (Rs.) | 2.49 | 0.83 | |||
Diluted Earnings Per Share (Rs.) | 1.85 | 0.62 | |||
g) | Details for the future lease rental receivable in respect of operating lease: | ||||
| Not later than one year | : | Rs. 3,354.36 thousand (Previous year | |
Nil) | ||||
| Later than one year but | |||
not later than five years | : | Rs 7,672.69 thousand (Previous year | ||
Nil) | ||||
| Later than five years | : | Nil | |
h) | As per the terms of appointment, the Managing Director and Whole-time Director draw their remuneration and other benefits from the holding company, ICICI Bank Limited. |
i) |
During
the year ended March 31, 2003 , the Company securitised identified
housing loan portfolio with a carrying value of Rs. 2,664,930
thousand on the date of the securitisation. As per the arrangement
with the counter parties, the Company has set aside a cash reserve
of Rs. 640,270 thousand to provide credit cum liquidity support
to investors and to enhance rating of the portfolio. Further,
the Company is required to maintain customer account relationship
and service the portfolio in future. On account of securitisation,
the Company has a surplus of Rs. 569,000 thousand. The Company
has estimated future servicing costs, prepayment risk and delinquency
based on the past performance of the Company and industry experience
. Such future costs, which aggregates to Rs. 243,603.31 thousand
is reduced from the above surplus and the balance amount of Rs.
325,396.60 thousand million is recognised as gain on securitisation
and shown under Income from Operations. The provision
made for the cost shall be reversed as and when incurred in the
future. On account of this transaction there is a contingent
liability of Rs. 396,666.69 thousand as on the balance sheet
date. |
j) | The Companys main business is to provide loans for the purchase or construction of residential houses. All other activities of the Company are related to the main business. As there are no separate reportable segments, as per the Accounting Standard on Segment Reporting (AS 17), issued by the Institute of Chartered Accountants of India. |
schedules | ||
forming part of the Accounts | Continued |
k) | Related Party Disclosure : |
The Company being a finance company the transactions in the normal course of business have not been disclosed. The following are the details of transactions with related parties:
|
|
|||
Name of the | Type of Transactions | Amount | ||
Related Party | (Rs. in 000s) | |||
|
|
|||
ICICI Bank Limited | ||||
the holding company | Rent paid | 18,576.86 | ||
Interest on fixed deposits | 10,792.49 | |||
Interest and other finance | ||||
expenses | 466,848.09 | |||
Expenses recovered | 1,422,311.73 | |||
Incentive on Securitisation paid | 12,559.78 | |||
Miscellaneous Expenses | 11,493.18 | |||
Unsecured loan | 3,614,569.43 | |||
Amount receivable | 191,913.99 | |||
Dividend Equity Shares | 230,000.00 | |||
Dividend Preference Shares | 45.12 | |||
|
|
|
||
ICICI Prudential Life | Income from property services | 684.86 | ||
Insurance Company Limited - the | ||||
subsidiary of ICICI Bank Limited | ||||
|
||||
ICICI Lombard General | Incentive on Securitisation paid | 123.24 | ||
Insurance Limited - the subsidiary | Insurance Premium group | 214.96 | ||
of ICICI Bank Limited | insurance cover | |||
Property Insurance paid | 57,887.39 | |||
|
|
|
||
I) | From the current year, the management has decided to make provision of 0.25% of the standard assets, over and above provisions on Non-performing assets. Accordingly, Rs. 28,042.82 thousand has been provided against standard assets. On account of this, profit for the year is lower by Rs. 28,042.82 thousand. |
m) | Expenditure in foreign currency Travelling Rs. 24.52 thousand (Previous year Rs. Nil). |
n) | Previous years figures have been regrouped wherever necessary. |
For and on behalf of the Board | ||
For N. M. RAIJI & CO. | CHANDA KOCHHAR | |
Chartered Accountants | Chairperson | |
J. M. GANDHI | V. VAIDYANATHAN | |
Partner | Managing Director & CEO | |
RAJENDRA PATIL | SANJAY SINGHVI | |
Mumbai, April 22, 2003 | Company Secretary | Head - Finance & Accounts |
95
cash flow statement | ||
March 31, | |||||
(Rs. in 000s) | 2002 | ||||
A. | Cash Flow from Operating Activities : | ||||
Profit before taxation and exceptional items | 405,840.52 | 126,348.01 | |||
Adjustments for : | |||||
Depreciation / Amortisation | 11,566.57 | 3,952.07 | |||
Loss / (Profit) on sale of fixed assets | 37.32 | | |||
Interest received | (17,534.82) | (729.85) | |||
Provision and Bad debts written off | 271,129.06 | 14,251.15 | |||
671,038.65 | 143,821.38 | ||||
Operating Profit before Working Capital Changes | |||||
Adjustments for : | |||||
Trade and Other Receivables | 3,737,115.79 | (8,976,218.03) | |||
Trade Payables and Other Liabilities | (239,954.47) | 607,652.95 | |||
4,168,199.97 | (8,224,743.70) | ||||
Cash Generated from Operations | 4,168,199.97 | (8,224,743.70) | |||
Income Taxes paid | (229,071.06) | (26,699.32) | |||
|
|
||||
Net cash from Operating Activities - A | 3,939,128.91 | (8,251,443.02) | |||
|
|
||||
B. | Cash Flow from Investing Activities : | ||||
Purchase of fixed assets | (36,102.81) | (38,534.48) | |||
Sale of fixed assets | 377.09 | | |||
Purchase of Investments (net) | 4,829.60 | (78,085.84) | |||
MIscellaneous Expenditure w/off | 11,203.97 | (22,037.93) | |||
Interest received | 17,534.82 | 729.85 | |||
|
|
||||
Net cash from Investing Activities - B | (2,157.33) | (137,928.40) | |||
|
|||||
C. | Cash Flow from Financing Activities : | ||||
Issuance of the Equity Shares | | 200,000.00 | |||
Issuance of the Preferance Shares | | 400,000.00 | |||
Dividend and dividend tax | (230,007.99) | | |||
Proceeds from borrowings (net) | (3,613,031.52) | 8,304,947.69 | |||
|
|
||||
Net Cash used in Financing Activities - C | (3,843,039.51) | 8,904,947.69 | |||
|
|||||
Net Increase in Cash and Cash Equivalents (A+B+C) | 93,932.06 | 515,576.27 | |||
Cash and Cash Equivalents as at beginning | 621,038.50 | 105,462.23 | |||
|
|
||||
Cash and Cash Equivalents as at end | 714,970.49 | 621,038.50 | |||
|
|||||
Notes : | |||||
1. | The above Cash Flow Statement has been prepared under the Indirect Method as set out in Accounting Standard - 3 on Cash Flow Statements issued by the Institute of Chartered Accountants of India. | ||||
2. | Cash and Cash Equivalents include Rs 633,170.49 thousand (Previous year - Rs. 538,508.65 thousand) Balances with banks in current accounts and Rs. 81,800 thousand (Previous year Rs. 82,529.85 thousand) Balances with banks in fixed deposits accounts. |
As per our Report attached | For and on behalf of the Board | |
For N. M. RAIJI & CO. | CHANDA KOCHHAR | |
Chartered Accountants | Chairperson | |
J. M. GANDHI | V. VAIDYANATHAN | |
Partner | Managing Director & CEO | |
RAJENDRA PATIL | SANJAY SINGHVI | |
Mumbai, April 22, 2003 | Company Secretary | Head - Finance & Accounts |
96
Statement pursuant to Part IV, Schedule VI to the Companies Act, 1956 Balance Sheet Abstract and Company’s General Business Profile |
1. | Registration Details | |||||||||||||
Registration No. | 1 | 2 | 0 | 1 | 0 | 6 | State Code | 1 | 1 |
Balance Sheet Date | 3 | 1 | 0 | 3 | 2 | 0 | 0 | 3 | |||||
Date | Month | Year |
2. |
Capital Raised during the Year | ||||||||||||||||||
(Amount in Rupees Thousands) | |||||||||||||||||||
Public Issue | Bonus Issue | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
Rights Issue | Private Placement | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
3. | Position of Mobilisation and Deployment of Funds | ||||||||||||||||||
(Amount in Rupees Thousands) | |||||||||||||||||||
Total Liabilities | Total Assets | ||||||||||||||||||
1 | 3 | 4 | 0 | 4 | 5 | 9 | 6 | 1 | 3 | 4 | 0 | 4 | 5 | 9 | 6 | ||||
Sources of Funds | |||||||||||||||||||
Paid-up Capital | Reserves and Surplus | ||||||||||||||||||
1 | 5 | 5 | 0 | 0 | 0 | 0 | 1 | 6 | 7 | 0 | 4 | 2 | |||||||
Secured Loans | Unsecured Loans | ||||||||||||||||||
N | I | L | 1 | 0 | 9 | 5 | 6 | 9 | 1 | 6 | |||||||||
Application of Funds | |||||||||||||||||||
Net Fixed Assets | Loans and Investments | ||||||||||||||||||
7 | 4 | 3 | 0 | 8 | 1 | 1 | 2 | 0 | 7 | 5 | 6 | 9 | |||||||
Net Current Assets | Miscellaneous Expenditure & Deferred Tax Assets | ||||||||||||||||||
1 | 2 | 7 | 7 | 4 | 0 | 5 | 1 | 1 | 4 | 6 | 7 | 6 | |||||||
Accumulated Losses | |||||||||||||||||||
N | I | L | |||||||||||||||||
4. | Performance
of Company |
||||||||||||||||||
Turnover | Expenditure | ||||||||||||||||||
1 | 9 | 7 | 8 | 2 | 6 | 1 | 1 | 5 | 6 | 2 | 4 | 2 | 1 | ||||||
Profit / Loss before Tax | Profit / Loss after Tax | ||||||||||||||||||
4 | 0 | 5 | 8 | 4 | 1 | 2 | 8 | 6 | 4 | 5 | 1 | ||||||||
Earning per Share in Rupees | Dividend Rate % | ||||||||||||||||||
2 | . | 4 | 9 | 2 | 0 | ||||||||||||||
5. | Generic
Names of Principal Products/Services of the Company (as per monetary terms) |
||||||||||||||||||
Product
Description Item Code No. |
|||||||||||||||||||
Home Loans NIL |
For and on behalf of the Board | ||
For N. M. RAIJI & CO. | CHANDA KOCHHAR | |
Chartered Accountants | Chairperson | |
J. M. GANDHI | V. VAIDYANATHAN | |
Partner | Managing Director & CEO | |
RAJENDRA PATIL | SANJAY SINGHVI | |
Mumbai, April 22, 2003 | Company Secretary | Head - Finance & Accounts |
97
ICICI INVESTMENT MANAGEMENT COMPANY LIMITED |
3RD ANNUAL REPORT AND ACCOUNTS 2002-2003
Directors | Auditors | Registered Office |
Kalpana Morparia, Chairperson | S.B. Billimoria & Co. | ICICI Bank Towers |
A. J. Advani | Chartered Accountants | Bandra-Kurla Complex |
Chandrashekhar Lal | Mumbai - 400 051 | |
Ashish Dalal | ||
directors report
to the members |
Your Directors have pleasure in presenting the Third Annual Report of the Company with the audited statement of accounts for the year ended March 31, 2003.
FINANCIAL RESULTS
The summary of the financial results for the year under review is as follows :
(Rupees) | ||||
FY2003 | FY2002 | |||
Gross Income | 10,941,697 | 11,252,307 | ||
Profit Before Tax | 8,139,060 | 2,148,154 | ||
Provision for tax | 2,896,746 | 750,000 | ||
Profit After Tax | 5,242,314 | 1,398,154 | ||
Transfer to Reserves | 5,242,314 | 1,398,154 |
Your Directors do not recommend payment of dividend for the year ended March 31, 2003.
OPERATIONAL REVIEW
The main object of the Company is to carry on the business of the management of mutual funds, unit trusts, offshore funds, pension funds, provident funds, venture capital funds and insurance funds, and to act as managers, consultants, advisors, administrators, attorneys, agents, or representatives of or for mutual funds, unit trusts, offshore funds, pension funds, provident funds, venture capital funds or insurance funds formed or established in India or elsewhere by the Company or any other person and to act as financial advisors and investment advisors, and to render such financial management, financial consultancy and advisory services to individuals, companies, corporations, trusts and other entities as supplemental activities of the Company and as do not conflict with the fund management activities.
Your Company is the Asset Management Company of ICICI Securities Fund, a Mutual Fund registered with SEBI. During the year under review, the Company did not launch any scheme and also did not undertake any other activity.
AUDIT COMMITTEE
The Board at its ninth Meeting held on March 29, 2001 had constituted an Audit Committee of Directors (the Committee) pursuant to the provisions of Section 292A of the Companies Act, 1956. The Committee was reconstituted by appointing Ashish Dalal as a Member of the Committee in place of Veena Mankar, who ceased to be a Director and consequently a Member of Audit Committee effective August 1, 2002.
PUBLIC DEPOSITS
During the year under review, the Company has not accepted deposits under Section 58-A of the Companies Act, 1956.
DIRECTORS
Veena Mankar ceased to be a Director effective August 1, 2002. The Board placed on record its appreciation of the valuable services rendered by her during her tenure.
The Board has appointed Ashish Dalal as an additional Director effective December 11, 2002. He would hold the office upto the date of the forthcoming Annual General Meeting as provided in the Articles of Association of the Company, but is eligible for appointment.
In terms of the provisions of the Articles of Association of the Company, A. J. Advani would retire at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment.
AUDITORS
M/s. S. B. Billimoria & Co., Chartered Accountants, Mumbai, will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board at its Meeting held on April 21, 2003 has proposed their appointment as the auditors to audit the accounts of the Company for the financial year ending March 31, 2004. You are requested to consider their appointment.
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
There was no income or expenditure in foreign currency during the period under review.
PERSONNEL AND OTHER MATTERS
Since your Company does not have any employees, provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 are not applicable.
Since your Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors confirm that :
1. | in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; |
2. | the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period; |
3. | the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and |
4. | the Directors had prepared the annual accounts on a going concern basis. |
ACKNOWLEDGEMENTS
Your Company is grateful to the Securities and Exchange Board of India for its support and advice during the period under review.
The Company would also like to express its gratitude for the unstinted support and guidance received from ICICI Bank, the holding Company and also from other group companies.
For and on behalf of the Board | |
KALPANA MORPARIA | |
Mumbai, April 21, 2003 | Chairperson |
98
auditors report | ||
to the members of ICICI Investment Management Company Limited |
1. | We have audited the attached Balance Sheet of ICICI Investment Management Company Limited as at March 31, 2003 and the Profit and Loss Account of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit. | |
2. | We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. | |
3. | As required by the Manufacturing and Other Companies (Auditors Report) Order 1988 issued by the Company Law Board in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable to the Company. | |
4. | Further to our comments in the Annexure referred to in paragraph 3 above: |
(a) | we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; | ||
(b) | in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; | ||
(c) |
the Balance Sheet and the Profit and Loss Account dealt with by this report are in agreement with the books of account; | ||
(d) | in our opinion, the Balance Sheet and the Profit and Loss Account dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; | ||
(e) | in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: |
(i) | in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2003; and | ||
(ii) | in the case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date. | ||
5. | On the basis of the written representations from the Directors, taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2003 from being appointed as a Director under Section 274 (1) (g) of the Companies Act, 1956. |
For S. B. BILLIMORIA & CO. | |
Chartered Accountants | |
P. R. RAMESH | |
Mumbai, April 21, 2003 | Partner |
annexure to the auditors report
(Referred to in paragraph 3 of our Report of even date) |
1. | The Company has neither taken nor granted secured or unsecured loans from or to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956 or companies under the same management within the meaning of the erstwhile Section 370 (1B) of the Companies Act, 1956. |
2. | The Company has an internal audit system, which is commensurate with the size of the Company and nature of its business. |
3. | There are no employees on the payroll of the Company and, therefore, provisions relating to Employees Provident Fund and Employees State Insurance Scheme are not applicable to the Company. |
4. | There were no undisputed amounts payable in respect of income tax, wealth tax, sales tax, and customs duty which were outstanding as on March 31, 2003 for a period of more than six months from the date they became payable. |
5. | According to the information and explanations given to us, no personal expenses have been charged to the profit and loss account. |
6. | The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. |
7. | In respect of investments made by the Company in shares, securities, etc. proper records have been maintained of the transactions and contracts and timely entries have been made therein. The shares, securities and other investments are held in the name of the Company. |
For S. B. BILLIMORIA & CO. | |
Chartered Accountants | |
P. R. RAMESH | |
Mumbai, April 21, 2003 | Partner |
99
balance sheet | ||
as at March 31, 2003 |
March 31, | ||||||
Schedule | Rupees | 2002 | ||||
SOURCES OF FUNDS | ||||||
Shareholders Funds | ||||||
Share Capital | 1 | 100,007,000 | 100,007,000 | |||
Reserves and Surplus | 2 | 12,865,214 | 7,622,900 | |||
|
|
|||||
112,872,214 | 107,629,900 | |||||
|
||||||
APPLICATION OF FUNDS | ||||||
Investments | 3 | 9,502,697 | 98,973,384 | |||
Current Assets, Loans and Advances | 4 | 113,557,263 | 18,529,458 | |||
Less: Current Liabilities and Provisions | 5 | 10,700,778 | 10,642,490 | |||
|
|
|||||
Net Current Assets | 102,856,485 | 7,886,968 | ||||
Miscellaneous Expenditure | 6 | 513,032 | 769,548 | |||
(to the extent not written off | ||||||
or adjusted) | ||||||
112,872,214 | 107,629,900 | |||||
|
Accounting Policies and | ||
Notes to Accounts | 9 |
profit and loss account | ||
for the year ended March 31, 2003 |
March 31, | ||||||
Schedule | Rupees | 2002 | ||||
INCOME | ||||||
Interest Income | 7 | 10,339,547 | 11,179,123 | |||
Dividend Income | ||||||
(Gross : TDS Rs. 62,065) | 591,093 | 73,184 | ||||
Other Income (Refer note 1) | 11,057 | | ||||
EXPENDITURE | ||||||
Professional Fees | | 8,779,250 | ||||
Establishment and other | ||||||
expenses (Refer note 2) | 2,216,956 | | ||||
Annual Fees-SEBI | 250,000 | | ||||
Auditors Remuneration (Refer note 3) | 36,750 | 52,987 | ||||
Other Expenses | 8 | 12,500 | 15,400 | |||
Miscellaneous Expenditure Written Off | 256,516 | 256,516 | ||||
Interest on Income Tax | 29,915 | | ||||
|
|
|||||
Profit Before Tax | 8,139,060 | 2,148,154 | ||||
Provision for Taxation | ||||||
Current | 3,000,000 | 750,000 | ||||
Deferred | | | ||||
Excess provision for income tax | ||||||
of earlier years written back | (103,254) | | ||||
|
|
|||||
2,896,746 | 750,000 | |||||
|
|
|||||
Profit After Tax Carried to Balance Sheet | 5,242,314 | 1,398,154 | ||||
|
|
Accounting Policies and | ||
Notes to Accounts | 9 |
As per our Report of even date attached | For and on behalf of the Board | ||
For S. B. BILLIMORIA & CO. | KALPANA MORPARIA | CHANDRASHEKHAR LAL | |
Chartered Accountants | Chairperson | Director | |
P. R. RAMESH | KRUNAL THAKKAR | ||
Partner | Company Secretary | ||
Mumbai, April 21, 2003 |
100
schedules | ||
forming part of the Accounts |
Rupees | March 31, 2002 | |||
SCHEDULE - 1 | ||||
SHARE CAPITAL | ||||
Authorised | ||||
25,000,000 Equity Shares of Rs. 10 each | 250,000,000 | 250,000,000 | ||
|
|
|||
Issued, Subscribed and Paid up | ||||
10,000,700 Equity Shares of Rs. 10 each | ||||
fully paid up | 100,007,000 | 100,007,000 | ||
|
|
|||
100,007,000 | 100,007,000 | |||
|
|
|||
All the above Equity Shares are held by | ||||
ICICI Bank Limited (the Holding Company) and | ||||
its nominees. | ||||
SCHEDULE - 2 | ||||
RESERVES AND SURPLUS | ||||
Profit and Loss Account | ||||
Opening Balance | 7,622,900 | 6,224,746 | ||
Addition during the year | 5,242,314 | 1,398,154 | ||
|
|
|||
Closing balance | 12,865,214 | 7,622,900 | ||
|
|
SCHEDULE - 3 | |||||
INVESTMENTS (Long term-At cost) | |||||
(Trade-Unquoted) | |||||
(i) | 900 10.85% ICICI bonds of | ||||
Rs. 1,00,000 each (matured) | | 90,000,000 | |||
(ii) | 20 Equity shares of Rs. 10 | ||||
each fully paid up | |||||
of ICICI Venture Funds | |||||
Management Company Limited | 200 | 200 | |||
(under the same management) | |||||
(iii) | 100 Equity shares of Rs. 10 | ||||
each fully paid up | |||||
of ICICI One Source Limited | 1,000 | | |||
(Trade-Quoted) | |||||
(i) | 803,899.343 (Previous Year: | ||||
759,205.44) Units of Prudential | |||||
ICICI Mutual Fund Liquid Plan- | |||||
Dividend Option | 9,501,497 | 8,973,184 | |||
|
|
||||
9,502,697 | 98,973,384 | ||||
|
|
||||
Quoted | 9,501,497 | 8,973,184 | |||
Unquoted | 1,200 | 90,000,200 | |||
Market value of quoted investments | 9,517,364 | 8,975,706 | |||
SCHEDULE - 4 | |||||
CURRENT ASSETS, LOANS AND ADVANCES | |||||
Current Assets | |||||
(A) | Interest Accrued But Not Due on Investments | | 702,759 | ||
(B) | Balances with Scheduled Bank : | ||||
(i) In Current Account | 546,202 | 1,220,861 | |||
(ii) In Fixed Deposits | 100,548,011 | 7,480,160 | |||
Loans and Advances | |||||
(a) | Interest accrued on Fixed Deposits | 651,588 | 468,876 | ||
(b) | Advance Taxes Paid | 4,775,000 | 3,295,000 | ||
(c) | Tax Deducted at Source | 6,972,420 | 4,713,396 | ||
(d) | Recoverable from ICICI Bank Limited | | 648,406 | ||
(e) | Income Tax refund receivable | 64,042 | | ||
|
|
||||
113,557,263 | 18,529,458 | ||||
|
|
||||
SCHEDULE - 5 | ||||
CURRENT LIABILITIES AND PROVISIONS | ||||
Current Liabilities | ||||
Sundry Creditors | 19,897 | 5,176,822 | ||
Payable to ICICI Bank Limited | 2,649,074 | | ||
Other Liabilities | 1,103 | 265,668 | ||
Provisions | ||||
Provision for Income Tax | 8,030,704 | 5,200,000 | ||
|
|
|||
10,700,778 | 10,642,490 | |||
|
|
|||
SCHEDULE - 6 | ||||
MISCELLANEOUS EXPENDITURE | ||||
to the extent not written off or adjusted | ||||
Preliminary Expenses | 769,548 | 1,026,064 | ||
Less : Written off during the period | 256,516 | 256,516 | ||
|
|
|||
513,032 | 769,548 | |||
|
|
|||
SCHEDULE - 7 | |||||
INTEREST INCOME | |||||
(a) | Interest on Fixed Deposits with Bank | 975,848 | 687,796 | ||
(Gross : TDS Rs. 225,285; | |||||
Previous year Rs. 120,164) | |||||
(b) | Interest on Bonds | 9,363,699 | 10,491,327 | ||
(Gross : TDS Rs. 1,971,674; | |||||
Previous year Rs. 2,140,231) | |||||
10,339,547 | 11,179,123 | ||||
|
|
||||
SCHEDULE - 8 | |||||
OTHER EXPENSES | |||||
(a) | Directors' sitting fees | 8,500 | 9,000 | ||
(b) | ROC filing fee | 1,500 | 3,000 | ||
(c) | Profession Tax | 2,500 | 3,400 | ||
|
|
||||
12,500 | 15,400 | ||||
|
|
SCHEDULE - 9
ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
1. | Method
of Accounting The Accounts are prepared in accordance with accounting principles generally accepted in India. The Company follows the accrual method of accounting. |
2. | Preliminary
Expenses Preliminary Expenses towards the incorporation of the Company are treated as Miscellaneous Expenditure and are written off to the Profit and Loss Account over a period of 5 years. |
3. | Revenue
Recognition Interest income and other dues are accounted on accrual basis. Dividend is recognised when declared. |
4. |
Investments Long term investments are carried at cost less diminution other than temporary. |
NOTES TO ACCOUNTS | |||||
1. | Other income includes foreign exchange gain (net) Rs. 6,550. | ||||
2. | Establishment and other expenses represent expenses charged by ICICI | ||||
Bank Limited to the Company. | |||||
3. | Auditors remuneration | March 31, | March 31, | ||
2003 | 2002 | ||||
(i) Statutory audit fees | 20,000 | 20,000 | |||
(ii) Tax audit fees | 15,000 | 30,000 | |||
(iii) Service Tax | 1,750 | 2,500 | |||
(iv) Expenses reimbursed | | 487 | |||
|
|
||||
36,750 | 52,987 | ||||
|
|
||||
4. | There is no deferred tax liability in case of the Company. | ||||
5. | Expenditure in Foreign Currency | March 31, | March 31, | ||
2003 | 2002 | ||||
Professional Fees | | 8,779,250 | |||
|
|
||||
| 8,779,250 | ||||
|
|
||||
6. | Names of related parties and description of relationship for the | ||||
transactions shown below are as follows : | |||||
1. | Holding company | ICICI Bank Limited | |
2. | Fellow subsidiary | ICICI Venture Funds | |
Management Company Limited | |||
3. | Key management personnel | A. J. Advani, | |
(Non Executive Directors) | Chandrashekhar Lal, | ||
Veena Mankar and | |||
Ashish Dalal | |||
(Amounts in Rs.) | |||||||
Holding | Fellow | Key | |||||
Company | Subsidiary | Management | |||||
Personnel | |||||||
Sitting fees | 8,500 | ||||||
Interest income | (10,339,547) | ||||||
Dividend income | (800) | ||||||
Investment | 200 | ||||||
Current account | 546,202 | ||||||
Deposit account | 100,548,011 | ||||||
Other payables | (1,997,486) | ||||||
|
|||||||
88,757,180 | (600) | 8,500 | |||||
|
|
|
|||||
Figures in the bracket indicate credit entry. | |||||||
7. | Previous year figures have been regrouped wherever necessary. |
101
Statement pursuant to Part IV, Schedule VI to the Companies Act, 1956 Balance Sheet Abstract and Company’s General Business Profile |
1. | Registration Details | |||||||||||||
Registration No. | 0 | 1 | 2 | 4 | 7 | 7 | 3 | State Code | 1 | 1 |
Balance Sheet Date | 3 | 1 | 0 | 3 | 2 | 0 | 0 | 3 | |||||
Date | Month | Year |
2. |
Capital Raised during the Year | ||||||||||||||||||
(Amount in Rupees) | |||||||||||||||||||
Public Issue | Bonus Issue | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
Rights Issue | Private Placement | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
3. | Position of Mobilisation and Deployment of Funds | ||||||||||||||||||
(Amount in Rupees) | |||||||||||||||||||
Total Liabilities | Total Assets | ||||||||||||||||||
1 | 2 | 3 | 5 | 7 | 2 | 9 | 9 | 2 | 1 | 2 | 3 | 5 | 7 | 2 | 9 | 9 | 2 | ||
Sources of Funds | |||||||||||||||||||
Paid-up Capital | Reserves and Surplus | ||||||||||||||||||
1 | 0 | 0 | 0 | 0 | 7 | 0 | 0 | 0 | 1 | 2 | 8 | 6 | 5 | 2 | 1 | 4 | |||
Secured Loans | Unsecured Loans | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
Application of Funds | |||||||||||||||||||
Net Fixed Assets | Investments | ||||||||||||||||||
N | I | L | 9 | 5 | 0 | 2 | 6 | 9 | 7 | ||||||||||
Net Current Assets | Miscellaneous Expenditure | ||||||||||||||||||
1 | 0 | 2 | 8 | 5 | 6 | 4 | 8 | 5 | 5 | 1 | 3 | 0 | 3 | 2 | |||||
Accumulated Losses | |||||||||||||||||||
N | I | L | |||||||||||||||||
4. | Performance
of Company (Amount in Rupees) |
||||||||||||||||||
Turnover (Gross Income) | Total Expenditure | ||||||||||||||||||
1 | 0 | 9 | 4 | 1 | 6 | 9 | 7 | 2 | 8 | 0 | 2 | 6 | 3 | 7 | |||||
Profit before Tax | Profit / Loss after Tax | ||||||||||||||||||
8 | 1 | 3 | 9 | 0 | 6 | 0 | 5 | 2 | 4 | 2 | 3 | 1 | 4 | ||||||
Earnings per Share in Rupees | Dividend Rate % | ||||||||||||||||||
0 | 0 | . | 5 | 2 | N | I | L | ||||||||||||
5. | Generic
Names of Principal Products/Services of the Company |
||||||||||||||||||
Investment Management Company | Item Code | ||||||||||||||||||
N | . | A |
For and on behalf of the Board | |||
KALPANA MORPARIA | CHANDRASHEKHAR LAL | ||
Chairperson | Director | ||
KRUNAL THAKKAR | |||
Company Secretary | |||
Mumbai, April 21, 2003 |
102
ICICI TRUSTEESHIP SERVICES LIMITED |
4TH ANNUAL REPORT AND ACCOUNTS 2002-2003
Directors | Auditors | Registered Office |
Sanjiv Kerkar, Chairman | C. C. Chokshi & Co. | ICICI Bank Towers |
Girish Mehta | Chartered Accountants | Bandra-Kurla Complex |
N.D. Shah | Mumbai - 400 051 | |
S. D. Israni | ||
|
directors report |
to the members |
Your Directors have pleasure in presenting the Fourth Annual Report of the Company with the audited statement of accounts for the year ended March 31, 2003.
FINANCIAL RESULTS
The summary of the financial results for the year under review is as follows :
(Rupees) | ||||
FY2003 | FY2002 | |||
Gross Income | 392,155 | 251,100 | ||
Profit Before Tax | 356,180 | 215,871 | ||
Provision for tax | 131,000 | 80,000 | ||
Profit After Tax | 225,180 | 135,871 | ||
Transfer to Reserves | 225,180 | 135,871 |
Your Directors do not recommend payment of dividend for the year ended March 31, 2003.
OPERATIONAL REVIEW
The main object of the Company is to act as trustee of mutual funds, offshore funds, pension funds, provident funds, venture capital funds, insurance funds, collective or private investment schemes, employee welfare or compensation schemes etc., and to devise various schemes for dealing with or in connection with aforesaid purposes including raising funds in any manner in India or abroad and to deploy funds so raised and earn reasonable returns on their investments and to act as trustees generally for any purpose and to acquire, hold, manage, dispose of all or any securities or money market instruments or property or assets and receivables or financial assets or any other assets or property.
The Company continues to act as the trustee of ICICI Securities Fund, ICICI Venture Capital Fund, ICICI Eco-net Fund, ICICI Emerging Sectors Trust, ICICI Property Trust, and certain beneficiaries of specified endowment policy ICICI Pru Save n Protect issued by ICICI Prudential Life Insurance Company Limited. The Company also continues to act as the trustee of a trust formed by RPG Cables Limited and erstwhile ICICI Limited for securitisation of the receivables from Bharat Sanchar Nigam Limited. In terms of the Scheme of Amalgamation of ICICI Limited, ICICI Capital Services Limited and ICICI Personal Financial Services Limited (Transferor Companies) with ICICI Bank Limited (Transferee Company), the Company is holding the shares pledged in favour of one or more Transferor Companies in trust for the benefit of persons for whose benefit the pledge had been created.
AUDIT COMMITTEE
In terms of the Circular No. MFD/CIR No.010/024/2000 dated January 17, 2000, SEBI requires the Trustee Companies of the mutual funds to constitute an audit committee to review the internal audit systems as also the reports of internal and statutory auditors. Since the Company is acting as the trustee of ICICI Securities Fund, a mutual fund registered with SEBI, the Company had constituted an Audit Committee of Directors (the Committee) comprising of N.D. Shah, Girish Mehta and Sanjiv Kerkar. Since no scheme has been launched under ICICI Securities Fund and the provisions of Section 292A of the Companies Act, 1956 are not applicable to the Company, the Board at its Meeting held on December 3, 2002 dissolved the Committee and decided that the powers of the Committee as applicable be exercised by the Board.
PUBLIC DEPOSITS
During the year under review, the Company has not accepted deposits under Section 58-A of the Companies Act, 1956.
DIRECTORS
V. Umakanth resigned as Director effective September 30, 2002. The Board placed on record its appreciation of the valuable services rendered by him during his tenure.
The Board has appointed S.D. Israni as an additional Director effective December 3, 2002. He would hold the office upto the date of the forthcoming Annual General Meeting as provided in the Articles of Association of the Company, but is eligible for appointment.
In terms of the provisions of the Articles of Association of the Company, Girish Mehta would retire at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment.
AUDITORS
M/s C. C. Chokshi & Co., Chartered Accountants, Mumbai, will retire as the statutory auditors of the Company at the ensuing Annual General Meeting. The Board at its Meeting held on April 21, 2003 has proposed their appointment as the auditors to audit the accounts of the Company for the financial year ending March 31, 2004. You are requested to consider their appointment.
FOREIGN EXCHANGE EARNINGS AND EXPENDITURE
There was no income or expenditure in foreign currency during the period under review.
PERSONNEL AND OTHER MATTERS
Since your Company does not have any employees, provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 are not applicable.
Since your Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors confirm that :
1. | in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; |
2. | the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period; |
3. | the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and |
4. | the Directors had prepared the annual accounts on a going concern basis. |
ACKNOWLEDGEMENTS
Your Company is grateful to the Securities and Exchange Board of India for its support and advice during the period under review.
The Company would also like to express its gratitude for the support and guidance received from ICICI Bank, the holding Company and also from other group companies.
For and on behalf of the Board
SANJIV KERKAR | |
Mumbai, April 21, 2003 | Chairman |
103
auditors report | ||
to the members of the ICICI Trusteeship Services Limited |
1. | We have audited the attached Balance Sheet of ICICI Trusteeship Services Limited, as at March 31, 2003 and also the Profit and Loss Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. |
2. | We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. |
3. | As required by the Manufacturing and Other Companies (Auditors Report) Order, 1988, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, we give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order. |
4. | Further to our comments in the Annexure referred to in paragraph 3 above, we report that : |
i) | We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; |
ii) | In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the books; |
iii) | The balance sheet and profit and loss account dealt with by this report are in agreement with the books of account; |
iv) | In our opinion, the balance sheet and profit and loss account comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; |
v) | On the basis of the written representations received from the directors as on March 31, 2003 and taken on record by the board of directors, we report that none of the directors is disqualified as on March 31, 2003 from being appointed as a director in terms of clause (g) of subsection (1) of Section 274 of the Companies Act, 1956; |
vi) |
In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: |
a) | in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2003; and | |
b) | in the case of the profit and loss account, of the profit for the year ended on that date. |
For
C. C. CHOKSHI & CO.
Chartered
Accountants
P.
R. BARPANDE
Partner
Mumbai, April 21, 2003
104
annexure to the auditors report | ||
(Referred to in paragraph 3 of our report of even date) |
1. | The Company did not have any fixed assets and hence items (i) and (ii) of clause (A) are not applicable to the Company. |
2. | The nature of companys activities is such that requirements of items (iii), (iv), (v), (vi), (x), (xi), (xii), (xiv), and (xvi) of Clause (A) of paragraph 4 of the Order are not applicable to the Company. |
3. | We are informed that there are no companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.The Company has not taken/granted any loans, secured or unsecured from/to companies under the same management as defined in sub-section (1B) of Section 370 of the Companies Act, 1956. Hence, items (vii) and (viii) of clause A of paragraph 4 of the Order are not applicable to the Company. |
4. | The Company has not given any loans or advances in the nature of loan to any party. |
5. | The Company has not accepted any deposits from public during the year. |
6. | As the Company has neither the paid up capital exceeding Rs. 25 lakhs at the commencement of the financial year nor did the average annual turnover for a period of three consecutive financial years immediately preceding the financial year concerned exceed Rs.2 crores, and hence the question of adequacy of the internal audit system does not arise. |
7. | The Company did not have any employee and hence the provisions of item (xvii) of clause A of paragraph 4 of the Order do not apply to the Company. |
8. | According to the information and explanations given to us, no undisputed amounts payable in respect of income-tax, wealth tax, sales tax, customs duty and excise duty were outstanding as on March 31, 2003, for a period of more than six months from the date they become payable. |
9. | According to the information and explanations given to us no personal expenses have been charged to Revenue Account. |
10. | The Company is not an Industrial company as defined under the Sick Industrial Companies (Special Provisions) Act, 1985. |
11. | The nature of service activities carried on by the Company does not require a system of recording receipts, issues, and consumption of materials and stores and allocation of materials consumed and labour to jobs. Further, the question of having the system of authorisation and internal control on issue of stores and allocation of stores and labour does not arise. |
For
C. C. CHOKSHI & CO.
Chartered
Accountants
P.
R. BARPANDE
Partner
Mumbai, April 21, 2003
105
balance sheet | ||
as at March 31, 2003 |
Schedule | Rupees | March 31, | ||||||
2002 | ||||||||
SOURCES OF FUNDS | ||||||||
Shareholders Funds : | ||||||||
Share Capital | 1 | 500,000 | 8,000 | |||||
Reserves and Surplus | 2 | 439,135 | 213,955 | |||||
|
|
|||||||
939,135 | 221,955 | |||||||
Corpus fund (Refer Note No.1) | 11,000 | 11,000 | ||||||
|
|
|||||||
Total | 950,135 | 232,955 | ||||||
|
|
|||||||
APPLICATION OF FUNDS | ||||||||
Investments | 3 | 200 | 200 | |||||
Current Assets, Loans and | ||||||||
Advances : | ||||||||
A. Current Assets | ||||||||
Cash and Bank Balances | 4 | 861,404 | 399,133 | |||||
Sundry Debtors (Unsecured | ||||||||
and considered good) | ||||||||
Debts outstanding for | ||||||||
a period exceeding | ||||||||
six months | | | ||||||
Other Debts | 48,856 | | ||||||
B. Loans and Advances | 5 | 294,822 | 164,000 | |||||
|
|
|||||||
1,205,082 | 563,133 | |||||||
|
|
|||||||
Less: Current Liabilities and | ||||||||
Provisions | ||||||||
Current Liabilities | 6 | 22,118 | 242,878 | |||||
Provisions | 7 | 262,087 | 131,087 | |||||
|
|
|||||||
284,205 | 373,965 | |||||||
|
|
|||||||
Net Current Assets | 920,877 | 189,168 | ||||||
Miscellaneous Expenditure | 8 | 29,058 | 43,587 | |||||
(to the extent not written off | ||||||||
or adjusted) | ||||||||
Total | 950,135 | 232,955 | ||||||
|
|
|||||||
Accounting Policies and | ||||||||
Notes to Accounts | 9 | |||||||
As per our attached Report of | For and on behalf of the Board |
even date | |
For C. C. CHOKSHI & CO. | SANJIV KERKAR |
Chartered Accountants | Chairman |
P. R. BARPANDE | N. D. SHAH |
Partner | Director |
Mumbai, April 21, 2003 | Mumbai, April 21, 2003 |
profit and loss account | ||
for the year ended March 31, 2003 |
Schedule | Rupees | March 31, | ||||
2002 | ||||||
INCOME | ||||||
Trusteeship fees (gross) | 390,100 | 251,100 | ||||
(TDS Rs. 15,738; Previous | ||||||
year Rs.12,750) | ||||||
Interest Income | 1,255 | | ||||
Income from Long term Investments: | ||||||
Dividend (gross) | 800 | | ||||
(TDS Rs. 84; Previous year NIL) | ||||||
392,155 | 251,100 | |||||
|
|
|||||
EXPENDITURE | ||||||
Auditors Remuneration (Refer Note | ||||||
No. 2 of Schedule 9) | 11,814 | 6,300 | ||||
Directors Fees | 5,000 | 9,000 | ||||
Profession Tax | 2,500 | 4,900 | ||||
ROC Filing Fees | 1,500 | 500 | ||||
Preliminary expenses written off | 14,529 | 14,529 | ||||
Other Expenditure | 632 | | ||||
|
|
|||||
Profit Before Tax | 356,180 | 215,871 | ||||
Provision for Taxation | 131,000 | 80,000 | ||||
|
|
|||||
Profit after tax | 225,180 | 135,871 | ||||
Balance brought forward from previous year | 213,955 | 78,084 | ||||
|
|
|||||
Balance carried to Balance Sheet | 439,135 | 213,955 | ||||
|
|
|||||
Profit after tax | 225,180 | 135,871 | ||||
Weighted Average Number of | ||||||
Equity Shares outstanding | 15,762 | 800 | ||||
Basic and Diluted Earning Per Share | 14.29 | 169.84 | ||||
(Nominal Value Rs. 10/- per share) | ||||||
Accounting Policies & | ||||||
Notes to Accounts | 9 | |||||
As per our attached Report of | For and on behalf of the Board |
even date | |
For C. C. CHOKSHI & CO. | SANJIV KERKAR |
Chartered Accountants | Chairman |
P. R. BARPANDE | N. D. SHAH |
Partner | Director |
Mumbai, April 21, 2003 | Mumbai, April 21, 2003 |
106
schedules | ||
forming part of the Balance Sheet as at March 31, 2003 |
Rupees | March 31, | |||
2002 | ||||
SCHEDULE 1 | ||||
SHARE CAPITAL | ||||
Authorised : | ||||
1,000,000 Equity Shares of Rs.10 each | 10,000,000 | 10,000,000 | ||
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10,000,000 | 10,000,000 | |||
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Issued, Subscribed & Paid up : | ||||
50,000 (Previous year 800) | 500,000 | 8,000 | ||
Equity Shares of Rs.10 each fully paid up | ||||
500,000 | 8,000 | |||
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All the above Equity Shares are held by ICICI | ||||
Bank Ltd. (the holding company) & its nominees. | ||||
SCHEDULE 2 | ||||
RESERVES & SURPLUS | ||||
Surplus in Profit and Loss Account | 439,135 | 213,955 | ||
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439,135 | 213,955 | |||
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SCHEDULE 3 | ||||
INVESTMENTS (at cost) | ||||
Long Term Investments (unquoted) | ||||
In equity shares (fully paid) | ||||
ICICI Venture Funds Management Co. Ltd. | ||||
20 equity shares of Rs. 10 each | 200 | 200 | ||
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200 | 200 | |||
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SCHEDULE 4 | |||||
CASH AND BANK BALANCES | |||||
Bank Balances with Scheduled | |||||
Banks (Refer Note No.1) | |||||
| in Current Accounts | 150,149 | 389,100 | ||
| in Savings Account | 10,439 | 10,033 | ||
| in Deposit account (including interest | ||||
accrued : Rs. 816 Previous year : Nil) | 700,816 | | |||
861,404 | 399,133 | ||||
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SCHEDULE 5 | ||||
LOANS AND ADVANCES | ||||
(Unsecured and considered good) | ||||
Advance Payment of Income Tax, etc. | 294,822 | 164,000 | ||
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294,822 | 164,000 | |||
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SCHEDULE 6 | |||||
CURRENT LIABILITIES | |||||
Sundry Creditors : | |||||
(i) | Total outstanding dues of Small Scale | ||||
Industrial Undertakings | | | |||
(ii) | Total outstanding dues of creditors other | ||||
than Small Scale Industrial Undertakings | 22,118 | 242,878 | |||
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22,118 | 242,878 | ||||
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SCHEDULE 7 | ||||
PROVISIONS | ||||
Provision for taxation | 262,087 | 131,087 | ||
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262,087 | 131,087 | |||
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SCHEDULE 8 | ||||
MISCELLANEOUS EXPENDITURE | ||||
(To the extent not written off or adjusted) | ||||
Preliminary Expenses | 43,587 | 58,116 | ||
Less : 1/5 written off for the year | 14,529 | 14,529 | ||
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29,058 | 43,587 | |||
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SCHEDULE 9
ACCOUNTING POLICIES AND NOTES ON ACCOUNTS SIGNIFICANT ACCOUNTING POLICIES :
1. | Basis
of preparation of financial statements The accompanying financial statements have been prepared under the historical cost convention in accordance with generally accepted accounting principles and the provisions of the Companies Act, 1956 and the applicable Accounting Standards issued by the Institute of Chartered Accountants of India. |
2. | Use
of Estimates The preparation of the financial statements in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known / materialise. |
3. | Revenue
Recognition Income from Trusteeship Fees is accounted / accrued on the basis of the understanding / agreements with the concerned parties. |
4. | Income
Taxes Tax expense represents the aggregate of the current tax and deferred tax. The deferred tax is computed in accordance with the requirements of the AS-22 Accounting for Taxes on Income issued by the Institute of Chartered Accountants of India. |
5. | Preliminary
Expenses Preliminary Expenses towards the incorporation of the Company are treated as miscellaneous expenditure and will be written off to the Profit and Loss Account over a period of 5 years from the year in which the Company commences operations. |
6. | Investments Investments classified as long-term investments are stated at cost. Provision is made to recognize a decline if any, other than temporary in the value of investments. |
7. | Contingent
Liabilities These, if any, are disclosed in the Notes to Accounts. Provision is made in the accounts in respect of those contingencies, which are likely to materialise into liabilities after the year-end till the finalisation of accounts and have material effect on the position stated in the Balance sheet. |
NOTES TO ACCOUNTS : | |
1. | The Company in the earlier years, in terms of the Indenture of Trust, received Rs. 1,000 as corpus fund from ICICI Prudential Life Insurance Company Limited and Rs. 10,000 from erstwhile ICICI Limited (ICICI), for setting up ICICI Securities Fund, which had been deposited in the bank account and is included under Schedule 4 Cash and Bank Balances. |
2. | Auditors remuneration | March 31, | March 31, | |||
2003 | 2002 | |||||
Rupees | Rupees | |||||
(i) | Statutory audit fees (including | |||||
service tax) | 10,500 | 6,300 | ||||
(ii) | Certification Fees | 1,050 | | |||
(iii) | Expenses | |||||
Reimbursed | 264 | | ||||
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11,814 | 6,300 | |||||
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3. | Current Liabilities include a sum of Rs. 4,927 (Previous year Rs. 2,31,645) payable to ICICI Bank Limited (holding company) towards reimbursement of expenses paid by ICICI Bank Limited on behalf of the Company. |
4. | Tax expense for the year is on the basis of current tax since there are no timing differences resulting into tax expense / tax saving on the deferred tax basis. |
5. | The amounts in the Balance Sheet and Profit and Loss Account are rounded off to the nearest Rupee. |
6. | Figures of the previous year have been regrouped / rearranged and reclassified, wherever necessary, to correspond with those of the current year. |
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Balance
Sheet Abstract and Company’s General Business Profile as
per Part IV, Schedule VI of the Companies Act, 1956. |
1. | Registration Details | |||||||||||||
Registration No. | 0 | 1 | 1 | 9 | 6 | 8 | 3 | State Code | 1 | 1 |
Balance Sheet Date | 3 | 1 | 0 | 3 | 2 | 0 | 0 | 3 | |||||
Date | Month | Year |
2. |
Capital Raised during the Year | ||||||||||||||||||
(Amount in Rupees) | |||||||||||||||||||
Public Issue | Bonus Issue | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
Rights Issue | Private Placement | ||||||||||||||||||
N | I | L | 4 | 9 | 2 | 0 | 0 | 0 | |||||||||||
3. | Position of Mobilisation and Deployment of Funds | ||||||||||||||||||
(Amount in Rupees) | |||||||||||||||||||
Total Liabilities | Total Assets | ||||||||||||||||||
1 | 2 | 3 | 4 | 3 | 4 | 0 | 1 | 2 | 3 | 4 | 3 | 4 | 0 | ||||||
Sources of Funds | |||||||||||||||||||
Paid-up Capital | Reserves and Surplus | ||||||||||||||||||
5 | 0 | 0 | 0 | 0 | 0 | 4 | 3 | 9 | 1 | 3 | 5 | ||||||||
Secured Loans | Unsecured Loans | ||||||||||||||||||
N | I | L | N | I | L | ||||||||||||||
Application of Funds | |||||||||||||||||||
Net Fixed Assets | Investments | ||||||||||||||||||
N | I | L | 2 | 0 | 0 | ||||||||||||||
Net Current Assets | Miscellaneous Expenditure | ||||||||||||||||||
9 | 2 | 0 | 8 | 7 | 7 | 2 | 9 | 0 | 5 | 8 | |||||||||
Accumulated Losses | |||||||||||||||||||
N | I | L | |||||||||||||||||
4. | Performance
of Company (Amount in Rupees) |
||||||||||||||||||
Turnover (Gross Income) | Total Expenditure | ||||||||||||||||||
3 | 9 | 2 | 1 | 5 | 5 | 3 | 5 | 9 | 7 | 5 | |||||||||
Profit before Tax | Profit after Tax | ||||||||||||||||||
3 | 5 | 6 | 1 | 8 | 0 | 2 | 2 | 5 | 1 | 8 | 0 | ||||||||
Earning per Share in Rupees | Dividend Rate % | ||||||||||||||||||
1 | 4 | . | 2 | 9 | N | I | L | ||||||||||||
5. | Generic
Names of Principal Products/Services of the Company |
||||||||||||||||||
Trustees for Funds | Item Code | ||||||||||||||||||
N | . | A |
Signature to Schedules 1 to 9 | For and on behalf of the Board |
As per our attached Report of even date | |
For C. C. CHOKSHI & CO. | SANJIV KERKAR |
Chartered Accountants | Chairman |
P. R. BARPANDE | N. D. SHAH |
Partner | Director |
Mumbai, April 21, 2003 | Mumbai, April 21, 2003 |
108