merger

1. 1

2. 2

3. Bank
The merger:
October25, 2001
Agenda forthe new millennium

4. 4
 The merger
 Transformation in the financial sector
 ICICI group today - a virtual universal bank
 Rationale formerger
 Mergerprocess
 Conclusion
 Summary of half yearly performance
 ICICI
 ICICI Bank

5. 5
 Amalgamation as defined underSection 2(1B) of the Income-tax Act, 1961 (‘the
Act’):
 All assets & liabilities of the amalgamating company (transferorcompany)
becomes the assets & liabilities of the amalgamated company (transferee
company)
 Consideration to shareholders of the transferorcompany by way of issue of
shares in the transferee company
 Issue of preference shares possible
 But, where the transferorcompany is a listed company, stock
exchanges could object
 Shareholders holding not less than 3/4th in value of the shares of the transferor
company should become shareholders of the transferee company

6. 6
Technology
… are bringing about a fundamental change in financial sector business
models

7. 7
Emergence of integrated
universal banks
Globalization
Technological
innovation
Shareholder
returns
…as evidencedbytheinternational precedents inuniversal banking

8. 8
… many international players have realized the benefits of
universal banking

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… all leading to the development of a more robust
financialsystem
 Economies of scale through volumes in
 Operating costs
 Technology deployment
 Economies of scope
 Large product suite
Cross-selling potential
 Optimization of Human capital
 Optimization of Financial capital

10. 10
ICICI has already achieved it’s major benefits by
enteringintoUniversalBanking.

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It is a Financial Supermarket which provide
all types of financial services.
 Retail Banking - Service to individual
 Wholesale Banking - Corporate sector
 Merchant Banking - Issue Market
 Investment Banking - Advisory Service
 Development Banking - Industrial sector

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ICICI group today - a virtual universal
bank
Retail Financial Services Corporate Financial ServicesInternet
• B2B
• Consumer
Finance Portals
• Web Trade
• Venture Capital
ICICI
ICICI Bank
ICICI Securities
ICICI Brokerage
ICICI Venture
ICICI Infotech
ICICI Lombard
ICICI
ICICI Bank
ICICI Capital
ICICI Prudential
ICICI Web Trade
ICICI PFS
ICICI Home
Technology Platforms
• Payment Gateway
• Customer Relationship
Management
• Financial Vertical
• Web Technologies
…basedonkeybuildingblocks present across thegroup

13. 13
Strong brand identity
Technology enabled service
Largest networkof ATMs in India
Highest number of Internet banking
registrations
Large product suite
Largest auto financier
Largest incremental issuerof cards
Credit cards, debit cards and ATMcards
 First banks in India to commence lead
generation forInsurance products

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 Numberof financial intermediaries
 Increasing competitive pressures
 Universal banking provides competitive advantages in
the current environment through
 Large product suite
 Diversified resource
 Economies of scale and scope
 Optimization of Human and Financial capitals
…providingastrongbusiness logic formergerof ICICIand
ICICIBank

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ICICIgr
Human Capital
Speed Capital
Brand Identity
Organizational Values
Knowledge Capital
Technology Capital
Thebuilding
blocks
supplemented
by
organizational
changes have
createdthe
right
combination
forachieving
leadership

16. 16
… having similar operating architecture, people and
processes. This merged entity is consequently well-
positioned to harness synergistic advantages and thereby
providebenefits to bothICICIandICICIBank
ICICI
•Large capital base
•Diversified and de-risked assets
•Strong brand
•Well established corporate
relationships
ICICI Bank
•Largest private sectorbank
•Strong retail franchise
•Technology leaderamong banks

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“Forward leap” in the hierarchy of Indian banks
A discontinuous jump in size and scale
Achieve size and scale of operations
Leverage ICICI’s capital and client base to increase
fee income
Higher profitability by leveraging on technology and
low cost structure
Offer a
complete product suite with immense cross-selling oppo
ICICI’s presence in retail finance, insurance,
investment banking and venture capital
Access to the ICICI group’s talent pool
Bank

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Improved ability to furtherdiversify asset portfolio
and business revenues
Lowerfunding costs
Ability to accept/offerchecking accounts
Availability of float money due to active participation in
the payments system
Diversified fund raising due to access to retail funds
Increased fee income opportunities
Ability to offerall banking products
Bank
Mergedentitywouldhavekeycompetitiveadvantages and
wouldbeamoreefficient providerof capital

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Competitive advantages of the
merged entity
…afterthe merger, the combinedentitywouldbe the second-largest bank in India,
withanasset baseof overRs. 1trillion

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 Valuation
 Independently appointed investment bankers
ICICI - JMMorgan Stanley
ICICI Bank- DSPMerrill Lynch
 Jointly appointed independent accountant to
recommend the final exchange ratio
Deloitte, Haskins & Sells appointed
Recommended one share of ICICI Bank for two shares
of ICICI, which was approved by the respective Boards

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 Transfer of ICICI’s shareholding in ICICI Bank to an
SPV priorto the merger
 Divestment in FY2003 by way of appropriate
placement
 Consolidation of retail operations
 Merger of ICICI PFS and ICICI Capital Services
with ICICI Bank

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 Mergereffective on
 March 31, 2002 or the date of RBI approval,
whicheveris later
 Shareholders’ approval
 High court approval
 Accounting for the merger in line with international
best practices
 Purchase method, mandatory under US GAAP, to
be adopted underIndian GAAPas well

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The mergerwill create a strongentity, whichwill
redefine banking in the highlycompetitive era of
globalizationandliberalization

24. Bank

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Q2
FY01
Q2
FY02
Inc. (%)
H1
FY01
H1
FY02
Inc. (%)
Profit before tax
2.77 3.56
28.5
5.90 7.42 25.6
Profit after tax
2.54 2.82
11.0
5.41 6.08 12.2
Total assets
684.19 743.71
8.7
684.19 743.71 8.7
Net NPA (%) 7.3 5.2 - 7.3 5.2 -
(Rs. in billion)
Profit to equityholders increased by16% in H1-FY02(net of preference
dividendpayout)

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H1(1)
FY01
H1(1)
FY02
EPS (Rs.) 13.6 15.5
Return on assets (%) 1.8 1.8
Return on net worth (%) 13.5 14.7
Overheads / Net income from
operations(3)
(%) 18.5 14.2
Overheads / Average net assets (%) 0.6 0.5

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H1
FY01
H1
FY02
Net interest income (after
provision for credit losses) 1505.0 2152.0
Non-interest revenue 367.0 2231.0
Non-interest expense 1222.0 2792.0
Income before tax 650.0 1591.0
Tax 43.0 456.0
Net income 607.0 1135.0
(Rs. in million)

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H1
FY01
H1
FY02
Profit after tax of ICICI
5.41 6.08
ICICI’s share of income from subsidiaries/affiliates
0.67 1.21
Dividend elimination
(0.36) (0.38)
Consolidated profit
5.72 6.91
21% increaseinIndianGAAPconsolidatedprofits
(Rs. in Billion)

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H1
FY01
H1
FY02
Income before tax
5.33 5.38
Net Income, after cumulative effect of
accounting change
4.50 5.01(1)
Total stockholder’s equity 73.68 76.91
Total assets 685.32 755.88
(Rs. in Billion)

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Q2
FY01
Q2
FY02
Inc.
(%)
H1
FY01
H1
FY02
Inc.
(%)
Operating
profit
585.0 970.0 66.0 1204.0 2356.0 96.0
Net profit 301.0 662.0 120.0 702.0 1314.0 87.0
Deposits 97283.0 175153.0 80.0 97283.0 175153.0 80.0
Customer
assets
63242.0 114092.0 80.0 63242.0 114092.0 80.0
Net NPA 845.0 1612.0 91.0 845.0 1612.0 91.0
(Rs. in million)

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H1
FY01
H1
FY02
EPS (Rs)(1)
7.13 11.93
Return on assets (%)(1)
1.29 1.37
Return on net worth ( %)(1)
11.85 19.07
Market share in deposits (%) 0.97 1.52
Market share in customer assets (%) 1.26 2.01
Cost to income (%) 51.2 54.1
Capital adequacy (%) 17.59 13.00

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 ICICI Limited and ICICI Bank expect to make available a copy of
Amalgamation and an Information Statement to shareholders and
investors.
 Shareholders & investor are requested to read offer document
carefully.

33. 33
The statement of ICICI Ltd and ICICI bank which was a forward-looking
statements and it is based on the current beliefs and expectations but actual
result may differfrom the forward-looking statements because it contain various
riskand uncertainties are as follows.
 The risk of failure to obtain government and other approvals of the merger as
perplanned.
 The risk of failure of the High Courts of Mumbai and Gujarat to approve the
Scheme of Amalgamation
 The riskof business which may not be integrated as smooth as planned.
 Merger of ICICI Ltd and ICICI bank making it more difficult to maintain
relationships with clients, employees and suppliers.
 The risk of new and changing regulation and unfavorable political support or
otherdevelopments in Indian and international markets.

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 Merger of ICICI Ltd and ICICI bank making it more
difficult to maintain relationships with clients,
employees and suppliers.
 The risk of new and changing regulation and
unfavorable political support or other developments in
Indian and international markets.
Apart from all above risk merger of ICICI Ltd and
ICICI bank has achieved there goal as per the planned
and today they are market leaderin financial sector.

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