Item 2
ICICI Limited
Unaudited Consolidated Financial Statements
Prepared in accordance with US GAAP
Periods ended September 30, 2000 and September 30, 2001
ICICI Limited
Unaudited Consolidated Financial Statements
Periods ended September 30, 2000 and September 30, 2001
Contents Page
Unaudited consolidated balance sheets 1
Unaudited consolidated statements of income 2
Notes to consolidated financial statements 4
ICICI Limited
USGAAP Consolidated balance sheets
(Rs in million)
--------------------------------------------------------------------------------------------------------------
As at September 30, September 30, March 31,
2000 2001 2001
----------------------------------------------------------- ----------------- ------------------ -------------
Unaudited Unaudited Audited
----------------------------------------------------------- ----------------- ------------------ -------------
Assets
Cash and cash equivalents.............................. 23,775 15,300 30,987
Trading account assets................................. 21,152 22,150 18,878
Securities
- Available for sale................................... 7,162 18,959 7,646
- Held to maturity..................................... 1,076 - 1,506
- Non-readily marketable equity securities............. 6,596 8,065 6,394
- Venture capital investments.......................... 747 4,333 4,569
Investment in affiliate................................ 7,648 8,293 7,899
Loans, net of allowance for loan losses, security 555,962 617,926 602,023
deposits and unearned income...........................
Customers' liability on acceptances.................... 5,809 2,765 2,715
Property and equipment, net............................ 11,670 12,191 12,039
Assets held for sale................................... - 1,377 841
Intangible assets, net................................. 467 1,559 1,827
Deferred tax assets.................................... - 4,692 4,587
Interest and fees receivable........................... 16,088 12,156 13,878
Other assets........................................... 27,171 26,117 24,656
----------------- ---------------- -------------
Total assets........................................... 685,323 755,883 740,445
================= ================ =============
Liabilities
Deposits
Interest-bearing deposits........................... 1,717 7,136 6,072
Non- interest- bearing deposits..................... - - -
Trading account liabilities............................ 14,945 18,534 12,483
Short-term borrowings.................................. 82,314 73,416 87,512
Bank acceptances outstanding........................... 5,809 2,765 2,715
Long -term debt........................................ 462,338 522,507 505,025
Other liabilities...................................... 30,992 40,352 36,908
Deferred credit, net................................... 1,513 - 1,310
Taxes and dividends payable............................ 8,226 11,808 10,498
Deferred tax liabilities............................... 3,085 828 806
Redeemable preferred stock............................. 667 735 698
----------------- ------------------ -------------
Total liabilities...................................... 611,606 678,081 664,027
----------------- ------------------ -------------
Minority interest...................................... 35 890 496
Stockholders' equity
Common stock at Rs. 10 par value: 1,600,000,000 shares
authorized as of September 30, 2000 and 2001; Issued and
outstanding 785,311,548 and 785,345,448 shares as of
September 30, 2000 and 2001, respectively.............. 7,845 7,848 7,848
Additional paid-in capital............................. 37,484 38,110 38,110
Retained earnings...................................... 31,976 34,447 34,196
Deferred stock compensation............................ (52) (17) (33)
Accumulated other comprehensive income................. (3,571) (3,476) (4,199)
----------------- ------------------ -------------
Total stockholders' equity............................. 73,682 76,912 75,922
----------------- ------------------ -------------
Total liabilities and stockholders' equity............. 685,323 755,883 740,445
----------------------------------------------------------- ================= ================== =============
See accompanying notes to the consolidated financial statements
ICICI Limited
USGAAP Consolidated statements of income
(Rs. In million)
--------------------------------------------------------------------------------------------------------------------------
For the period September 30, 2000 September 30, 2001 March 31,
2001
------------------------ ------------------------ -------------
Quarter Half year Quarter Half year Year ended
ended ended ended ended
------------------------ ------------------------ -------------
Unaudited Unaudited Audited
------------------------ ------------------------ -------------
Interest income
Interest and fees on loans.............................. 19,135 37,690 20,898 40,847 76,595
Interest and dividends on securities.................... 46 316 561 695 560
Interest and dividends on trading account assets........ 1,080 1,912 432 1,165 2,836
Interest on balances and deposits with banks............ 220 252 76 222 910
Other interest income................................... 19 94 28 61 585
---------- ------------- ---------- ------------- -------------
Total interest income................................... 20,500 40,264 21,995 42,990 81,486
---------- ------------- ---------- ------------- -------------
Interest expense
Interest on deposits.................................... 85 173 204 391 490
Interest on long-term debt.............................. 14,014 27,418 15,345 30,703 57,242
Interest on short-term borrowings....................... 2,422 4,478 2,665 4,843 8,780
Interest on trading account liabilities................. 467 829 266 576 1,445
Other interest expense.................................. 1 2 1 12 4
---------- ------------- ---------- ------------- -------------
Total interest expense.................................. 16,989 32,900 18,481 36,525 67,961
---------- ------------- ---------- ------------- -------------
Net interest income..................................... 3,511 7,364 3,514 6,465 13,525
---------- ------------- ---------- ------------- -------------
Provision for loan losses............................... 773 2,066 2,367 3,294 9,892
---------- ------------- ---------- ------------- -------------
Net interest income after provision for loan
losses.................................................. 2,738 5,298 1,147 3,171 3,633
---------- ------------- ---------- ------------- -------------
Non-interest income
Fees, commission and brokerage.......................... 1,637 2,875 1,856 3,645 5,317
Trading account revenue................................. (415) (292) 139 1,136 847
Securities transactions................................. (487) (895) (768) (1,418) (1,709)
Gain on sale of stock of subsidiaries/affiliates........ - - - 57 2,507
Foreign exchange income/(loss).......................... (100) 22 293 153 (657)
Software development and services....................... 235 235 340 771 701
Gain/(loss) on sale of property and equipment........... - - - 16 (31)
Rent.................................................... 57 115 70 146 413
Other non-interest income............................... 105 245 394 520 646
---------- ------------- ---------- ------------- -------------
Total non-interest income............................... 1,032 2,305 2,324 5,026 8,034
---------- ------------- ---------- ------------- -------------
Non-interest expense
Salaries and employee benefits.......................... 284 762 654 1,439 1,940
General and administrative expenses..................... 976 1,814 1,058 1,963 3,609
Amortization of intangible assets....................... 61 108 - - 259
---------- ------------- ---------- ------------- -------------
Total non-interest expense.............................. 1,321 2,684 1,712 3,402 5,808
---------- ------------- ---------- ------------- -------------
Equity in earning/(loss) of affiliates.................. 131 409 277 552 856
Minority interest....................................... - - 6 33 34
---------- ------------- ---------- ------------- -------------
Income before income taxes.............................. 2,580 5,328 2,042 5,380 6,749
---------- ------------- ---------- ------------- -------------
Income tax expense...................................... 390 827 430 1,261 119
---------- ------------- ---------- ------------- -------------
Income before extraordinary items and cumulative effect
of accounting change.................................... 2,190 4,501 1,612 4,119 6,630
---------- ------------- ---------- ------------- -------------
Extraordinary gain, net of tax.......................... - - -
Cumulative effect accounting principle, net of tax...... - - (373) 892 -
---------- ------------- ---------- ------------- -------------
Net income.............................................. 2,190 4,501 1,239 5,011 6,630
---------------------------------------------------------- ---------- ------------- ---------- ------------- -------------
ICICI Limited
USGAAP Consolidated statements of income
Earnings per share (Rs.)
---------------------------------------------------------------------------
September 30, 2000 September 30, 2001 March 31, 2001
--------------------------- --------------------------- -------------------
Quarter Half year Quarter Half year Year ended
ended ended ended ended
------------- ------------- ------------ -------------- -------------------
Reported Net Income..................... 2,190 4,501 1,239 5,011 6,630
Add: Goodwill amortization.............. 61 108 - - 259
------------- ------------- ------------ -------------- -------------------
Adjusted net income..................... 2,251 4,609 1,239 5,011 6,889
------------- ------------- ------------ -------------- -------------------
Earnings per equity share (Rs.)
Basic
Reported net income..................... 2.79 5.73 1.58 6.38 8.44
Goodwill amortization................... 0.08 0.14 - - 0.33
Adjusted net income..................... 2.87 5.87 1.58 6.38 8.77
Diluted
Reported net income..................... 2.78 5.72 1.58 6.38 8.44
Goodwill amortization................... 0.08 0.14 - - 0.33
Adjusted net income..................... 2.86 5.86 1.58 6.38 8.77
Weighted average number of equity shares
used in computing earnings per equity share
(millions)
Basic.................................... 785 785 785 785 785
Diluted.................................. 788 787 785 785 785
See accompanying notes to the consolidated financial statements.
ICICI Limited
Notes to consolidated financial statements
for the periods ended September 30, 2000 and September 30, 2001
Basis of preparation
The accounting and reporting policies of ICICI 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 financial statements and the reported
income and expense for the reporting period. 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.
Impact of recently issued accounting standards
Statement of Financial Accounting Standards (SFAS) 133, Accounting for
Derivative Instruments and Hedging Activities, as amended by SFAS 138,
Accounting for Certain Derivative Instruments and Certain Hedging Activities,
is effective for ICICI from April 1, 2001. SFAS 133 requires that an entity
recognize all derivatives as either assets or liabilities measured at fair
value. The accounting for changes in the fair value of a derivative depends on
the use of the derivative. Derivatives that are not designated as part of a
hedging relationship must be adjusted to fair value through income. If the
derivative is a hedge, depending on the nature of the hedge, the effective
portion of the hedge's change in fair value is either (1) offset against the
change in fair value of the hedged asset, liability or firm commitment through
income or (2) held in equity until the hedged item is recognized in income. The
ineffective portion of a hedge's change in fair value is immediately recognized
in income. A number of the derivatives entered into by the Company do not
qualify as hedges under SFAS 133 and accordingly have been recorded at fair
value with the changes accounted for in earnings. The initial transition
adjustments required to adopt SFAS 133 resulted in no income statement impact
but resulted in the adjustment in the carrying values of assets and liabilities
to the extent of Rs. 706 million.
In July 2001, the FASB issued Statement No. 141, Business Combinations, and
Statement No. 142, Goodwill and Other Intangible Assets. Statement 141 requires
that the purchase method of accounting be used for all business combinations
initiated after June 30, 2001 as well as all purchase method business
combinations completed after June 30, 2001. Statement 141 also specifies
criteria intangible assets acquired in a purchase method business combination
must meet to be recognized and reported apart from goodwill, noting that any
purchase price allocable to an assembled workforce may not be accounted for
separately. Statement 142 requires that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with the provisions of Statement
142. Statement 142 also requires that intangible assets with definite useful
lives be amortized over their respective estimated useful lives to their
estimated residual values, and reviewed for impairment in accordance with SFAS
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of.
The Company is required to adopt the provisions of Statement 141 immediately,
except with regard to business combinations initiated prior to July 1, 2001.
The Company has opted to adopt the provisions of Statement 142 effective April
1, 2001.
Statement 141 requires that upon adoption of Statement 142, the Company
evaluate its existing intangible assets and goodwill that were acquired in a
prior purchase business combination, and to make any necessary
reclassifications in order to conform with the new criteria in Statement 141
for recognition apart from goodwill. Upon adoption of Statement 142, the
Company is required to reassess the useful lives and residual values of all
intangible assets acquired in purchase business combinations, and make any
necessary amortization period adjustments in the first interim period after
adoption. In addition, to the extent an intangible asset is identified as
having an indefinite useful life, the Company is required to test the
intangible asset for impairment in accordance with the provisions of Statement
142 in the first interim period. Any impairment loss will be measured as of the
date of adoption and recognized as the cumulative effect of a change in
accounting principle in the first interim period. Upon adoption, the Company
did not have any reclassification adjustment, amortization period adjustment or
impairment loss on intangible assets.
In connection with the transitional goodwill impairment evaluation, Statement
142 requires the Company to perform an assessment of whether there is an
indication that goodwill is impaired as of the date of adoption. To accomplish
this the Company has identified its reporting units and determined the carrying
value of each reporting unit by assigning the assets and liabilities, including
the existing goodwill and intangible assets, to those reporting units as of the
date of adoption. The Company has up to six months from the date of adoption to
determine the fair value of each reporting unit and compare it to the reporting
unit's carrying amount. To the extent a reporting unit's carrying amount
exceeds its fair value, an indication exists that the reporting unit's goodwill
may be impaired and the Company must perform the second step of the
transitional impairment test. In the second step, the Company must compare the
implied fair value of the reporting unit's goodwill, determined by allocating
the reporting unit's fair value to all of it assets (recognized and
unrecognized) and liabilities in a manner similar to a purchase price
allocation in accordance with Statement 141, to its carrying amount, both of
which would be measured as of the date of adoption. This second step is
required to be completed as soon as possible, but no later than the end of the
year of adoption. Any transitional impairment loss has to be recognized as the
cumulative effect of a change in accounting principle in the Company's
statement of earnings.
The Company has performed the transitional impairment tests for determination
of impairment of goodwill. Consequently, goodwill of Rs. 373 million has been
determined as impaired and has been written off as a cumulative effect of a
change in accounting principle.
Any unamortized negative goodwill existing at the date Statement 142 is adopted
must be written off as a cumulative effect of a change in accounting principle.
Upon adoption, the Company has written off unamortized negative goodwill of Rs
1,265 million as a cumulative effect of a change in accounting principle.
Merger of ICICI Limited with ICICI Bank Limited
The board of ICICI Limited at its meeting on October 25, 2001 decided to merge
ICICI Limited with ICICI Bank Limited. The merger will be subject to several
approvals including those of the Reserve Bank of India, shareholders and the
High Courts. The consummation date of the merger will be the later of March 31,
2002 and the date of RBI approval. The board of ICICI Bank Limited also
approved the merger.
October 25, 2001
END
Item 3
ICICI Limited
Performance Review - Half-year ended September 30, 2001:
26% increase in profit before tax
The Board of Directors of ICICI at its meeting held in Mumbai today, approved
the audited accounts of ICICI (NYSE: IC) for the half-year ended September 30,
2001 (H1-2002). The Board also approved the unaudited consolidated accounts
under Indian GAAP and considered the unaudited consolidated US GAAP financial
statements of ICICI for H1-2002. In order to facilitate comparison with earlier
years, the key highlights of the unconsolidated accounts of ICICI under Indian
GAAP are given below.
Results - Indian GAAP
The profit before tax increased 26% to Rs. 742 crore in H1-2002 from Rs. 590
crore in the half-year ended September 30, 2000 (H1-2001). Provision for
taxation increased to Rs. 134 crore (including Rs. 60 crore on account of
deferred tax provision) in H1-2002 from Rs. 49 crore in H1-2001, due to the
creation of deferred tax provision as per the accounting standard, which came
into effect in the current year. The profit after tax increased 12% to Rs. 608
crore in H1-2002 from Rs. 541 crore in H1-2001.
The profit before tax increased 29% to Rs. 356 crore in the quarter ended
September 30, 2001 (Q2-2002) from Rs. 277 crore in the quarter ended September
30, 2000 (Q2-2001). The profit after tax increased 11% to Rs. 282 crore in
Q2-2002 from Rs. 254 crore in Q2-2001.
Asset Quality
ICICI's net NPA ratio was 5.2% at September 30, 2001 and net NPAs outstanding
were Rs. 3,183 crore. ICICI has been able to restrict the level of NPAs due to
its focussed efforts for recovery from existing NPA cases and increased
monitoring of stress cases.
Rapid liberalisation and globalisation has changed the operating environment
for Indian companies and necessitated restructuring of operations and credit
facilities of some intrinsically viable companies. ICICI has focused on
proactive restructuring of such viable companies to maximise their economic
value, with appropriate contractual mechanisms to mitigate credit risk and
safeguard lenders' interests. The Reserve Bank of India's guidelines issued in
March 2001 provide a strong impetus to proactive and meaningful restructuring.
During H1-2002, ICICI restructured assets aggregating Rs. 2,865 crore.
Capital Adequacy
ICICI's capital adequacy at September 30, 2001 was 14.8% including Tier-1
capital adequacy of 9.5% and Tier-2 capital adequacy of 5.3% (including
revaluation reserve as per RBI guidelines).
Unaudited Consolidated Accounts under Indian GAAP
Profit after tax increased by 21% to Rs. 691 crore in H1-2002 from Rs. 572
crore in H1-2001. Profit after tax increased by 16% to Rs. 320 crore in Q2-2002
from Rs. 275 crore in Q2-2001.
Unaudited Consolidated Accounts under US GAAP
Income before tax and cumulative effect of change in accounting principle
increased 1% to Rs. 538 crore (US$ 112 million) in H1-2002 from Rs. 533 crore
(US$ 111 million) in H1-2001. Net income after cumulative effect of change in
accounting principle increased 11% to Rs. 501 crore (US$ 105 million) in
H1-2002 from Rs. 450 crore (US$ 94 million) in H1-2001.
Summary Profit and Loss Statement (Indian GAAP Unconsolidated)
Rs. crore
Q2 Q2 H1 H1 FY 2001
2001 2002 2001 2002
---- ---- ---- ---- ---------
Fund based income 2,018 2,164 4,018 4,371 8,211
Less: Interest and depreciation 1,725 1,840 3,350 3,676 6,912
charges ----- ----- ----- ----- -----
Net fund based income 293 324 668 695 1,299
Add: Fees and commissions 169 173 268 339 522
----- ----- ----- ----- -----
Net income from operations 462 497 936 1,034 1,821
Less: Operating expenses 83 82 167 160 337
----- ----- ----- ----- -----
Profit from operations 379 415 769 874 1,484
Less: Provisions and write-offs
for loans & debentures 99 81 214 191 608
----- ----- ----- ----- -----
Profit before income from
investments and other income 280 334 555 683 876
Add: Dividend income 10 49 61 95 108
Add: Net capital gain / (loss) (19) (31) (40) (44) 344
Add: Other income 6 4 14 8 62
----- ----- ----- ----- -----
Profit before accelerated
provisioning and tax 277 356 590 742 1,390
Profit before tax 277 356 590 742 577
Less: Provision for tax 23 74 1 49 134 1 40
----- ----- ----- ----- -----
Profit after tax 254 282 541 608 537
Less: Extraordinary items2 - (131) 2 - (131) -
Appropriated from - 131 - 131 -
capital reserves
Preference dividend 1 - 18 - 18
----- ----- ----- ----- -----
Profit to equity holders 253 282 523 608 519
Summary Balance Sheet (Indian GAAP Unconsolidated)
Rs. crore
Sep 30, Sep 30, Growth % Mar 31,
2000 2001 2001
------- ------- -------- ---------
Net loans and debentures 52,072 57,440 10.3 56,002
Other Investments 3,683 5,320 44.4 4,404
Current assets 7,081 5,723 (19.2) 7,583
Leased assets 4,267 3,795 11.1 4,069
Other fixed assets 984 1,809 83.8 1,042
Miscellaneous expenditure 332 284 (14.3) 314
------ ------ ------ ------
Total assets 68,419 74,371 8.7 73,414
Shareholders' equity and reserves 8,558 8,777 3 2.6 7,973
Of which: Equity capital 785 785 - 785
Preference capital 350 350 - 350
Borrowings 54,996 59,669 8.5 59,835
Current & other liabilities 4,515 5,575 23.5 5,256
------ ------ ------ ------
Total liabilities 68,419 74,371 8.7 73,414
Note:
1. Provision for taxation for H1-2002 includes deferred tax provision as per
the accounting standard, which came into effect in the current year.
2. On October 16, RBI issued clarifications on the guidelines for the
classification and valuation of investments. In compliance with the
clarification, ICICI has effected changes in investment classification and
the consequent impact on valuation. This has resulted in an additional
charge to the Revenue Account relating to the period upto March 31, 2001
amounting to Rs. 131 crore which is disclosed as an extraordinary item. As
per the accounting policy followed by ICICI in earlier years, realised
profit on sale of investments has been credited to the Revenue Account and
transferred from the Revenue Account to the Capital Reserve account before
arriving at the disposable profit. In accordance with its accounting
policy, ICICI has utilised this component of the Capital Reserve to
transfer to the Revenue Account an amount equivalent to the extraordinary
charge referred to above.
3. Shareholders' equity and reserves includes revaluation reserve of Rs. 716
crore.
4. The Board of ICICI Limited has approved the merger of ICICI Limited with
ICICI Bank Limited. The merger will be subject to various approvals,
including those of RBI, shareholders of ICICI and ICICI Bank and the High
Courts of Mumbai and Gujarat. The Appointed Date of the merger will be
March 31, 2002 or the date of final approval by RBI, whichever is later.
The Board of ICICI Bank has also approved the merger.
Except for the historical information contained herein, statements in this
release which contain words or phrases such as "will", "aim", "will likely
result", "believe", "expect", "will continue", "anticipate", "estimate",
"intend", "plan", "contemplate", "seek to", "future", "objective", "goal",
"project", "should", "will pursue" and similar expressions or variations of
such expressions may constitute "forward-looking statements". These
forward-looking statements involve a number of risks, uncertainties and other
factors that could cause actual results to differ materially from those
suggested by the forward-looking statements. These risks and uncertainties
include, but are not limited to our ability to successfully implement our
strategy, future levels of non-performing and restructured loans, our growth
and expansion, the adequacy of our allowance for credit losses, technological
changes, investment income, cash flow projections, our exposure to market risks
as well as other risks detailed in the reports filed by ICICI Limited with the
Securities and Exchange Commission of the United States. ICICI undertakes no
obligation to update forward-looking statements to reflect events or
circumstances after the date thereof.
For press queries please call Madhvendra Das at 91-22-653 6124 or email at
das@icici.com
-------------
For investor queries please call Rakesh Jha at 91-22-653 8902 or Sandeep
Guhagarkar at 91-22-653 6157 or email at ir@icici.com
------------
October 25, 2001
END