ICICI Bank 2003 Annual Report Download - page 123

F59
notes to the consolidated financial statements
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 acquirer’s 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 Company’s 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 Company’s 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.