ICICI Bank 2006 Annual Report Download - page 132

F73
b) Business combinations
The differences arising due to business combinations are primarily on account of:
i) Determination of the accounting acquirer.
ii) Accounting of intangible assets and goodwill.
Under US GAAP, the amalgamation between ICICI Bank Limited and ICICI Limited was accounted for as a
reverse acquisition in fiscal 2003. This means that ICICI Limited was recognised as the accounting acquirer
in the amalgamation, although ICICI Bank was the legal acquirer. On the acquisition date, ICICI held a 46%
ownership interest in ICICI Bank. Accordingly, the acquisition of the balance 54% ownership interest has
been accounted for as a step-acquisition. Under Indian GAAP, ICICI Bank Limited was recognised as the
legal and the accounting acquirer and the assets and liabilities of ICICI Limited were incorporated in the
books of ICICI Bank Limited in accordance with the purchase method of accounting. Further under US
GAAP the amalgamation resulted in goodwill and intangible assets while the amalgamation under Indian
GAAP resulted in a capital reserve (negative goodwill) which was accounted for as Revenue and Other
Reserves according to the scheme of amalgamation.
Further for certain acquisitions made by the Company no goodwill has been accounted for under Indian
GAAP primarily due to accounting for the amalgamation by the pooling of interests method. However under
US GAAP goodwill has been accounted for in accordance with SFAS No. 141 on “Business Combinations”
and SFAS No. 142 on “Goodwill and Other Intangible Assets”.
Under US GAAP subsequent to the adoption of SFAS No. 142, the Company does not amortise goodwill
and intangibles with infinite life but instead tests the same for impairment at least annually. The annual
impairment test under SFAS No. 142 does not indicate an impairment loss for fiscal 2004, fiscal 2005 and
fiscal 2006.
Under US GAAP intangible assets are amortised over their estimated useful lives in proportion to the economic
benefits consumed in each period.
The estimated useful life of intangible assets is as follows:
No. of years
Customer-related intangibles ................................................ 3-10
Other intangibles................................................................... 5
In fiscal 2006, the Company recorded goodwill under US GAAP of Rs. 1,196.8 million in relation to the
acquisitions of software, business process outsourcing and asset management companies in India and
the United States for an aggregate cash consideration of Rs. 1,480.1 million. The revenue and total assets
of the acquired companies are immaterial to the consolidated results of operations and financial position
of the Company. The Company has also entered into a contract with some of the companies acquired, to
pay additional amounts if certain criteria are met.
In fiscal 2005, the Company recorded goodwill under US GAAP of Rs. 2,004.0 million in relation to the
acquisitions of business process outsourcing and research companies in India and United States for an
aggregate cash consideration of Rs. 2,139.6 million. The revenue and total assets of the acquired companies
are immaterial to the consolidated results of operations and financial position of the Company. The Company
has also entered into a contract with some of the companies acquired to pay additional amounts if, certain
criteria are met. Further in one of the acquisitions, the Company has the option to acquire a majority stake
in property companies owned by the seller.
reconciliation to US GAAP and related notes
for the year ended March 31, 2006