ICICI Bank 2007 Annual Report Download - page 95

F25
Particulars Year ended March 31, 2007
Pension Gratuity
Actuarial (gain)/loss ..................................................................................... (28.2) (63.6)
Liabilities extinguished on settlement ........................................................ (2.3) —
Benefits paid ............................................................................................... (63.3) (91.8)
Obligations at March 31, 2007 .................................................................... 1,029.4 1,142.1
Plan assets at March 31, 2007, at fair value
Opening plans assets, at fair value ............................................................. 1,079.5 785.3
Expected return on plan assets .................................................................. 78.9 62.5
Actuarial gain/(loss) ..................................................................................... (110.1) (18.0)
Assets distributed on settlement ............................................................... (2.3) —
Contributions ............................................................................................... 5.8 153.7
Benefits paid ............................................................................................... (63.3) (91.8)
Plan assets at March 31, 2007, at fair value ............................................... 988.5 891.7
Fair value of plan assets at the end of the year .......................................... 988.5 891.7
Present value of the defined benefit obligations at the end of the year .... 1,029.4 1,142.1
Asset/(liability) at March 31, 2007 ............................................................... (40.9) (250.4)
Cost for the year ended March 31, 2007
Service cost ................................................................................................. 6.7 221.0
Interest cost ................................................................................................ 78.0 75.5
Expected return on plan assets .................................................................. (78.9) (62.5)
Actuarial (gain)/loss ..................................................................................... 81.9 (45.6)
Net cost ..................................................................................................... 87.7 188.4
Investment details of plan assets
Majority of the plan assets are invested in Government securities and corporate bonds in case of pension plan and insurer
managed funds and special deposit schemes in case of gratuity plan.
Assumptions
Interest rate ............................................................................................. 8.35% 8.35%
Salary escalation rate .................................................................................. 7.00% 7.00%
Estimated rate of return on plan assets ..................................................... 7.50% 7.50%
The estimates of future salary increases, considered in actuarial valuation, take into consideration inflation, seniority,
promotion and other relevant factors.
11. Employee Stock Option Scheme (“ESOS”)
In terms of the ESOS, as amended, 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 on the date(s) of the grant of options.
In terms of the Scheme, 13,187,783 options (March 31, 2006: 17,362,584 options) granted to eligible employees were
outstanding at March 31, 2007.
As per the scheme, the exercise price of ICICI Bank’s options is the last closing price on the stock exchange which recorded
highest trading volume preceding the date of grant of options. Hence, there is no compensation cost in year ended
March 31, 2007 based on intrinsic value of options. However, if ICICI Bank had used the fair value of options based on the
Black-Scholes model, compensation cost in year ended March 31, 2007 would have been higher by Rs. 827.4 million and
proforma profit after tax would have been Rs. 30,274.8 million. On a proforma basis, ICICI Bank’s basic and diluted earnings
per share would have been Rs. 33.91 and Rs. 33.72 respectively. The key assumptions used to estimate the fair value of
options are given below.
Risk-free interest rate .................................................................................. 5.12% – 8.22%
Expected life ............................................................................................... 3 – 6 years
Expected Volatility ....................................................................................... 36.34% – 41.03%
Expected dividend yield .............................................................................. 1.44% – 4.06%
A summary of the status of the Bank’s stock option plan is given below.
forming part of the Accounts (Contd.)
schedules