ICICI Bank 2008 Annual Report Download - page 143

F69
SCHEDULE 19
Notes forming part of the accounts
The following additional disclosures have been made taking into account the requirements of accounting standards and RBI
guidelines in this regard.
1. Merger of the The Sangli Bank Limited
The Sangli Bank Limited (Sangli Bank), a banking company incorporated under the Companies Act, 1956 and licensed by
RBI under the Banking Regulation Act, 1949 was amalgamated with ICICI Bank with effect from April 19, 2007 in terms
of the Scheme of Amalgamation (the Scheme) approved by the Reserve Bank of India vide its order DBOD No. PSBD
10268/16.01.128/2006-07 dated April 18, 2007 under Section 44A (4) of the Banking Regulation Act, 1949. The consideration
for the amalgamation was 100 equity shares of ICICI Bank of the face value Rs. 10 each fully paid-up for every 925
equity shares of Rs. 10 each of Sangli Bank. Accordingly on May 28, 2007, ICICI Bank allotted 3,455,008 equity shares of
Rs. 10 each to the shareholders of Sangli Bank.
As per the Scheme, the entire undertaking of Sangli Bank including all its assets and liabilities stood transferred/deemed
to be transferred to and vest in the Bank.
The amalgamation has been accounted as per the scheme in accordance with the purchase method of accounting as per
Accounting Standard 14 (AS-14) “Accounting for Amalgamation” issued by the Institute of Chartered Accountants of India.
Accordingly the assets and liabilities of Sangli Bank have been accounted at the values at which they were appearing in the
books of Sangli Bank as on April 18, 2007 and provisions were made for the difference between the book values appearing
in the books of Sangli Bank and the fair value as determined by ICICI Bank.
In the books of ICICI Bank, an “Amalgamation Expenses Provision Account” was credited by an amount determined for the
expenses and costs of the Scheme arising as a direct consequence on account of any changes in the business or operation
of Sangli Bank proposed or considered necessary by the Board of Directors of ICICI Bank (including but not limited to
rationalisation, upgradation and enhancement of human resources and expenses relating to modifying signage, modifying
stationery, branding, changing systems and network, communication including media costs, impairments of technology
and fixed assets, conducting general meetings, payments of listing fees and other statutory and regulatory charges, travel
in relation to the consolidation contemplated in the Scheme, valuation, due diligence, investment banking expenses and
charges relating to preparation of the Scheme, consultations in relation to the consolidation contemplated in the Scheme
and training), and other extraordinary expenses on integration and consolidation under the Scheme, to be incurred by the
Bank and the balance in such account has been debited to the securities premium account.
Accordingly, the excess of the paid-up value of the shares issued over the fair value of the net assets acquired (including
reserves) of Rs. 3,259.5 million and amalgamation expenses of Rs. 222.7 million has been netted off from the securities
premium account. The computation of this amount is detailed in the table below:
Rupees in million
Particulars Amount Amount
3,455,008 equity shares of face value of Rs. 10 each .................................. 34.6
Less: Net assets of Sangli Bank at April 18, 2007 .................................... (2,500.7)
Fair value adjustments .................................................................... (517.7)
Reserves taken over on amalgamation ........................................... (206.5) (3,224.9)
Excess of the paid-up value of the shares issued
over the fair value of the net assets acquired .............................................. (3,259.5)
Amalgamation expenses............................................................................... (222.7)
As per Accounting Standard – 14 (AS-14) on Accounting for Amalgamations issued by the Institute of Chartered Accountants
of India, under the ‘purchase method’ of accounting for amalgamation, the identity of reserves of the amalgamating entity is
not required to be preserved in the books of ICICI Bank. However, the balance in Statutory Reserve Account of Sangli Bank
at April 18, 2007 has been added to the Statutory Reserves of ICICI Bank. As a result, the balances in Statutory Reserve is
higher to the extent of Rs. 206.5 million and the excess of the paid-up value of the share issued over the fair value of the
net assets acquired is lower to that extent.
2. Equity issue of ICICI Bank Limited
The Bank made a follow on public offering of equity shares (including green shoe option) and American Depository Share’s
(“ADSs”) vide its prospectus dated June 26, 2007 and June 23, 2007 respectively aggregating to Rs. 199,673.5 million. The
expenses of the issue amounting to Rs. 1,846.6 million have been written-off against securities premium account as per
the object of the issue. The details of the equity issue and ADSs are given in the table below.
forming part of the Consolidated Accounts (Contd.)
schedules
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