MERGERS AND ACQUISITIONS

[Case Study]

Assignment on Strategic Management II

Submitted by:

Abhishek Maurya (01) Santosh Kumar ( !) Ka"i# $e% &i'ari ((0)

M)A *+,I+

th

Sem-

IMS. /0I12+SI&3 45 6/CK047

Mergers And Acquisitions

INTRODUCTION We have been learning about the companies coming together to from another company and companies taking over the existing companies to expand their business. With recession taking toll of many Indian businesses and the feeling of insecurity surging over our businessmen, it is not surprising when we hear about the immense numbers of corporate restructurings taking place, especially in the last couple of years. Several companies have been taken over and several have undergone internal restructuring, whereas certain companies in the same field of business have found it beneficial to merge together into one company. In this context, it would be essential for us to understand what corporate restructuring and mergers and acquisitions are all about. All our daily newspapers are filled with cases of mergers, acquisitions, spin offs, tender offers, ! other forms of corporate restructuring. "hus important issues both for business decision and public policy formulation have been raised. #o firm is regarded safe from a takeover possibility. $n the more positive side %ergers ! Acquisition&s may be critical for the healthy expansion and growth of the firm. Successful entry into new product and geographical markets may require %ergers ! Acquisition&s at some stage in the firm's development. Successful competition in international markets may depend on capabilities obtained in a timely and efficient fashion through %ergers ! Acquisition's. %any have argued that mergers increase value and efficiency and move resources to their highest and best uses, thereby increasing shareholder value. .

Mergers And Acquisitions

"o opt for a merger or not is a complex affair, especially in terms of the technicalities involved. We have discussed almost all factors that the management may have to look into (efore going for merger. )onsiderable amount of brainstorming would be required by the managements to reach a conclusion. *.g. A due diligence report would clearly identify the status of the company in respect of the financial position along with the net worth and pending legal matters and details about various contingent liabilities. +ecision has to be taken after having discussed the pros ! cons of the proposed merger ! the impact of the same on the business, administrative costs benefits, addition to shareholders' value, tax implications including stamp duty and last but not the least also on the employees of the "ransferor or "ransferee )ompany. WHAT IS MERGER? %erger is defined as combination of two or more companies into a single company where one survives and the others lose their corporate existence. "he survivor acquires all the assets as well as liabilities of the merged company or companies. ,enerally, the surviving company is the buyer, which retains its identity, and the extinguished company is the seller. %erger is also defined as amalgamation. %erger is the fusion of two or more existing companies. All assets, liabilities and the stock of one company stand transferred to "ransferee )ompany in consideration of payment in the form of *quity shares in the transferee company,
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Mergers And Acquisitions

+ebentures in the transferee company, )ash, or A mix of the above modes. WHAT IS ACQUISITION? Acquisition in general sense is acquiring the ownership in the property. In the context of business combinations, an acquisition is the purchase by one company of a controlling interest in the share capital of another existing company. Methods of Acquisition: An acquisition may be affected by a. Agreement with the persons holding ma/ority interest in the company management like members of the board or ma/or shareholders commanding ma/ority of voting power0 b. 1urchase of shares in open market0 c. "o make takeover offer to the general body of shareholders0 d. 1urchase of new shares by private treaty0 e. Acquisition of share capital through the following forms of considerations vi2. %eans of cash, issuance of loan capital, or insurance of share capital.

Ta eo!e": A 3takeover& is acquisition and both the terms are used interchangeably. "akeover differs from merger in approach to business combinations i.e. "he process of takeover, transaction involved in takeover, determination of share exchange or cash
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Mergers And Acquisitions

price and the fulfillment of goals of combination all are different in takeovers than in mergers. 4or example, process of takeover is unilateral and the offeror company decides about the maximum price. "ime taken in completion of transaction is less in takeover than in mergers, top management of the offeree company being more co operative. De#$e"%e" o" co"&o"ate s&'its o" di!ision: +e merger or split or divisions of a company are the synonymous terms signifying a movement in the company.

(u"&ose of Me"%e"s ) Acquisitions "he purpose for an offeror company for acquiring another company shall be reflected in the corporate ob/ectives. It has to decide the specific ob/ectives to be achieved through acquisition. "he basic purpose of merger or business combination is to achieve faster growth of the corporate business. 4aster growth may be had through product improvement and competitive position. $ther possible purposes for acquisition are short listed below*+, ("ocu"e$ent of su&&'ies: 5. "o safeguard the source of supplies of raw materials or intermediary product0 6. "o obtain economies of purchase in the form of discount, savings in transportation costs, overhead costs in buying department, etc.0 7. "o share the benefits of suppliers economies by standardi2ing the materials.
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Mergers And Acquisitions

*-, Re!a$&in% &"oduction faci'ities: 5. "o achieve economies of scale by amalgamating production facilities through more intensive utili2ation of plant and resources0 6. "o standardi2e product specifications, improvement of quality of product, expanding 7. %arket and aiming at consumers satisfaction through strengthening after sale Services0 8. "o obtain improved production technology and know how from the offered company 9. "o reduce cost, improve quality and produce competitive products to retain and Improve market share.

*., Ma" et e/&ansion and st"ate%0: 5. "o eliminate competition and protect existing market0 6. "o obtain a new market outlets in possession of the offeree0 7. "o obtain new product for diversification or substitution of existing products and to enhance the product range0 8. Strengthening retain outlets and sale the goods to rationali2e distribution0 9. "o reduce advertising cost and improve public image of the offeree company0 :. Strategic control of patents and copyrights. *1, 2inancia' st"en%th:
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Mergers And Acquisitions

5. "o improve liquidity and have direct access to cash resource0 6. "o dispose of surplus and outdated assets for cash out of combined enterprise0 7. "o enhance gearing capacity, borrow on better strength and the greater assets backing0 8. "o avail tax benefits0 9. "o improve *1S ;*arning 1er Share.. *3, Gene"a' %ains: 5. "o improve its own image and attract superior managerial talents to manage its affairs0 6. "o offer better satisfaction to consumers or users of the product. *4, O5n de!e'o&$enta' &'ans: "he purpose of acquisition is backed by the offeror company&s own developmental plans. A company thinks in terms of acquiring the other company only when it has arrived at its own development plan to expand its operation having examined its own internal strength where it might not have any problem of taxation, accounting, valuation, etc. (ut might feel resource constraints with limitations of funds and lack of skill managerial personnel&s. It has to aim at suitable combination where it could have opportunities to supplement its funds by issuance of securities, secure additional financial facilities, eliminate competition and strengthen its market position. *6, St"ate%ic &u"&ose:

Mergers And Acquisitions

"he Acquirer )ompany view the merger to achieve strategic ob/ectives through alternative type of combinations which may be hori2ontal, vertical, product expansion, market extensional or other specified unrelated ob/ectives depending upon the corporate strategies. "hus, various types of combinations distinct with each other in nature are adopted to pursue this ob/ective like vertical or hori2ontal combination. *7, Co"&o"ate f"iend'iness: Although it is rare but it is true that business houses exhibit degrees of cooperative spirit despite competitiveness in providing rescues to each other from hostile takeovers and cultivate situations of collaborations sharing goodwill of each other to achieve performance heights through business combinations. "he combining corporate aim at circular combinations by pursuing this ob/ective.

*8, Desi"ed 'e!e' of inte%"ation: %ergers and acquisition are pursued to obtain the desired level of integration between the two combining business houses. Such integration could be operational or financial. "his gives birth to conglomerate combinations. "he purpose and the requirements of the offer or company go a long way in selecting a suitable partner for merger or acquisition in business combinations.

Mergers And Acquisitions

T0&es of Me"%e"s
%erger or acquisition depends upon the purpose of the offer or company it wants to achieve. (ased on the offerors& ob/ectives profile, combinations could be vertical, hori2ontal, circular and conglomeratic as precisely described below with reference to the purpose in view of the offer or company. *A, 9e"tica' co$:ination: A company would like to takeover another company or seek its merger with that company to expand espousing backward integration to assimilate the resources of supply and forward integration towards market outlets. "he acquiring company through merger of another unit attempts on reduction of inventories of raw material and finished goods, implements its production plans as per the ob/ectives and economi2es on working capital investments. In other words, in vertical combinations, the merging undertaking would be either a supplier or a buyer using its product as intermediary material for final production. "he following main benefits accrue from the vertical combination to the acquirer company i.e. 5. It gains a strong position because of imperfect market of the intermediary products, scarcity of resources and purchased products0 6. <as control over products specifications.

*;, Ho"i<onta' co$:ination:

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Mergers And Acquisitions

It is a merger of two competing firms which are at the same stage of industrial process. "he acquiring firm belongs to the same industry as the target company. "he mail purpose of such mergers is to obtain economies of scale in production by eliminating duplication of facilities and the operations and broadening the product line, reduction in investment in working capital, elimination in competition concentration in product, reduction in advertising costs, increase in market segments and exercise better control on market. *C, Ci"cu'a" co$:ination: )ompanies producing distinct products seek amalgamation to share common distribution and research facilities to obtain economies by elimination of cost on duplication and promoting market enlargement. "he acquiring company obtains benefits in the form of economies of resource sharing and diversification. *D, Con%'o$e"ate co$:ination: It is amalgamation of two companies engaged in unrelated industries like +)% and %odi Industries. "he basic purpose of such amalgamations remains utili2ation of financial resources and enlarges debt capacity through re organi2ing their financial structure so as to service the shareholders by increased leveraging and *1S, lowering average cost of capital and thereby raising present worth of the outstanding shares. %erger enhances the overall stability of the acquirer company and creates balance in the company&s total portfolio of diverse products and production processes.

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Mergers And Acquisitions

=1>Ad!anta%es of Me"%e"s
%ergers and takeovers are permanent form of combinations which vest in management complete control and provide centrali2ed administration which are not available in combinations of holding company and its partly owned subsidiary. Shareholders in the selling company gain from the merger and takeovers as the premium offered to induce acceptance of the merger or takeover offers much more price than the book value of shares. Shareholders in the buying company gain in the long run with the growth of the company not only due to synergy but also due to =boots trapping earnings>. %ergers and acquisitions are caused with the support of shareholders, manager&s ad promoters of the combing companies. "he factors, which motivate the shareholders and managers to lend support to these combinations and the resultant consequences they have to bear, are briefly noted below based on the research work by various scholars globally. *+, 2"o$ the stand&oint of sha"eho'de"s Investment made by shareholders in the companies sub/ect to merger should enhance in value. "he sale of shares from one company&s shareholders to another and holding investment in shares should give rise to greater values i.e. "he opportunity gains in alternative investments. Shareholders may gain from merger in different ways vi2. 4rom the gains and achievements of the company i.e. "hrough ;a. ;b. ;c. ;d. ?eali2ation of monopoly profits0 *conomies of scales0 +iversification of product line0 Acquisition of human assets and other resources not available otherwise0
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;e.

(etter investment opportunity in combinations. $ne or more features would generally be available in each merger where

shareholders may have attraction and favour merger. *-, 2"o$ the stand&oint of $ana%e"s %anagers are concerned with improving operations of the company, managing the affairs of the company effectively for all round gains and growth of the company which will provide them better deals in raising their status, perks and fringe benefits. %ergers where all these things are the guaranteed outcome get support from the managers. At the same time, where managers have fear of displacement at the hands of new management in amalgamated company and also resultant depreciation from the merger then support from them becomes difficult. *., ("o$ote"?s %ains %ergers do offer to company promoters the advantage of increasing the si2e of their company and the financial structure and strength. "hey can convert a closely held and private limited company into a public company without contributing much wealth and without losing control. *1, ;enefits to %ene"a' &u:'ic Impact of mergers on general public could be viewed as aspect of benefits and costs to;a. )onsumer of the product or services0
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Mergers And Acquisitions

;b. Workers of the companies under combination0 ;c. ,eneral public affected in general having not been user or consumer or the worker in the companies under merger plan. *a, Consu$e"s "he economic gains reali2ed from mergers are passed on to consumers in the form of lower prices and better quality of the product which directly raise their standard of living and quality of life. "he balance of benefits in favour of consumers will depend upon the fact whether or not the mergers increase or decrease competitive economic and productive activity which directly affects the degree of welfare of the consumers through changes in price level, quality of products, after sales service, etc. *:, Wo" e"s co$$unit0 "he merger or acquisition of a company by a conglomerate or other acquiring company may have the effect on both the sides of increasing the welfare in the form of purchasing power and other miseries of life. "wo sides of the impact as discussed by the researchers and academicians are- fi"st'0@ mergers with cash payment to shareholders provide opportunities for them to invest this money in other companies which will generate further employment and growth to uplift of the economy in general. Second'0@ any restrictions placed on such mergers will decrease the growth and investment activity with corresponding decrease in employment. (oth workers and communities will suffer on lessening /ob $pportunities, preventing the distribution of benefits resulting from diversification of production activity.
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*c, Gene"a' &u:'ic

Mergers result into centralized concentration of power. Econo ic power is to !e understood as t"e a!ilit# to control prices and industries output as onopolists. $uc" onopolists affect social and political en%iron ent to tilt e%er#t"ing in t"eir fa%our to econo # a aintain t"eir power ad

e&pand t"eir !usiness e pire. '"ese ad%ances result into econo ic e&ploitation. (ut in a free onopolist does not sta# for a longer period as ot"er co panies enter into t"e field onopolist. '"is enforces co petition in t"e to reap t"e !enefits of "ig"er prices set in !# t"e generalize t"at erger of two or

ar)et as consu ers are free to su!stitute t"e alternati%e products. '"erefore* it is difficult to ergers affect t"e welfare of general pu!lic ad%ersel# or fa%ora!l#. E%er# ore co panies "as to !e %iewed fro different angles in t"e !usiness erging co pan# and also

practices w"ic" protects t"e interest of t"e s"are"olders in t"e create "indrance in ad inistration of t"e +o%ern ent polices.

ser%es t"e national purpose to add to t"e welfare of t"e e plo#ees* consu ers and does not

Cha&te" +-: Chan%e in scena"io of ;an in% Secto" 5. "he first mega merger in the Indian banking sector that of the <+4) (ank with "imes (ank, has created an entity which is the largest private sector bank in the country. 6. "he merger of the city bank with "ravelers ,roup and the merger of (ank of America with #ation (ank have triggered the mergers and acquisition market in the banking sector world wide. 7. *urope and @apan are also on their way to restructure their financial sector thought merger and acquisitions. %erger will help banks with added money power, extended geographical reach with diversified branch #etwork, improved product mix, and
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Mergers And Acquisitions

economies of scale of operations. %erger will also help banks to reduced them borrowing cost and to spread total risk associated with the individual banks over the combined entity. ?evenues of the combine entity are likely to shoot up due to more effective allocation of bank funds. I)I)I (ank has initiated merger talks with )enturian (ank but due to difference arising over swap ration the merger didn&t materiali2ed. #ow A"I (ank is egeing )enturian (ank. "he proposed merger of A"I (ank and )enturian (ank will make them third largest private banks in terms of si2e and market )apitali2ation State (ank of India has also planned to merge seven of its associates or part of its long term policies to regroup and consolidate its position. Some of the Indian 4inancial Sector players are already on their way for mergers to strengthen their existing base. 8. In India mergers especially of the 1S(S may be sub/ect to technology and trade union related problem. "he strong trade union may prove to be big obstacle for the 1S(S mergers. "echnology of the merging banks to should complement each other #1A management. %anagement of efficiency, cost reduction, tough competition from the market players and strengthing of the capital base of the banks are some of the problem which can be faced by the merge entities. %ergers for private sector banks will be much smoother and easier as again that of 1S(S.

THE ;ANAING SCENARIO HAS ;EEN CHANGING AT 2AST (BACEC

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(ank traditionally /ust borrower and lenders, has started providing complete corporate and retail financial services to its customers 5. "echnology drive has benefited the customers in terms of faster improve convenient banking services and Barity of financial products to suit their requirement. Atms, 1hone (anking, #et banking, Any time and Any where banking are the services which bank have started offering following the changing trend in sectors. In plastic money segment customer have also got a new option of debits cards against the earlier popular credit card. *arlier customers had to conduct their banking transaction within the restricted time frame of banking hours. #ow banking hours are extended. 6. Atms ,1hone banking and #et banking had enable the customer to transact as per their convince customer can now without money at any time and from any branch across country as certain their account transaction, order statements of their account and give instruction using the tally banking or on online banking services. 7. (ank traditionally involve working capital financing have started offering consumer loans and housing loans. Some of the banks have started offering travel loans, as well as many banks have started capitali2ing on recent capital market boom by providing I1$ finance to the investors.

Cha&te" 3: ("ocedu"e of Me"%e"s ) Acquisitions

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Mergers And Acquisitions

Public announcement: "o make a public announcement an acquirer shall follow the following procedure+C A&&oint$ent of $e"chant :an e": "he acquirer shall appoint a merchant banker registered as category C I with S*(I to advise him on the acquisition and to make a public announcement of offer on his behalf. -C Use of $edia fo" announce$ent: 1ublic announcement shall be made at least in one national *nglish daily one <indi daily and one regional language daily newspaper of that place where the shares of that company are listed and traded. .C Ti$in%s of announce$ent: 1ublic announcement should be made within four days of finali2ation of negotiations or entering into any agreement or memorandum of understanding to acquire the shares or the voting rights.

1C Contents of announce$ent: 1ublic announcement of offer is mandatory as required under the S*(I ?egulations.
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("ocedu"e of ;an Me"%e"

"he procedure for merger either voluntary or otherwise is outlined in the respective

state statutesD the (anking regulation Act. "he ?egistrars, being the authorities vested with the responsibility of administering the Acts, will be ensuring that the due process prescribed in the Statutes has been complied with before they seek the approval of the ?(I. "hey would also be ensuring compliance with the statutory procedures for notifying the amalgamation after obtaining the sanction of the ?(I.

(efore deciding on the merger, the authori2ed officials of the acquiring bank and

the merging bank sit together and discuss the procedural modalities and financial terms. After the conclusion of the discussions, a scheme is prepared incorporating therein the all the details of both the banks and the area terms and conditions.

$nce the scheme is finali2ed, it is tabled in the meeting of (oard of directors of

respective banks. "he board discusses the scheme thread bare and accords its approval if the proposal is found to be financially viable and beneficial in long run.

After the (oard approval of the merger proposal, an extra ordinary general meeting

of the shareholders of the respective banks is convened to discuss the proposal and seek their approval.
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After the board approval of the merger proposal, a registered valuer is appointed to

valuate both the banks. "he valuer valuates the banks on the basis of its share capital,market capital, assets and liabilities, its reach and anticipated growth and sends its report to the respective banks.

$nce the valuation is accepted by the respective banks , they send the proposal

along with all relevant documents such as (oard approval, shareholders approval, valuation report etc to ?eserve (ank of India and other regulatory bodies such Security ! exchange board of India (S*(I) for their approval.

After obtaining approvals from all the concerned institutions, authori2ed officials

of both the banks sit together and discuss and finali2e share allocation proportion by the acquiring bank to the shareholders of the merging bank (SWA1 ratio)

After completion of the above procedures , a merger and acquisition agreement is

signed by the bank

Cha&te" 8: R;I Guide'ines on Me"%e"s ) Acquisitions of ;an s

With a view to facilitating consolidation and emergence of strong entities and

providing an avenue for non disruptive exit of weakDunviable entities in the banking sector, it has been decided to frame guidelines to encourage mergerDamalgamation in the
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sector.

Although the (anking ?egulation Act, 5E8E ;AA)S. does not empower ?eserve

(ank to formulate a scheme with regard to merger and amalgamation of banks, the State ,overnments have incorporated in their respective Acts a provision for obtaining prior sanction in writing, of ?(I for an order, inter alia, for sanctioning a scheme of amalgamation or reconstruction.

"he request for merger can emanate from banks registered under the same State

Act or from banks registered under the %ulti State )o operative Societies Act ;)entral Act. for takeover of a bankDs registered under State Act. While the State Acts specifically provide for merger of co operative societies registered under them, the position with regard to take over of a co operative bank registered under the State Act by a co operative bank registered under the )*#"?AF

Although there are no specific provisions in the State Acts or the )entral Act for

the merger of a co operative society under the State Acts with that under the )entral Act, it is felt that, if all concerned including administrators of the concerned Acts are agreeable to order mergerD amalgamation, ?(I may consider proposals on merits leaving the question of compliance with relevant statutes to the administrators of the Acts. In other words, ?eserve (ank will confine its examination only to financial aspects and to the interests of depositors as well as the stability of the financial system while considering such proposals.

Cha&te" +D: A$a'%a$ation of U":an ;an s

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Cha&te" ++: Info"$ation ) Docu$ents to :e fu"nished :0 ;E THE ACQUIRER O2 ;ANAS

+C +raft scheme of amalgamation as approved by the (oard of +irectors of the acquirer bank.

-C )opies of the reports of the valuers appointed for the determination of reali2able value of assets *net of a$ount &a0a:'e to c"edito"s ha!in% &"ecedence o!e" de&osito"s, of the acquired bank.

.C Information which is considered relevant for the consideration of the scheme of merger including in particular-

AC Annual reports of each of the (anks for each of the three completed financial years immediately preceding the proposed date for merger.

;C 4inancial results, if any, published by each of the (anks for any preceding the proposed date of merger.

period

subsequent to the financial statements prepared for the financial year immediately

CC 1ro forma combined balance sheet of the acquiring bank as it will appear consequent on the merger.

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DC )omputation based on such pro forma balance sheet of the following-

IC "ier I )apital IiC "ier II )apital Iii. ?isk weighted Assets I!C ,ross and #et npas 9C 9i. ?atio of "ier I )apital to ?isk weighted Assets ?atio of "ier II )apital to ?isk weighted Assets

9iiC ?atio of "otal )apital to ?isk weighted Assets 9iii. "ier I )apital to "otal Assets I/C FC FiC ,ross and #et npas to Advances )ash ?eserve ?atio Statutory Fiquidity ?atio

1C Information certified by the values as is considered relevant to understand the net reali2able value of assets of the acquired bank including in particular-

AC "he method of valuation used by the values

;C "he information and documents on which the values have relied

and

the

extent of the verification, if any, made by the values to test the accuracy of such
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information

CC If the values have relied upon pro/ected information, the names designations of the persons who have provided such information verification, if any, made by the values in relation to such information

and

and the extent of

DC +etails of the pro/ected information on which the values have relied

EC +etailed computation of the reali2able value of assets of the acquired bank.

3C Such other information and explanations as the ?eserve (ank may require.

Cha&te" 4: Me"%e"s in the ;an in% Secto" ICICI ;an INTRODUCTION

ICICI Bank ,for erl# Industrial Credit and Investment Corporation of India - is

India.s largest pri%ate !an). /0/0/ (an) "as total assets of a!out 1s.20.05!n ,end2Mar 2005-*
a networ) of o%er 550 !ranc"es and offices* and a!out 1900 atms. /0/0/ (an) offers a wide range of !an)ing products and financial ser%ices to corporate and retail custo ers t"roug" a %ariet# of deli%er# c"annels and t"roug" its specialized su!sidiaries and affiliates in t"e areas of in%est ent !an)ing* life and non2life insurance* %enture capital and asset anage ent.

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Mergers And Acquisitions /0/0/ (an).s e3uit# s"ares are listed in /ndia on stoc) e&c"anges at Golkata and Badodara* t"e $toc) E&c"ange* %umbai and t"e #ational Stock *xchange of India Fimited and its

adrs are listed on t"e #ew Hork Stock *xchange ,45$E-. 6uring t"e #ear 2005 /0/0/ !an)
was in%ol%ed as a defendant in cases of alleged cri inal practices in its de!t collection operations and alleged fraudulent tactics to sell its products.

"he industrial )redit and Investment )orporation of India Fimited now known as I)I)I Ftd. Was founded b the World bank, the ,overnment of India and representatives of private industry on @anuary 9, 5E99. "he ob/ective was to encourage and assist industrial development and investment in India. $ver the years, I)I)I has evolved into a diversified financial institution. I)I)I&s principal business activities include-

1ro/ect 4inance Infrastructure 4inance )orporate 4inance Securiti2ation Feasing +eferred )redit )onsultancy services )ustodial services "he I)I)I ,roups draws its strength from the core competencies of its individual companies. "oday, top Indian )orporate look towers I)I)I as a business partner for providing solutions to their varied financial requirements. "he ,roup also offers a gamut of personal finance solutions to individuals. "o lead the financial services into the new millennium, the ,roup is now truly positioned as a Birtual Aniversal (ank.
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Mergers And Acquisitions

"he liberali2ation of the Indian economy in the 5EEIs offered I)I)I an opportunity to provide a wide range of financial services. 4or regulatory and strategic reasons, I)I)I set up speciali2ed subsidiaries in the areas of commercial banking, investment banking, non banking finance, investor servicing brooking, venture capital financing and state level infrastructure financing. I)I)I plans to focus on its retail finance business and expect the same to contribute upto 59 6I J of its turnover in the next five years. It is trying to change the perception that it is a corporate oriented bank. "he bank hard selling its image as a retail segment bank has for the first time come up with an advertisement that addresses its products at the individual. "his is to drive home the point that the bank has product and services catering to all individuals. 4or this purpose the network of I)I)I (ank shall come into use. "he parent plants to sell its products and also raise retail funds through the banking subsidiary.

THE ICICI GROUP COMPRISES OF:

ICICI ;an Bi$ited@
ICICI Securities and Finance Company Limited (ICICI Securities),

ICICI C"edit Co"&o"ation Bi$ited ; I)I)I )redit., ICICI In!esto"s Se"!ices Bi$ited ;I)I)I Services., ICICI 9entu"e 2unds Mana%e$ent Bi$ited ;I)I)I Benture., ICICI inte"nationa' Bi$ited@ ICICI #AIN2RA Bi$ited ;I GI#.,

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Mergers And Acquisitions

%r. G.B. Gamath, )*$ of I)I)I Fimited, has recently voiced the intentions of I)I)I Fimited towards banking and I)I)I (ank. I)I)I Fimited is endeavoring to forge a closer relationship with I)I)I bank. %r. G B Gamath recently quoted in a leading daily =(anking is dead. Aniversal banking is in offering with a whole range of financial products and services. "he basic idea is for banks to do business along with =banking>. (ankers will have to emerge as businessmen.> I)I)I (ank is a focused banking company coping with the changing times of the banking industry. So it can be a lucrative target for other player in the same line of operations. <owever, when merged with I)I)I Fimited the attraction is reduced manifold considering the magnitude of operations of the I)I)I limited. $f course, one would still need a bank to open letters of credit, offer guarantees, handle documentation, and maintain current account facilities etc. So banks will not superfluous. (ut nobody needs so many of them any more. Secondly, besides credit, a customer may also want from a bank efficient cash management, advisory services and market research on his product. "hus the importance of fee based is increasing in comparison with the fund based income. "he pre merger status of I)I)I (ank is as follows- it had liabilities of ?s.56,IK7 crore, equity market capitali2ation of ?s.6,8:: crore and equity volatility of I.K8L. Working through options reasoning, we find that this share price and volatility are consistent with assets worth ?s.57,68E crore with volatility I.59. "hus, I)I)I bank had assets which are E.KJ ahead of liabilities, which is roughly consistent with the spirit of the (asle Accord, and has leverage of 9.7K times.

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Mergers And Acquisitions

Histo"0 of ICICI ;an

"he World bank the ,overnment of India and representatives of Indian industry form I)I)I Fimited as a development finance institution to provide medium term and long term pro/ect financing to Indian businesses in +833.

5EE8 I)I)I establishes I)I)I (ank as a subsidiary.

5EEE I)I)I becomes the first Indian company and the first bank or financial institution from non @apan Asia to list on the #HS*.

6II5 I)I)I acquired (ank of %adura ;est. 5E87.. (ank of %adura was a )hettiar bank, and had acquired )hettinad %ercantile (ank ;est. 5E77. and Illan/i (ank ;established 5EI8. in the 5E:Is.

6II6 "he (oards of +irectors of I)I)I and I)I)I (ank approve the merger of I)I)I, I)I)I 1ersonal 4inancial Services Fimited and I)I)I )apital Services Fimited, with I)I)I (ank. After receiving all necessary regulatory approvals, I)I)I integrates the group's financing and banking operations, both wholesale and retail, into a single.

28

Mergers And Acquisitions

INTRODUCTION O2 ;ANA O2 MADURA

"he pre merger status of (ank of %adura is as follows- it had liabilities of ?s.8,888 crore, equity market capitali2ation of ?s.5II crore and equity volatility of I.:E. Working through options reasoning, we may say that the stock market thinks that its assets are worth ?s.8, IE9 crore with a volatility of I.I6. <ence, bom is bankrupt ;with assets which are ?s.79I crore behind liabilities. and has a leverage of 85 times. If we needed to bring bom up to a point where its assets were 5IJ ahead of liabilities, which is broadly consistent with the (asle Accord, this would require an infusion of ?s.LII crore of equity capital. <ow do we combine these to think of the merged entityM Assets and liabilities are additive, so the total assets of the merged entity would prove to be roughly ?s.5K,789 crore and the liabilities would prove to be ?s.5:,95K crore. "he merged entity would hence need roughly ?s.LII crore of fresh equity capital in order to come up to a point where assets were atleast 5IJ ahead of liabilities. <ow can we estimate the market capitali2ation of the merged entityM "he value of equity is the value of a call option on the assets of the merged entity. 1ricing the call requires an estimate of the volatility of the merged assets, i.e. It requires knowledge of the extent to which the assets of the two banks are uncorrelated. We find that using values of the correlation coefficient ranging from LIJ to E9J, the volatility of assets of the merged entity proves to be around I.56. In this case, the valuation of the call option, i.e. An estimate of the market capitali2ation of the merged entity, proves to be roughly ?s.6,9II crore.

29

Mergers And Acquisitions

"his number is not far from the pre merger market capitalisation of I)I)I (ank, which was ?s.6,8:: crore. <ence, we can say that on purely financial arguments, the merger is roughly neutral to I)I)I (ank shareholders if bom was merged into I)I)I (ank for free. Indeed, if banking regulators took their /obs more seriously, they would force the shareholders of bom to walk into such a merger at a 2ero share price as a way of reducing "he number of bankrupt banks in India by one. Such a forced merger would be a politically easier alternative for the ?(I when compared with closing down bom. "he shareholders of I)I)I (ank have paid a non 2ero fee for bom. "his reflects a hope that the products and processes of I)I)I (ank will rapidly improve the value of assets of bom in order to compensate. In addition, the merged entity will have to rapidly raise roughly ?s.LII crore of equity capital to obtain a 5IJ buffer between assets and liabilities. <ence, this proposed merger is a godsend for bom, which was otherwise a bankrupt entity which was headed for closure given the low probability that it would manage to raise ?s.LII crore of equity on a base of ?s.5II crore of market capitalisation. It is useful to observe that bom probably did not see things in this way, given the willingness of India's banking regulators to interminably tolerate the existence of bankrupt banks. )losure of bom would normally involve pain for bom's shareholders and workers0 instead both groups will get an extremely pleasant ride if the merger goes through. "he proposed merger is a daunting problem for I)I)I (ank. It will need to rapidly find roughly ?s.LII crore in equity. If India's banking regulators were serious about
30

Mergers And Acquisitions

capital adequacy, I)I)I (ank should have to pay roughly 2ero to merge with bom ;it is doing a favour to bom and to India's banking system.0 instead I)I)I (ank has paid a positive price for bom. "he key question that will be answered in the next twoDthree years is- Will I)I)I (ank's superior knowledge of products and processes revitali2e the assets and employees of bom, and generate shareholder value in the merged entityM I)I)I's top management clearly thinks so, and it would be a very happy outcome if this did indeed happen . "he proposed merger is a good thing for India's economy, since the headcount of bankrupt banks will go down by one, and there is a possibility of obtaining higher value added out of the poorly utili2ed assets and employees of bom. If the merger goes through, then it will reduce the say of the management team of bom in India's resource allocation, which is a good thing. Cha&te" +.: Me"%e" of ICICI ;an 5ith ;an of Madu"a

"he proposed merger between I)I)I (ank and (ank of %adura ;bom. is a remarkable one. "he pre merger market capitali2ation of I)I)I (ank was roughly ?s.69II crore while bom was at roughly ?s.5II crore. (om is known to have a poor asset portfolio. What will the merged entity be worthM

"he key rationale underlying every merger is the question of synergy. )an I)I)I (ank's products and technology bring new life to the 6:7 branches of bomM Will I)I)I (ank ;which has 5,KII employees. be able to overcome the 6,:II employees that bom carries, given that Indian labour law makes it troublesome and expensive to sack workersM
31

Mergers And Acquisitions

In applying these ideas to I)I)I (ank and to bom, we need to believe that the stock market effectively processes information to produce estimates of the price and volatility of the shares of both these banks. "his assumption is suspect, because both securities have poor stock market liquidity. <ence, we should be cautious in interpreting the numbers shown here. "here are many other aspects in which this reasoning leans on models, which are innately imperfect depictions of reality. <owever, these models are powerful tools for understanding the basic factors at work, and they probably convey the broad picture quite effectively. "he stock of I)I)I (ank may be in the limelight on the back of the proposed acquisition of (ank of %adura. "hough the stock has gained sharply in the last two months after hitting a recent low of ?s 55I, some upside may be left as the bank could get re rated on account of the merger. *xisting shareholders could hold their exposures in I)I)I (ank while investors with an appetite for risk could contemplate exposures despite the impressive gains of the past few months. I)I)I (ank continues to be one of the better options in the banking sector at the moment and the possible merger with I)I)I may well be on the backburner. "he merger would pitchfork I)I)I (ank as the leading private sector bank. "he merger may be viewed favorably since (ank of %adura has focused strengths and a reasonably good quality balance sheet. "he board of directors is to meet on +ecember 55 to consider the merger. It is quite likely that the swap ratio may be fixed in a manner that holds out a good deal for the shareholders of (ank of %adura. "his may also be influenced by the fact that

32

Mergers And Acquisitions

the (ank of %adura stock has gained sharply by around KI per cent in the past fortnight in the homestretch to the deal. As the acquisition is to be financed by issuance of stock, the rise in the market capitali2ation of (ank of %adura may mean a higher degree of equity issuance by I)I)I (ank. (ut the price may well be worth paying as this is the only way that I)I)I (ank may be able to get control over banks with reasonable quality balance sheets that could make a difference in the medium to long term. (ank of %adura has assets of ?s 7,ELL crore and deposits of ?s 7,7E9 crore as of %arch 6III. "he fact that the bank has a capital adequacy of 59.L per cent with shareholder funds of ?s 6:7 crore may mean that I)I)I (ank ;post merger phase. will have more leeway to pursue growth without expanding the equity base ;other than paying for the acquisition.. Strong capital adequacy, a strong beachhead on the Internet arena, a revamped I" architecture, a growing retail client base through a brick and click strategy, and improving asset quality and earnings growth are positive features as far as I)I)I (ank is concerned. +espite these factors, the share had been on a downtrend from after touching a high of ?s 6K5, eight months ago. "he uptrend then was on the back of the announcement of its A+? issue and new technology initiatives. "he subsequent downtrend was triggered by the possibility of the merger with its parent. "here is continuing concern on asset quality of I)I)I. It has been a stated goal of the I)I)I group to go in for universal banking. It is clear that once regulatory hurdles are removed, such a possibility becomes distinctly feasible. (ut

33

Mergers And Acquisitions

,iven the battering that bank stock took, I)I)I may now hesitate to pursue this path. Also I)I)I (ank is the most visible investor friendly face for the group in terms of returns to shareholders and it may well be maintained as a separate entity. In this backdrop, the stock may hold scope for improvement in the valuation of the stock.

2inancia' standin% of ICICI ;an ) ;an of Madu"a (a"a$ete"s #et worth "otal +eposit Advances #et 1rofit Share )apital ICICI ;an +887#+888 7IL.77 :IK6.E8 77KK.:I :7.K9 5:9.IK ;an of Madu"a +888#-DDD +887#+888 +888#-DDD 556E.EI 655.76 68K.L7 EL::.I6 7I57.II 7:75.II 9I7I.E: 57E7.E6 5::9.86 5I9.87 7I.57 89.9L 5E:.L5 5E.:8J 6.98J 5.97J 55.IL 5L.L7J L.57J 8.::J 55.IL 58.69J 55.IEJ :.67J

)apital Adequacy 55.I:J ?atio ,ross Advances D 8.K6J ,ross #1&s #et Advances D #et #1&s 6.LLJ

Source: Co$&'ied f"o$ Annua' Re&o"t *Ma"ch -DDD, of ICICI ;an ) ;an of Madu"aC C"ucia' (a"a$ete"s: # Ho5 the0 stand

34

Mergers And Acquisitions

#ame of the (ank of (ank %adura (ook value of bank on the day of merger 5L7.I announcement %arket price on the day announcement merger *arning +ividend 1D* ?atio per paid of share ;inJ. 5L7.I 7LJ 99J 5.K7

I)I)I (ank 9L.I

5:E.EI 9.8 59J KL7

The Gene"ation Ga&:# the merger of 9K year old ($% sooth bared old generation bank with a fast growing technology say new ,eneration bank will help the latter and the start merger is likely to bring cheer to shareholder and bank employees of ($% and some amount of discomfort and anxiety to those of I)I)I bank. "he scheme of amalgamation will increase the equity bank of I)I)I (ank to ?S 66I.7: )?. I)I)I (ank will issue 679.8 lakh share of ?S 5I each to the shareholder of ($%. "he merger entity will have an increase of a net base over ?S 5:I bn and deposit base of ?S 575 bn. "he merged entity will have 7:I branches and a similar number of A"%&s across the country and also enable the ICICI to se"!e a 'a"%e custo$e" :one of 5.6 million customers of ($% through a wider network, adding to the antoma bare to 6.K million.

35

Mergers And Acquisitions

Mana%in% "u"a' :"anches: I)I)I ma/or branches are in ma/or and cities, where as ($% spreads its wings mostly in semi urban and city segments of south India. "here in a task ahead lying for the merged entity to increase dramatically the business mix of rural branches of ($%. $n the other hand due to ,eographical location of its branches and level of competition. I)I)I (ank will have a tough time to cope with.

Mana%in% soft5a"e: Another task which stand on the way is technology while I)I)I bank which is fully automatic. Qua'it0 of assets:# the nature of assets a bank is holding would signify its operational efficiency. Asually the level of #on C performing Assets ; #1AS. /udges the quality of assets. "he lower the #A1S to total advances or total assets the better the quality is and vice versa. Staff &"oducti!it0: # $ne of the key area where banks can develop competition advantage. "he measurement of staff productivity becomes one of the essential factors while measuring the performance of the banks. Biquidit0:# While assessing the liquidity of a bank the most sought ratio is net loans to total assets. A rise in the net loans to total assets may be considered as a fall in the liquidity of the bank.

36

Mergers And Acquisitions

;oo 9a'ue &e" sha"e:# It is simply the net worth of the company ;which is equal to the paid up equity capital plus resource and surplus. divided by the number of outstanding equity shares. Ea"nin% &e" sha"e:# specific valuation per unit of investment given by #et income after income taxes and after dividends on preferred stock of the company. Net 5o" :# (ook value of a company is common stock, surplus, resources and retained earnings. ("ofita:i'it0: # the most crucial ratio in measuring the profitability is net profit of the bank. "he ratio such as #et Interest Income ;#IF. and #et Interest %argin ;#I%. measure sustenance ability of the bank based on the spread. *ntity is using the package, (anks 6III, ($% computeri2ed EI percent of its business and was converted with IS(S software. "he ($% branches are supposed to switch over to (anks 6III. "hough it is not a difficult task, with LIJ computer literate staff would need effective retraining which involves a cost. "he I)I)I (ank need to invest ?S 9I core for upgrading ($%&s 6:7 branches. Mana%in% Hu$an Resou"ces: $ne of the greatest challenges before I)I)I (anks is managing human resources. When the head count of I)I)I (ank is taken it in less than 59II employees on the other hand ($% has over 69II.

37

Mergers And Acquisitions

"he merged entity will have bout 8III employees which will make it one of the largest banks among the new generation private sector banks. "h staff of I)I)I (anks are drawn from K9 various banks mostly young qualified professionals with computer background and prefer to work in metro or by either with good remuneration packages. While under the influence of tread unions most of the ($% employees have low career aspiration. "he announcement by <.#. signor, )*$ and %+ of I)I)I, that three would be no B?S or retrenchment, creates a new hope amongst the ($% employees. It is a tough task ahead to manage. $n the other hand their pay would be revised up wards. It is not a <erevlean task to integrate two work weltersM

Mana%in% C'ient ;ase:# "he clients base of I)I)I (ank after merger, will be as 6.K %illion from it past I.9 %illion, as accumulation of 6.6 %illion from ($%. "he nature and quality of clients is not of uniform quality. "he ($% had built up it client base for a long time, in a hard way, on the basis of personali2ed services. In order to deal with the ($% clientele, the I)I)I (ank needs to redefine its strategies to suit to the new clientele. "he sentiments or a relationship of small and medium borrower is hurt it may be difficult for them to reestablish the relationship which could also hamper the image of the bank. ,iven the situation, we need to wait and view, as to how the I)I)I will face this challenge.

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Mergers And Acquisitions

Reco$$endation of Na"asi$ha$ Co$$ittee on :an in% secto" "efo"$s

,lobally, the banking and financial systems have adopted information and communications technology. "his phenomenon has largely by passed the Indian banking system, and the committee feels that requisite success needs to be achieved in the following areas- (anking automation - 1lanning, Standardi2ation of electronic payment systems - "elecom infrastructure - +ata were %erger between banks and dfls and nbfcs need to be based on synergies and should make a sound commercial sense. )ommittee also opines that merger between strong banks D fls would make for greater economic and commercial sense and would be a case where the whole is greater than the sum of its party and have a 3force multiplier effect>. It also have merger should not be seen as a means of bailing out weak banks.

39

Mergers And Acquisitions

A weak bank could be nurtured into healthy units. %erger could also be a solution to a after cleaning up their balances sheets it only say if these is no Boltaire response to a takeover of such bank, a restructuring commission for such 1S(, can consider other options such as restructuring , merger and amalgamations to it not closure. "he committee also options that while licensing new private sector banks, the initial capital requirement need to be review. It also emphasi2ed on a transparent mechanism for deciding the ability of promoter to professionally manage the bank. "he committee also feels that a minimum threshold capital for old private banks also deserved threshold capitals. "he committee also opined that a promoter group couldn't hold more that 8I percent of the equity of a bank. "he #arasimham )ommittee also suggested that the merger could be a solution to 3Weak banks& )oney after clearing up the balance sheets. with a strong public sector bank. Source: Na"asi$ha$ Co$$ittee "e&o"t on :an in% secto" "efo"$sC Chan%es afte" the $e"%e":# While, ($% had an attractive business per employee figure of ?s.6I6 lakh, a better technological edge and had a vast base in southern India when compared to 4ederal bank. While all these factors sound good, a cultural integration would be a tough task ahead for I)I)I (ank. I)I)I (ank has announced a merger with 9K year old (ank of %adure, with 6:7 branches, out of which L6 of them are in rural areas, with most of them in southern India. As on the day of announcement of merger. IE 56 II., Gotak mahindra group was holding about 56 percent stake in ($%, the )hairman ($%, %r.G.%. "haiagara/an,
40

Mergers And Acquisitions

along with his associates was holding about 6: percent stake, Spic groups has about 8.K percent, while FI) and A"I were having marginal holdings. "he merger will give I)I)I (ank a hold on South India market, which has high rate of economic development.

"he board of +irector at I)I)I has contemplated the following synergies emerging from the mergerFinancial Capability: "he amalgamation will enable them to have a stronger financial and operational structure, which is supposed to be capable of greater resourgerDdeposit mobili2ation. And I)I)I will emerge a one of the largest private sector banks in the country. Branch network: "he I)I)I&s branch network would not only 6:8, but also increases geographic coverage as well as convenience to its customers. Customer base: "he emerged largest customer base will enable the I)I)I bank to offer banking financial services and products and also facilitate cross selling of products and services of the I)I)I groups. Tech edge: "he merger will enable I)I)I to provide atms, 1hone and the Internet banking and finical services and products and also facilitate cross selling of products and services of the I)I)I group. Focus on Priority Sector: "he enhanced branch network will enable the (ank to focus on micro finance activities through self help groups, in its priority sector initiatives through its acquired LK rural and LL semi urban branches.
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Mergers And Acquisitions

Source- ?eport submitted at *,% on @anuary 5E, 6II5.

THE SWA( RATIO: "he swap ratio has been approved in the ratio of 5-6 C two shares of I)I)I (ank for every one share of (ank of %adera. "he deal with (ank of %adera is likely to dilute the current equity capital by around 56 percent. And the merger is expected to bring 6I percent gains in *1S of bank. And also the bank&s comfortable capital Adequacy ?atio ;)A?. of 5E.:8 percent has declined to 5K.: percent.

Cha&te" +1: Reasons :ehind the "ecent t"end of $e"%e" in ;an in% Secto" The question on to& e!e"0:od0?s $ind is Are banks and bankers on the road to redundancyM 4irst consider the "easons 5ho one does not need :an s in 'a"%e nu$:e"s any more A depositor today can open a cheque account with a money market mutual fund and obtain both higher returns and greater and greater flexibility. Indian mutual funds are queuing up to offer this facility.

42

Mergers And Acquisitions

After can be drawn or a telephone bill paid easily through credit cards. *ven if a bank is /ust a safe place to put away your savings, you need not go to it. "here is always an A"% you can do business with. If you are solvent and want to borrow money, you can do so on your credit card with far fewer hassles. A 3AAA& corporate can directly borrow from the market through commercial papers and get better rates in the bargain. In fact the banks may indeed be left with dad credit risk or those that cannot access the capital market. "his once again makes a shift to non fund based the activities all the more important.

Cha&te" +3: Case Studies Case stud0 I I+(I C A#I"*+ W*S"*?# %*?,*? (A#G ;Merger. "he merger that was announced on , 6II: between +eutsche (ank and +resdner (ank, ,ermany&s largest and the third largest bank respectively was considered as ,ermany&s response to increasingly tough competition markets. "he merger was to create the most powerful banking group in the world with the balance sheet total of nearly 6.9 trillion marks and a stock market value around 59I
43

Mergers And Acquisitions

billion marks. "his would put the merged bank for ahead of the second largest banking group, A.S. based citigroup, with a balance sheet total amounting to 5.6 trillion marks and also in front of the planned @apanese book mergers of Sumitomo and Sukura (ank with 5.K trillion marks as the balance sheet total. "he new banking group intended to spin off its retail banking which was not making much profit in both the banks and costly, extensive network of bank branches associated with it. "he merged bank was to retain the name +eutsche (ank but adopted the +resdner (ank&s green corporate color in its logo. "he future core business lines of the new merged (ank included investment (anking, asset management, where the new banking group was hoped to outside the traditionally dominant Swiss (ank, Security and loan banking and finally financially corporate clients ranging from ma/or industrial corporation to the mid scale companies.

With this kind of merger, the new bank would have reached the no.5 position of the AS and create new dimensions of aggressiveness in the international mergers. (ut barely 6 months after announcing their agreement to form the largest bank in the world, had negotiations for a merger between +eutsche and +resdner (ank failed on April 9, 6III. "he main issue of the failure was +resdner (ank&s investment arm, Gleinwort (enson, which the executive committee of the bank did not want to relinquish under any circumstances.
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Mergers And Acquisitions

In the preliminary negotiations it had been agreed that Gleinwort (enson would be integrated into the merged bank. (ut from the outset these considerations encountered resistance from the asset management division, which was +eutsche (ank&s investment arm. +eutsche (ank&s asset management had only integrated with Fondon&s investment group %organ ,renfell and the American (anker&s trust. "his division alone contributed over :IJ of +eutsche (ank&s profit. "he top people at the asset management were not ready to undertake a new process of integration with Gleinwort (enson. So there was only one option left with the +resdner (ank i.e. "o sell Gleinwort (enson completely. <owever Walter, the chairman of the +resdner (ank was not prepared for this. "his led to the withdrawal of the +resdner (ank from the merger negotiations. In economic and political circles, the planned merger was celebrated as ,ermany&s advance into the premier league of the international financial markets. (ut the failure of the merger led to the disaster of ,ermany as the financial center.

Case stud0 II

MERGER O2 ICICI ;ANA WITH SANGBI ;ANA

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Mergers And Acquisitions

COMING TOGETHER: The "e%iona' office of San%'i ;an in Mu$:aiC "he merger that was announced on A1?IF 5L, 6IIK between I)I)I (ank and SA#,FI (ank.All branches of Sangli (ank functions as branches of I)I)I (ank from April 5E, said the ?eserve (ank of India. Sangli (ank is an unlisted private bank headquartered at Sangli in %aharashtra. As on %arch 75, 6II:, Sangli (ank had deposits of ?s. 6,II8 crore, advances of ?s. LLL crore, net #1A ;non performing assets. ratio of 6.7 per cent and capital adequacy of 5.: per cent. Its loss at the end of 6II9 I: amounted to ?s. 6E crore. It has 5EL branches and extension counters, including 59L branches in %aharashtra and 75 branches in Garnataka. About 9I per cent of the total branches are located in rural and semi urban areas and 9I per cent in metropolitan and urban centres. "he bank has about 5,L9I employees. I)I)I (ank is the second largest bank in India and the biggest in terms of market capitalisation. As on September 7I, 6II:, I)I)I (ank had total assets of ?s. 6L6,7K7 crore. In the six months ended September 7I, 6II:, it made a net profit of ?s. 5,7K9 crore.

46

Mergers And Acquisitions It had :76 branches and extension counters and 6,77: A"%s as on that date, and is in the process of setting up additional branches and A"%s pursuant to authorisations granted by the ?(I. It has about 75,9II employees. I)I)I (ank offers a wide range of financial products and services directly and through subsidiaries in the areas of life and general insurance, asset management and investment banking. Its shares are listed on the (ombay Stock *xchange Fimited and the #ational Stock *xchange of India Fimited and its American +epositary Shares are listed on the #ew Hork Stock *xchange

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