Icici Merger: An Inorganic Rise To The Top

ICICI has grown in size to build an asset base of almost Rs one trillion, largely through its strategy of aggressive mergers and acquisitions.

The four-fold increase in its asset base since 1995-96 has been the cumulative effect of a series of mergers and acquisitions which began in 1996 with the merger of its own subsidiary -- SCICI.

The SCICI merger came into effect from April 1, 1996, and in one go pushed up ICICI's asset base from Rs 23,324 crore in 1995-96 to Rs 36,292 crore in 1996-97. The total borrowing and advances increased by Rs 10,000 crore each in that year. The improvement in profits and profitability, however, can not attributed solely to mergers as the entire corporate sector was on a profit binge in 1996-97.

In 1996-97, ICICI took over ITC Classic Finance to capture a strong retail distribution and investor service franchise, particularly in the eastern sector. And on the financial side, its assets increased to Rs 46,000 crore in 1997-98. The total borrowing increased to Rs 37,449 crore and advances shot up to Rs 34,000 crore. Net profit touched a historic Rs 1,000 crore.

As a result of the two mergers, ICICI's total revenue doubled in two years to Rs 5,894 crore.

ICICI saw synergy in acquiring Anagram Finance to strengthen its retail network in the western and northern regions of the country, to complement the infrastructure already acquired from ITC Classic in the east.

Anagram Finance merged in 1998-99 taking ICICI's asset base to Rs 58,587 crore. Its advances shot up to over Rs 42,000 crore and borrowings zoomed to Rs 47,659 crore.

There have been no acquisitions in the last two years. At the end of the quarter ended June 2001, ICICI's assets stood at Rs 74,751 crore.