Anagram Finance To Merge With Icici

The Industrial Credit and Investment Corporation of India Ltd (ICICI) yesterday announced plans to merge Anagram Finance into itself. The move will help ICICI accelerate its foray into the retail business.

ICICI has, however, decided against acquiring any of Anagrams five subsidiaries. The Lalbhais, Anagrams promoters , will buy these companies from ICICI.

Since the net worth of Anagram has turned negative to Rs 13 crore, and provisions for non-performing assets are inadequate, the Lalbhais have decided to infuse long-term resources worth Rs 125 crore. Anagram had posted a net profit of Rs 34.76 crore on June 30, 1997.

The boards of the two companies will meet on May 23 to consider the merger proposal.

 

Neither scrip was traded on the kerb following the merger announcement. On the BSE yesterday, ICICI moved in a narrow range and hit an intra-day high of Rs 103.90 before closing at Rs 102.40. On the NSE, the scrip recorded an intra-day high of Rs 104.20 before closing at Rs 103.20. Anagram Finance registered an intra-day high of Rs 20.90 before closing at Rs 20.70. It recorded a turnover of Rs 13,000 with only 650 shares changing hands.

A detailed examination and review of the operations and the financial condition of the company, including a conservative estimate of provisions required for non-performing assets, has revealed an erosion in net worth, necessitating further infusion of funds into the company. To protect the interests of creditors, including depositors and public shareholders, the investment companies of the Lalbhai family have decided to infuse long-term resources of Rs 125 crore, convertible into nominal equity capital of the company upon the merger becoming effective in pursuance of the Articles of Agreement signed with ICICI on May 20, 1998, said a release issued by Anagram Finance.

Explaining the deal, ICICI general manager Kalpana Morparia said the Lalbhais would infuse Rs 125 crore long-term funds into ICICI. In order to account for the 125-crore entry into its books,

ICICI will make a nominal issue of 10 shares to Anagram.

Morparia said ICICI had decided against acquiring the five subsidiaries of Anagram Finance Anagram Housing Finance,

Stockbroking, Anagram Capital Market and Anagram Wellington Asset Management Company. However, institutional sources said ICICI had evaluated these subsidiaries.

Morparia also indicated that the Lalbhais would buy these companies from ICICI, but declined to comment on the price. These companies are not quoted, and as on June 30, 1997, Anagram Finances combined investment in them amounted to slightly over Rs 11.74 crore.

This will be ICICIs third acquisition, following SCICI and ITC Classic Finance. Anagram has a strong retail franchise: a distribution network of more than 50 branches in Gujarat, Rajasthan and Maharashtra, and a base of 250,000 depositors. Anagram had aggregate deposits of Rs 454.98 crore on June 30, 1997.

Outlining the difference between the ITC Classic deal and the Anagram deal, Morparia said ITC Classic had a stronger deposit base and there was synergy between the two because of their corporate clientele.

ICICI was attracted by Anagrams retail portfolio. Anagram is active in leasing and hire-purchase, and car, truck and consumer finance. Only 3.3 per cent of the companys disbursements were made under corporate finance. While ITC Classic gave ICICI a base in eastern India, the acquisition of Anagram gives ICICI a strong retail franchise and immediate access to a wide distribution network in the western region. Following the acquisition of ITC Classic, the network was taken over by I-Credit, the non-bank finance arm of ICICI.