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ICICI swallows Anagram Finance

The Industrial Credit and Investment Corporation of India has announced the merger of Anagram Finance with the development financial institute.

Anagram Finance is the financial institute (non-banking financial company in Indian parlance) controlled by the Lalbhais of Arvind Mills, makers of the famed 'Flying Machine' denims.

Incidentally, Anagram Finance chairman Sanjay Lalbhai is one of the directors on the ICICI board. But he had resigned from the ICICI board about a month ago on the grounds that he is an interested party in the merger and therefore it would be improper for him to offer an opinion on the merger.

The boards of both the firms will meet separately on May 23 to consider the proposal merger. The boards will also have to decide the swap ratio. At present, the ICICI scrip is quoted at Rs 102.50 while Anagram Finance is at Rs 20.20 on the Bombay Stock Exchange. However, the swap ratio may be different from the 1:5 on the stock exchange.

The merger will be effective from April 1, 1998. As a precondition, the investment companies of the Lalbhai group will pump in Rs 1.25 billion zero-coupon advances into Anagram Finance which will be converted into nominal equity once the merger is ratified by the courts.

ICICI is driving hard to strengthen its retail base in the new liberalised era where government funds are hard to come by. The Anagram merger will provide ICICI a retail base in western India. Anagram has 17 branches in Gujarat, 10 in Maharashtra, and five in Rajasthan. It has a depositor base of 250,000. Earlier this year, ICICI had absorbed ITC Classic, which has a strong retail base in eastern India.

For the Lalbhais, hiving off Anagram will enable them to concentrate on its core business of textiles, dyes, and chemicals.

There are no plans to merge the five subsidiaries of Anagram Finance. Also, ICICI has made it clear that it will not absorb all the 400 employees of Anagram Finance.