The director boards of Sundaram Finance Ltd (SFL) and Lakshmi General Finance (LGF) have given an in-principle clearance to the merger of LGF with SFL, subject to necessary approvals. The appointed date of merger is April 1 2004. Subsequent to the merger, the net owned funds of SFL would go up to over Rs 600 crore.
LGF is an associate of SFL with a paid-up capital of Rs 7 crore and net owned funds of Rs 116 crore. The company has an asset base of Rs 700 crore. It offers hire purchase and leasing services and also accepts deposits from the public. It also offers other products like car finance, commercial vehicle and equipment finance.
Speaking to FE Mr TT Srinivasaraghavan, managing director, of SFL said, "The board has today given in principle approval for merging LGF with SFL, subject to necessary approvals. We will have to comply with the legal and statutory formalities like preparing the scheme of merger and obtaining approvals from the Reserve Bank of India, shareholders of both the companies, Madras High Court and other necessary approvals. The company will put in place the other processes like appointment of valuers within the next couple of weeks. The merger process is expected to be completed within the next five to six months. The merger will be effective from April 2004."
He said, "The merger proposal was considered earlier also but we thought this is the appropriate time to go ahead with the merger plan. Both SFL and LGF are AAA (triple A) rated companies and are strong entities. The merger plan is in sync with the consolidation exercise happening in the financial services landscape today."
SFL is a diverse group with interests in the information technology and business process outsourcing sectors through its divisions Sundaram Infotech Solutions (SIS) and Sundaram Business Services (SBS). SFL has a net worth of Rs 523 crore and assets of Rs 3,200 crore.