The Hindu : Business : Lakshmi General to merge with Sundaram Finance

Online edition of India's National Newspaper
Tuesday, Sep 28, 2004

Business

Business

Lakshmi General to merge with Sundaram Finance

By S. Varadharajan

CHENNAI, SEPT. 27. The board of directors of Sundaram Finance Limited (SFL) today approved, in principle, the merger proposal of Lakshmi General Finance (LGF) with the company. This follows a similar decision by the board of directors of Lakshmi General Finance. The decision shall be subject approval of shareholders of the respective companies, the High Court of Chennai, Reserve Bank of India and other formalities. The appointed date of the merger will be April 1, 2004. The merger, it is believed, would result in considerable synergy, significant economies of scale and greater marketing thrust.

Sundaram Finance was incorporated in 1954, with the object of financing the purchase of commercial vehicles and passenger cars. It was started with a paid-up capital of Rs. 2 lakhs and later went public in 1972. The paid-up capital as on March 31, 2004 was 24 crores and 96.5 per cent of it was from the issue of bonus shares. Reserves stood at Rs. 499.24 crores.

The company reported a net profit of Rs. 55.62 crores and paid a dividend of 70 per cent. It is one of the most respected financial services brands in India

Lakshmi General Finance Limited (LGF) is a group company of Sundaram Finance and it follows the ethical standards of Sundaram Finance. The other entities in the group are: Sundaram Asset Management, Sundaram Home Finance, Royal Sundaram Alliance Insurance, Sundaram Infotech Solutions, Sundaram Business Services, Sundaram Finance Distribution and Infreight Technologies.

Lakshmi General Finance is a closely held company and its shares are not listed in stock exchanges. It is a focussed player in the commercial vehicle finance segment and enjoys strong customer loyalty, especially in Southern India. In the 12 months ended March 31, 2004, the company made a profit after tax of Rs. 18.64 crores against Rs. 16.65 crores in 2002-03. It paid two interim dividends aggregating to 70 per cent for 2003-04 on a paid up capital of Rs. 7 crores. Reserves stood at Rs. 109.26 crores as on March 31, 2004.

Both SFL and LGF enjoy the highest rating of "AAA" from both ICRA and CRISIL.

It is understood that merchant bankers, legal counsel and valuers will be appointed soon. The idea is to make the process transparent.

According to sources it will take approximately one month for the share swap ratio to be announced.

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