Magma, Shrachi merge to be India's largest financial powerhouse

Kolkata, Aug 25 (UNI) Magma Leasing and Shrachi Infrastructure Finance, with combined asset under management of over Rs 4500 crores, today announced their decision to merge in order to become "India's largest Financial Services Powerhouse".

Announcing the "whole-hearted approval" to this effect by the Board of Directors of both the companies today, Magma Leasing Managing Director Sanjay Chamria and his counterpart in Shrachi Infrastructure Ravi Todi here said following the Board of Director's decision they would now approach the RBI and other regulatory authorites, the shareholders of both the companies and the Calcutta High Court to formally approve the merger with effect from April one this year.

They said under the terms of agreement following the merger the company would now be known as "Magma Shrachi Finance Limited" and issue one Magma equity shares for three shares of Shrachi to 2.49 million shareholders of both the companies before conducting the due diligence on the transaction by a well known consultancy firm.

Highlighting positive aspects of the merger following years of intense negotiations, Mr Chamria said apart from leveraging the pan India branch network and the human resources of both the companies the merger would go a long way in diversifying their product portfolios and increase the asset base by over 31 per cent to become an economic powerhouse in private financial market.

Further elaborating, he said while the number of branches of the new company would be 146 following the joining of 68 Magma branches with 78 of Shrachi all across the country, the total number of employees would be around 2300 with majority of about 1500 working for Magma Leasing.

In terms of the optimal utilisation product portfolio, they said it would also go up from six fund based products to eight fee based products while major emphasis would be given in the sale of new vehicles in India's semi-rural and rural market.

Asked about the finacial stakes in post merger scenario, both Mr Chamria and Mr Todi said under a new Board of Directors the promoters stake would be 51.2 per cent, while that of the shareholders was to the tune of 27 per cent. "We have no plan to infuse any fresh fund into the new venture," Mr Chamria clarified replying to a related query.

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