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Our Bureau

Chennai , July 28

THE merger of Shriram Investments Ltd (SIL) into Shriram Transport Finance Company Ltd (STFC) will happen at a 1:1 ratio, the group announced on Thursday.

The Chairman of the Shriram Group, Mr R. Thyagarajan, said that the merger would create the biggest truck finance company in India. "The combined entity will enjoy a stronger synergy of financial resources, managerial and marketing expertise that will value for all our investors and stakeholders," he said.

Last year, the combined disbursements of the two companies was about Rs 6,000 crore, of which, about Rs 3,400 crore was retained by the companies, and the other Rs 2,600 crore was sold to partner banks. The two companies have a combined networth of Rs 400 crore and a market capitalisation of close to Rs 1,000 crore.

About 75-80 per cent of the loans of the two companies go for purchase of used trucks, a niche that the group has found a home for its operations.

The board of directors of STFC, SIL and Shriram Overseas Finance Ltd also decided to implement an employee stock option scheme (ESOS), covering approximately 500 employees of all three companies. ESOS is usually granted to senior employees, whereas Shriram's ESOS will be granted mostly to the employees at the branch level of STFC, SIL and SOFL, according to a release from the company.

Meanwhile, the group has announced the first quarter results for the three companies.

The Managing Director of Shriram Transport Finance Company, Mr R. Sridhar, said that the combined disbursements of the two merging companies in the first quarter, at about Rs 1,000 crore, was up about 20 per cent over the same period last year.

Asked for guidance for the current year, Mr Sridhar said that he expected a 25 per cent growth in disbursements this year and at least a 25 per cent growth in bottomline.

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