AHMEDABAD, Aug 1: Gujarat Industrial Investment Corporation (GIIC) and Gujarat State Financial Corporation (GSFC), term-lending agencies for large and medium-scale industries, are likely to be merged. A decision on the matter will be taken in due course by the Gujarat government, which has already reduced its holding in the two companies.

The state government's stake in GSFC has already come down below 50 per cent. "It is inevitable in the long run. They have to function as banks, and with a high level of professional efficiency," officials of the two corporations said, while admitting that a merger was likely in the long run.

The two companies initiated restructuring exercises some time ago.While some measures have already been implemented, others are still being adopted. There are several similarities between the two companies, and a merger will avoid duplication and ensure better human resource development.

According to GIIC's restructuring plans submitted to the Gujarat government, ICICI, IL&FS and HDFC are together scheduled to take up to 40 per cent of the equity. GIIC has engaged AF Ferguson as consultants.

GIIC chairman SK Shelat has invited ADB through its resident representative for India, Shigeko M Asher to take up to 10 per cent equity in GIIC. GSFC had gone public with a Rs 120 crore issue last February. GSFC managing director R Bannerji told reporters that net profit more than doubled to Rs 33.39 crore in 1996-97 from Rs 15.60 crore.

Its loan sanctions scaled a peak of Rs 401.90 crore compared with an actual disbursement of Rs 318.82 crore, the corresponding figures for the previous year being Rs 340.12 crore and Rs 262.20 crore respectively.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.