According to company spokesman Darshan Mehta, the move comes in the wake of Anagram Finance's merger with ICICI. ``ICICI is only interested in the asset side of our balance-sheet; they do not want anything to do with our liabilities. Hence, the decision to repay all our liabilities and convert Anagram Finance into a zero-debt company,'' he pointed out.

The ICICI stand with regard to Anagram Finance's liabilities comes as a surprise as the deal clearly states that ``all assets -- including intra-group assets, which will be purchased by the investment companies of the Lalbhai group, and liabilities of Anagram (outstanding as on the effective date of amalgamation) will be transferred to ICICI''. However Mehta arguesthat the pre-payment of Anagram's total debt liabilities is not ICICI's pre-condition to the merger. ``It does not form part of the memorandum of understanding we have signed with ICICI,'' adds Mehta.

In the first stage, Anagram Finance will pre-pay the principal amount of the FDs to its deposit-holders with interest up to October 15, 1998. According to the company, ``All FDs which are maturing on and after October 15, 1998, will be pre-paid along with interest up to October 15 at the contracted rate on the said date.'' At present, the company has a fixed-deposit base of Rs 140 crore.

Although Mehta refused to divulge the total debt obligations of Anagram Finance, he said the pre-payment will be financed through the promoters' contribution of Rs 125 crore (which forms part of the MoU with ICICI) as well as through the securitisation of Anagram Finance's lease and hire purchase portfolio. According to Mehta, the securitisation of receivables is largely with ICICI.

As a pre-condition to the merger theinvestment companies of the Lalbhai group have to bring in Rs 125 crore zero-coupon advances over the next three months which will be converted into 3 equity shares of ICICI on the effective date of merger. The fund is to compensate for the erosion in networth and estimated losses on Anagram's asset portfolio.