The Hindu Business Line : GTF eyes 50% growth in turnover

In the current fiscal, GTF is planning to issue bonds worth Rs 50-75 crore of 5-6 years tenure to shore up its Tier-II capital. "Once we raise our core capital, our borrowing can go up to Rs 800 crore," Mr Sonmale said.

Mumbai , Aug. 17

GLOBAL Trade Finance (GTF), jointly owned by Exim Bank of India and other financial institutions, is targeting a 50 per cent growth in turnover in 2005-06.

The export finance institution hopes to increase its turnover to around Rs 3,000 crore from Rs 1,913 crore in 2004-05, said Mr Arvind Sonmale, Managing Director and CEO. GTF is a provider of international factoring, domestic factoring and forfaiting services. Mr Sonmale said, "We should be able to reach this target if India's exports maintain the 25 per cent growth rate, as in the last three years." The company's profit after tax increased to Rs 6.5 crore from Rs 1.5 crore in 2003-04.

Factoring (for the short-term) helps in lessening the credit and collection burden created by international sales. Forfaiting is meant for receivables against which payments are due over a longer period.

To meet its growth targets, GTF is planning to raise its capital from Rs 36 crore to Rs 81 crore by way of issuing preferential shares to its stakeholders.

The company is jointly owned by Exim Bank — 40 per cent, First International Merchant Bank, Malta — 38.5 per cent, International Finance Corporation, Washington — 12.5 per cent and Bank of Maharashtra — 9 per cent. GTF, which started business in 2001, was created to offer export-financing tools for exporters, especially small and medium-scale enterprises (SMEs).

The company's current networth is Rs 65 crore, which includes Tier-I and Tier-II capital. Apart from raising funds through equity, the company has set up lines of credit worth $140 million with banks such as Exim Bank, Standard Chartered, State Bank of India and ABN Amro. It also raises funds through debentures, short-term bonds and mutual funds.

GTF is also planning to introduce import factoring for the first time in India. Mr Sonmale said, "The scope is immense. Last year, the country's gross imports were worth $107 billion. We will be able to start import factoring within a month's time."

On the challenges of the factoring business, Mr Sonmale said, "Lack of awareness of the product is the biggest challenge. Banks do offer bill-discounting facilities, but they are collateralised and the margins are very high. The SME segment, to whom we mainly cater, cannot meet these requirements, as they often do not have strong balance sheets."

Unlike banks, GTF offers credit cover and does not insist on collaterals for the finance. The company also carries out collection and follow-up work through its network.

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