The Hindu Business Line : GTF to take factoring to semi-urban centres

The figures tell the story. Quantum of funding provided this year will cross Rs 6,000 crore. Outstanding loan assets will more than double to Rs 1,700 crore. Net profit will increase at least 50 per cent to Rs 42 crore. Zero NPAs. With this kind of performance, Global Trade Finance, the NBFC set up for providing factoring services, believes that it is time to expand its presence across the country.

Today, it has seven offices. Very shortly, it will have fifty more.

The Global Trade Finance's Managing Director, Mr Arvind Sonmale, sees his company as a key player in SME financing (although its products are not necessarily meant for SMEs.) He explains that for a SME, collecting dues from a customer, especially from a big customer, is a headache. "Here is where we come in", he says, "You supply the goods, we will fund you against the receivables." And, if you take an insurance policy from GTF, you won't even have to bother about whether the customer ultimately pays up or not.

This is the model of business that has taken GTF to the top position in factoring services. Today, it has around 550 customers. GTF is owned by Exim Bank of India (40.5 per cent), FIM Bank, Malta (38.5 per cent), IFC, Washington (12 per cent) per cent and Bank of Maharashtra (9 per cent).

Now, in order to reach out to more SMEs, GTF intends to put up as many as fifty "two-man" offices across the country.

Most of these offices will come up at industrial clusters such as Tiruppur, Coimbatore, Pune and Ludhiana. In order to attract customers, the company has changed the tagline for its service from `factoring' to a more explicit `funding against receivables without recourse'.

These offices, which will be connected to GTF's central server in Mumbai, will need to do no more than front-ending GTF. "All they have to do is to market GTF to the customers," says Mr Sonmale. And when a customer comes in, they will only need to scan the invoice and send the image to the head office.

He told Business Line recently that the company offered export factoring without recourse and domestic factoring either with recourse or without recourse if the client bought a credit insurance policy. Funding is without any collateral and based only on the track record of transactions between the client and his customer.

"In 2004, we were processing 175 invoices a day. Today we are doing more than 800," he said. So far the company has remained in the large cities but now intends to extend its presence to semi-urban, industrial areas.

In order to fund the growth, GTF will need to raise capital next year, which could come either from the shareholders or through an IPO.

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