NEW TARGETS

Mumbai, Jan. 24: The State Bank of India (SBI) is acquiring 91 per cent of Global Trade Finance Ltd (GTFL), a factoring company, for Rs 520.55 crore.

Factoring is a financial service under which a bank or an NBFC provides loans to a company against receivables from the company’s B2B customers or against invoices of sale of goods.

These services are generally provided to small and medium enterprises who often find it difficult to take loans by pledging assets.

For instance, if an exporter is to receive some amount from a third party, the factor advances him a fixed sum (in most cases 70-95 per cent of the amount that has to be received) and later recovers this directly from the importer.

The exporter does not have to wait to receive the funds from the importer. Money is immediately available to him, thereby improving his cash flow. GTFL is a market leader in factoring, which has shown robust growth in recent times.

The SBI today informed stock exchanges that it would be buying the stakes of the Export-Import Bank of India, the International Finance Corporation and Malta’s FIMBank in GTFL.

GTFL reported a turnover of Rs 6,200 crore in 2006-07, a growth rate of 121 per cent over that of Rs 2,800 crore in the previous year with an after-tax profit of Rs 28.87 crore. The value of GTFL’s factored assets as on March 31, 2007 was Rs 1,749.6 crore.

Profit jumps 70%

The SBI’s third-quarter profit jumped 70 per cent to Rs 180.86 crore from Rs 106.50 crore in the corresponding previous period.

Net interest income for the nine months ended December 31, 2007, rose over 16 per cent to Rs 12,220.64 crore from Rs 10,511.49 crore in the previous year. Gross advances grew to Rs 395,343 crore at the end of the nine months from Rs 314,850 crore at the end of December 2006, a growth rate of Rs 80,493 crore or over 25 per cent.