TO TAP the SME market, Rs 6,250-crore Global Trade Finance, providers of export-import trade finance solutions (mainly to the SMEs) plans to enhance its loan assets to Rs 600-700 crore in the Chandigarh region in one year span by opening satellite offices here. At present, the Mumbai-based company’s loan assets in the region are close to Rs 200 crore. It will be lending the factored loans at a rate of 11-12.5% depending on the credibility of the company.
Loan assets under Factoring normally does not require any collateral which is the main blockade for SMEs for getting loans from banks. Factoring business world wide is close to euro 1,200 billion. In India it is at a nascent stage and is approximately worth euro 3.5 billion. Factoring is a receivable management and financing service designed to improve the seller’s cash flow and cover risk. MD & CEO of Global Trade Finance Mr Arvind Sonmale says, “We offer a viable alternative to bank finance for the SMEs based here. Being a NBFC, GTF enjoys the flexibility of providing adequate, timely and hasslefree finance. We are focused on supporting the trade finance needs of the SMEs, which have flourished in Punjab. GTF has opened its office in Chandigarh in view the enormous business potential in Punjab. We shortly plan to open offices in Ludhiana and Jalandhar.”
As on September 2007, GTF turnover stands at Rs 4,700 crore and factored loans outstanding stands at Rs 2,400 crore. It registered turnover of Rs 6,250 crore in FY 2006-07 against Rs 2,800 crore in FY 2005-06. This had also helped GTF clock over 100% increase in its bottom-line for the third year in a row.
Experts opine that Chandigarh region offers good business opportunities not only for companies like GTF but for SMEs also. Chandigarh region is a home to SME units in segments like paper manufacturing, basic metals and alloys, machinery, food products, sanitaryware, auto parts, machine tools, cycle parts, fasteners, pharmaceuticals, auto components, electrical appliances etc.
GTF commenced its operations in September 2001, as a joint venture promoted by the Export Import Bank of India, WestLB, Germany and IFC, Washington. Currently the stakeholders are: Export Import Bank of India (40%), FIM Bank, Malta (38.5%), IFC, Washington (12.5%) and Bank of Maharashtra (9%).