New Delhi : At a time when many public sector banks have deferred their public issues, Vijaya Bank has been bold enough to stick to its plans to come out with an maiden initial public offer (IPO) later this month. Notwithstanding the poor market sentiments, the bank feels that this is the right to tap the markets. Says Mr S Gopalakrishnan, chairman and managing director of Vijaya Bank, ``Our public issue is well-timed. We want to avoid entering the market at a time when there is a flood of similar IPOs.''Though the markets are depressed, most of the issues are getting reasonable response in the book building portion, even as they struggle in the fixed price portion. Since the issue is open to all, Mr Gopalakrishnan feels, ``The issue will get a good response especially from institutional investors and non-speculative retail investors, who have a long-term perspective.'' Like its so many counterparts, Vijaya Bank is also suffering from the problem of high non-performing assets (NPAs). In the financial year 1999-2000, the bank's net NPAs stood at 6.65 per cent. Net NPA has, though, come down as compared to 11.61 per cent in 1995-96. Mr Gopalakrishnan plans to reduce the figure further. ``We are targeting to reduce NPAs to five per cent by the end of the current fiscal with a thrust on cash recovery, along with provisioning,'' he adds.
The bank, according to its CMD, also has plans for modernisation and computerisation of operations. ``Till now, we were handicapped due to our conflict with the employee's union on the issue of computerisation, but now since the issue has been settled we plan to go ahead and computerise 70 per cent of our business by December 31, 2000,'' Mr Gopalakrishnan says. The bank also has plans to network the branches and set up ATMs at major branches.
A general downtrend in the economy has seen shrinking profit margins and decline in lending operations. Even though the advance to deposit ratio of the bank has gone up from 38.8 per cent in 1999 to 40.4 per cent during the year, it is still very low. Accordingly, the bank has shifted its focus from corporate to the retail segment and securitisation. In search for greener pastures, the bank has also shifted focus from manufacturing to the expanding information technology (IT) sector, within the corporate segment.According to the bank officials, their list of clients include names like NIIT and Satyam Computers.
Priced at par, the issue of 10 crore equity shares, with a face value of Rs 10, will augment the capital base of the bank and aid in expansion of assets. Post-issue, the government holding will come down from 100 per cent to 72.16 per cent. The issue, lead managed by SBI Capital Markets along with DSP Merrill Lynch, Kotak Mahindra and JM Morgan Stanley, will open for subscription from November 27 to December 4. The shares will be listed the stock exchanges of Bangalore, National and Mumbai.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.