SBI Factors & Commercial Services Pvt Ltd is likely to put into play the merged entity with Global Trade Finance (GTF), a leading factoring firm, within a year. The integration process will be complete by then.
“It will take about a year for the merged entity to start operations,” said DS Das, managing director and chief executive officer of SBI Factors.
SBI completed acquisition of GTF in March this year, having closed the deal in January after picking up a 92% stake in the company for about Rs 521 crore.
SBI Factors, the country’s first factoring company, had an asset base of Rs 1,900 crore by end of May this year, and aims to increase this to Rs 2,000 crore by the end of this fiscal. According to top officials, the combined asset base of GTF and SBI Factors would be around Rs 7,000 crore after the merger.
Das said the Euro 5 billion factoring market in India has enough space for growth. While a small country like Taiwan has a factoring market to the tune of Euro 44 billion or almost 15% of the country’s gross domestic product, the Indian market is merely 0.06% of the country’s GDP.
While SBI Factors has a 30% market share, post merger it would shoot up to 80%.
Das, here to open SBI Factors’ 11th branch office, said the size of the market would boom if non-recourse factoring comes into play. “Then you can target some of the large players,” he said.
While SBI Factors grew at 60% last year, growth will be flat this year, Das said. Last year, 70% of the factoring was from letter of credit and 30% was from core factoring including receivables, purchase bill and export factoring.
“This year we are looking at 80% from core factoring where our asset level will remain constant,” Das said.
“We are looking at a net profit of Rs 37 crore by end of this fiscal,” Das said.
SBI Factors has clocked a net profit of Rs 28 crore in 2007-08 against Rs 13 crore last fiscal.