The Hindu : GTB plan for fresh capital infusion

Online edition of India's National Newspaper
Wednesday, Oct 01, 2003

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Business

GTB plan for fresh capital infusion

By Our Special Correspondent

HYDERABAD SEPT. 30. Global Trust Bank plans to raise Rs. 500 crores capital and negotiations are in an advanced stage with the short-listed investors. A special committee comprising three directors has been constituted for finalisation of the terms of the investment. This process may take three to four weeks, according to Sudhakar Gande, Managing Director.

In a statement issued here late Tuesday evening, Mr. Gande said GTB's plans of capital infusion were at an advanced stage and the choice had been narrowed down to two reputed international fund/strategic investors. This coupled with the steps taken over the last 18 months had positioned the bank on a growth path once again, he felt.

The plan to raise further equity capital was to meet the capital adequacy requirement and for this purpose it had raised the authorised capital to Rs. 350 crores and this might be raised further if required, he said. The bank had appointed Lazard India and J. M. Morgan Stanley as financial advisors, who had in turn brought the reputed funds/strategic investors.

The board of directors on Tuesday also adopted the audited accounts for the year ended March 2003 and the quarter ended June 2003. For March 2003, the bank earned an operating profit of Rs. 36.44 crores from normal operations, but posted a net loss of Rs. 272 crores on account of provisions and write-offs amounting to Rs. 309 crores, which "is required for clean up.''

Consequently for the June quarter, the bank posted a net profit of Rs. 4.59 crores. Mr. Gande said the balance sheet had been cleaned up and all provisions made in accordance with the RBI guidelines. He felt the bank had turned the corner and expressed confidence it would continue to make profits in subsequent quarters.

During the year under review, the bank recovered over Rs. 293 crores from critical, NPA and written off accounts. Additional securities amounting to Rs. 200 crores were obtained in certain accounts.

The Rs. 309 crore provisions and write offs arose mainly due to its exposure to capital markets and "and other sensitive sectors'' in the earlier years. With an upswing in the economy and capital markets, the potential for recovery has gone up, the bank feels.

As of March 2003, deposits were Rs. 6,921 crores (Rs. 6,443 crores) reflecting a 7.4 per cent growth, and net advances Rs.3,276 crores (Rs.3,435 crores).

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