India Factoring, a joint venture between Punjab National Bank (PNB) and Malta-based FIMBank, is set to receive Rs 100-crore equity infusion from its promoters by the end of the third quarter. The non-banking financial company, in its first full year of operation, would also start providing international factoring services next month.
“We had received the authorised dealers' licence for the purpose of foreign exchange transactions from the Reserve Bank of India last month. We expect to get our first few export factoring orders rolling in October,” said Chief Executive Officer, Sudeb Sarbadhikary. The company's total outstanding assets currently stand at Rs 500-600 crore, and it aims to double this by the end of the current financial year. “We will need additional capital infusion by December-January to maintain our growth momentum,” he said. In March, the company’s total assets stood at Rs 250 crore.
Major shareholders in the company include FIMBank (49 per cent), PNB(30 per cent) and Banca IFIS (10 per cent). “All the shareholders have committed capital infusion of Rs 500 crore at different levels, as and when milestones are reached,” Sarbadhikary said.
Factoring services involve the prepayment of credit invoices, or the client's bills. The company typically finances 80 per cent of the client's invoice and enjoys two-three per cent of spread in the business. “Currently, there is a general slowdown in the economy because of the high interest rates, and the billing has declined 15-20 per cent, especially in the auto sector,” he said.
The company’s current clientele includes small and medium enterprises (SMEs) in the pharmaceuticals, textiles, automotive parts and ancillary, information technology and steel sectors. In India, the factoring business usually fills the gap in SME funding from banks. Major players in this field include SBI Global Factors, IFCI Factors and Bibby Factors. HSBC Bank, Standard Chartered Bank and DBS Bank also provide factoring services in India.
