Tamilnad Mercantile Bank plans Rs 1.2K cr IPO this fiscal

The Tamilnad Mercantile Bank (TMB), which will turn 100 this year, will come out with an initial public offering (IPO) of about Rs 1,000 crore to Rs 1,200 crore, said a top official of the bank.

The official also said that TMB logged an after tax profit of Rs 603.33 crore for the year ending March 31, 2021, as compared to Rs 407.69 crore reported in the corresponding period of the previous fiscal.

The bank’s total business for FY 2020-21 stood at Rs 72,511.45 crore (deposits Rs 40,970.42 crore, advances Rs 31,541.03 crore), up from Rs 65,061.21 crore (deposits Rs. 36,825.03 crore, advances Rs. 28,236.18 crore) reported last fiscal.

Speaking to reporters, K.V. Rama Moorthy, Managing Director and Chief Executive Officer (CEO), said that there will also be an offer for sale of 5 per cent so that the existing shareholders can dilute their holdings.

He said TMB will file the necessary IPO papers with the Securities and Exchange Board of India (SEBI) in 8-10 weeks time.

“Overall, the post issue dilution will be about 10 per cent,” he said.

Queried about the status of the share transfers made to Katra Holdings and others without the Reserve Bank of India’s (RBI) permission and the fine slapped on TMB by the Enforcement Directorate (ED) last year, Moorthy declined to comment, saying the issue is in the court.

Last year, the Special Director, ED (southern region), had imposed a penalty of Rs 11.33 crore on TMB for recording in its books the transfer of 46,862 shares of the bank in the names of seven foreign entities — RST Limited (wholly owned by Ravi S. Trehan), Katra Holdings Limited (wholly owned by Ramesh Vangal), GHI I Limited (wholly owned by Rajat Gupta), Kamehameha (Mauritius) Limited, FI Investments (Mauritius) Limited, Cuna Group (Mauritius) Limited, and Swiss Re Investors (Mauritius) Limited.

The above seven entities were not approved by the RBI for acquiring the shares of TMB.

A further penalty of Rs 5.66 crore was imposed on TMB for its act of recording in its books the subsequent transfer of 27,289 shares out of the above 46,862 shares in the names of two foreign entities — Sub-Continental Equities Ltd, Mauritius, and Robert & Adris James Company Limited, Mauritius, without the permission of the RBI.

Penalty was also imposed on the directors of the TMB Board who had approved the recording of the transfer of shares of the bank.

With a capital adequacy ratio (CAR) of 18.94 per cent (Basel III norms), Moorthy agreed that TMB is not short of capital and the IPO proceeds will be used in branch expansion and others.

The Tuticorin-based TMB currently has about 509 branches and Moorthy said the target is to increase that to 650 by the next fiscal.

Though TMB doesn’t have any pending new branch licence, it plans to add 66 branches this year and the rest in the next fiscal.

The bank has 1,132 automatic teller machines (ATM), 47 e-lobbies and 260 cash recycler machines.

On the impact of Covid-19, Moorthy said he is apprehensive about how it would pan out and there may not be another countrywide lockdown.

With Covid-19 vaccination, the situation would improve and it is for the Central government and the RBI to decide on loan moratoriums for micro, small and medium enterprises (MSME), Moorthy said.