The Hindu Business Line : Canbank Factors: Factor in for a year

THE fixed deposit programme of Canbank Factors, a subsidiary of Canara Bank, is open for investment. Considering the strong parentage and the growing business volumes, an investment up to one year can be considered. An investment beyond that can be avoided, given the fluid interest rate scenario.

Schemes and features: Canbank Factors offers cumulative and non-cumulative schemes. The interest rate for the 12-month tenor is at 6.75 per cent and 7 per cent. The interest is compounded at monthly intervals (see table for annual yields and minimum deposit requirements).

Business: Canbank Factors provides factoring services to business enterprises. That is, they lend against their client's account receivables at an agreed percentage and enable the client get cash as soon as he bills his customer.

The company's factoring volumes have grown steadily and logged a 19 per cent rise in fiscal 2002-03 to Rs 1,223 crore. Eighty per cent of the factoring volumes is contributed by the SME sector. Given the trend, the company has good prospects for factoring volumes growth, but this may not necessarily lead to improved earnings, due to rising competition.

Financials: The company recorded good numbers in fiscal 2002-03. For the year ended March 2003, the funds in use (FIU) surged 24.2 per cent to Rs 219.2 crore from the corresponding previous period.

The total income grew 13 per cent to Rs 29.4 crore. The post tax profit was at Rs 9.3 crore (Rs 7.3 crore) and the net profit margin 29.5 per cent.

The company's gross non-performing asset, as a percentage of FIU, rose to 1.72 (0.84). The company's capital adequacy ratio, as on December 31, 2002, was 26.09 per cent.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Steel: From strength to strength

Tonnes by the wire

Branding irons

Steeling the thunder

Bubbly market: Toast it, but sip lightly on profits

Ten that stand out in the crowd

Stock prices: Sensing the right signals

Riding the market bull

Corporate governance — Private and public sector responses

Nifty and Sensex — Differently driven

Of short sale and proposed changes in it