Here is a news article published in TIMES OF INDIA on 06.09.10 ,
in which ceo of a banc tells us about his banc`s plans for future,
lets track this. over a year or two and see what happens.
currently stock of dhanlaxmi banc is trading at Rs. 186 on NSE
| We are not worried about profitability Dhanlaxmi Bank CEO Amitabh Chaturvedi says the capital spent on creating the banks capacity will give him two and a half times the business this financial year without opening any new branches UNDER his tenure in Reliance Capital Market,Reliance Mutual Fund became the countrys number one mutual fund in terms of assets.After quitting Reliance Capital in 2008,Amitabh Chaturvedihad disappeared from public view to re-emerge six months later as the managing director and CEO of South-based Dhanlaxmi Bank.Prior to joining Reliance Capital,he was with ICICI Bank in charge of resources management. After taking charge at the Keralabased bank,Mr Chaturvedi has brought in a new team,increased the banks visibility,expanded its ATM and branch network and announced ambitions to convert the regional bank into a pan-Indian one.In an interview with Sangita Mehta,he talks about his plans for the bank and views on new private banks. Its two years since you took charge.But the banking world still talks about your perceived connections with your former employer Reliance ADAG a group,which may be interested in a banking licence .I guess two years ago it was a perception.Now this perception,if its there at all,is in the minds of very few.I do not see this question coming to me often.In the past,if I met 10 people,eight would ask me this question.Now it is only one out of 10.This perception is not there anymore and this rumour is baseless. You have rebranded the bank and its a visible change.But your net and operating profits are lower than when you took charge,and NPAs are higher too. Our NPAs as a percentage of assets have come down.But in absolute terms,they are higher.For any start-up organisation,there is a gestation period.Even though it was a running bank,we have had to do a complete overhaul.We had branches but never had staff.The bank had computers but never had technology.Also,the bank never advertised.Today,a bank requires a certain minimum infrastructure.I dont think we should be worried about profitability.Last year was the investment phase.In one and a half years,we had 2,500 employees,refurbished branches and invested in technology.This was the reason why our profits fell. This basic minimum investment was required for take-off.Last year was the year for capacity building.This year is my optimisation period.This capacity that is created will give me two and half time of business in this financial year without opening any new branches.Our business has already grown more than 100%.Advances rose from 2,500 crore to over 6,000 crore and from 3,000 crore to 8,500 crore.In absolute numbers,when I am doubling the balance sheet,there is a possibility of 10 crore increase in bad loans.In percentage terms,net and gross NPAs have come down.We are in the business of lending.NPAs will happen. You stepped in with a three-year term,of which almost two are over.What is your strategy for the next one year But mine is not a three-year strategy.I am looking at something which is long-term for the bank.I am creating a base for banks to do business.I would either get a rollover or somebody else may come in.I dont see a likelihood of me not getting an extension.But if I look at a one-year tenure and take decisions,it may not be good for the bank. Many old private banks are getting CEOs from foreign and private banks.They are expected to take an aggressive stance and competition will intensify.Under the circumstances,what would your USP be We do not want to get into a mindset of creating a USP and spending time and money on it.We want to do basics of banking take money and give money in a way that satisfies customers.Secondly,a lot of private CEOs are joining old private banks but we are one and a half years ahead of them.I took time to make basic structural changes like taking staff out of IBA wage structure,introducing ESOPs and creating a culture of variable component. New private banks will sooner or later come in the market with huge capital and better technology.What are the chances that a bank like Dhanlaxmi will be acquired New private banks will have to start with capital of 1,000 crore.We are already at 1,000 crore and we will be ahead of new banks by at least three years.Even if they get the best of talent,they will still have to set up a new bank and my team is already working.When they start their engine,I will be on the fourth gear.It will be easy for me to raise capital because I have a track record to show.For new banks,maybe the first initial capital will have be brought in by the promoter.I dont think they will start with 5,000 crore as they will have to go out and raise money as a start-up.But I will also be careful,because the new guys will get a new perspective.That may be a catch-up mode for us.But that is the excitement. Dont you see yourself as an acquisition target Its a free world.However,there are rules including RBI regulations.But we will not be acquired.We will definitely acquire if there is an opportunity. Are you comfortable with an individual,Raja Mohan Rao,being the largest stakeholder.How will it be in the future Will this stake fall further There is a single entity which has the largest stake.But it was 37% earlier,which has come down to 10% and now it is 7.5% post our recent qualified institutional placement (QIP).But I dont think 7.5% is a meaningful number for someone to overshadow the functioning of the bank.Whether the stake will come down will depend on our fund-raising strategy.If we do another QIP or a rights-cumpublic issue,his stake will come down. What targets have you set for Dhanlaxmi Bank in the coming years In 2015-16,we will be in the league of top five private sector banks in the country. Top five in terms on assets We have set a few parameters.Like we want to be profitable and a double A-rated bank with a large branch network and large advances portfolio. Which means you will have to raise a huge capital.Something like 5,000 crore. No,it would be in the region of 3,000 crore.We already have 1,000-crore capital and would also be making profits.In five years,if I am not able to add 1.5 times From TIMES OF INDIA. of mumbai edition. 06.09.2010 |
