Global Trade Aims At $200 Million Turnover

Global Trade Finance (GTF), a three-way joint venture floated by the Export Import Bank of India, WestLB and the International Finance Corporation (IFC), is eyeing a turnover of $200 million in the current fiscal by offering its range of forfeiting and factoring products to exporters among the small and medium enterprises (SME) in the country.

GTF kicked off its operations on September 1. The company, which has a paid-up capital of Rs 45 crore, expects to break-even in the current fiscal.

German credit institution WestLB holds 40 per cent stake in the non-banking finance company, Exim Bank accounts for 35 per cent stake, while IFC holds the balance.

"The forfeiting and factoring products, which are post-shipment export finance products, will boost exports from the SME sector. We have set a very conservative turnover target of $200 million," T C Venkat Subramanian, managing director, Exim Bank, said at a press meet here today.

Export factoring is a comprehensive receivable management service for an exporter. It provides credit guarantee against the financial default of the buyer, provides finance up to 90 per cent of invoice value, offers collection services and professional sales ledger and analysis.

Forfeiting allows discounting of trade related obligations due to mature at a future date without recourse to the seller for tenors up to 10 years on a fixed rate basis.

"Receivables management is the biggest headache for the SMEs. However, with the help of factoring and forfeiting products, the companies can hope to achieve higher turnover with limited capital," said M G Bhide, who is the chairman of the National Institute of Bank Management and also a director of GTF.

Veena Mankar, MD of GTF, pointed out that factoring and forfeiting were risk mitigation tools for SME exporters and actual revenues for GTF would come through service charges.

MUMBAI: The recent terror attacks in the US could affect Indian exports, especially in the gems & jewellery, readymade garments and textiles sectors, according to T C Venkat Subramanian, MD of Exim Bank.

India's exports to the US stood at around $6 billion last fiscal. Subramanian pointed out that exporters should focus more on Latin American (LatAm) countries in the current global economic slowdown.