Tayals To Raise Their Stake In Bor To 49%

The Tayals, the promoters of Bank of Rajasthan (BoR), have decided to hike their stake in the bank to 49 per cent from the current 39 per cent by taking advantage of the enhanced creeping acquisition limit of 10 per cent even as earlier plans to acquire a South-based bank have been shelved.

The 10 per cent enhanced creeping acquisition limit, which came into force after the 9/11 incident to revive the then sagging domestic capital markets, ends next month and this limit is to be restored to five per cent in a given financial year.

"We are in the process of organising funds from personal savings and loans against insurance policies," said BoR chairman, Pravin Kumar Tayal.

At the current market price of Rs 14 a share, the acquisition cost for the promoter group would work out to around Rs 15 crore. Book value of a BoR share is currently at Rs 23.5.

"In book value terms the market price of a BoR share should have been around Rs 50. We expect the market price to improve in two to three year's time," said Tayal, who has been granted a two year extension (from August 2002 to August 2004) as chairman of BoR by the Reserve Bank of India.

On the issue of organic growth vis-a-vis inorganic growth, Tayal averred that BoR, which is predominantly North-based, expects to expand at the rate of 50 branches a year, from a 360 branch network now to 500 in three-years time.

He pointed out that going by the availability of private sector banks in the South an acquisition/ merger was not on the cards.

The bank is expecting to declare a dividend for the first time in six year's in this financial year. It is eyeing a net profit of around Rs 60 crore in financial year 2003 as against Rs 40 crore in FY 2002.