The Madras High Court (HC) has revealed that Tamilnad Mercantile Bank’s (TMB) initial public offering (IPO) resolution has been passed, including the election of its directors. All the resolutions — submitted to the court in a sealed cover — were passed with more than one third of the votes polled.
The bank has, since 2016, been seeking the nod of its shareholders, who are largely from the Nadar community, to go public, but a majority has been rejecting the proposal.
At the 93rd annual general meeting (AGM) held in 2016, when the proposal for an IPO was placed before the shareholders for the first time, it was declined.
The lender held four AGMs between 2015-16 and 2018-19 (94th AGM to 97th AGM), and the one held last month was under the supervision of the Madras HC. The voting results were given to the court in a sealed cover.
While the formal order of the court was not uploaded, it dictated the voting results wherein it was stated nearly 75 per cent of the shareholders approved the IPO.
The bank’s former chairman and director S Annamalai and others have confirmed the development and expect TMB to be listed within the next 12 months.
It may be recalled that the Reserve Bank of India has been asking the bank to be listed.
According to Annamalai, the IPO will also help unlock shareholders’ value. According to some shareholders, TMB’s share is trading at around Rs 400 per share outside the public market.
The IPO will also help enhance visibility, aid customer acquisition, provide liquidity to existing shareholders, increase the ability to raise affordable capital faster, and enhance brand and corporate value. The IPO will also strengthen the bank’s capital adequacy ratio (CAR) and help it to expand its branches.
In 2019-20 (FY20), the bank had posted a net profit of Rs 407.56 crore (Rs 258.58 crore in 2018-19, or FY19). Its total business stood at Rs 64,540.79 crore, against Rs 61,624.59 crore. Gross non-performing assets (NPAs) dropped to 3.62 per cent in FY20, from 4.32 per cent in FY19, while net NPAs dropped 1.8 per cent, from 2.4 per cent. The CAR (Basel III) was 16.74 per cent in FY20, compared to 16.17 per cent.
The bank has been mired in ownership tussles ever since foreign investors (FIs) bought stake from businessman C Sivasankaran, who had acquired the stake from Essar Group.
The transaction to FIs had also attracted show-cause notice from the Enforcement Directorate to TMB and Standard Chartered Bank, among others, for contravention of the Foreign Exchange Management Act (FEMA), 1999. The battle to control the bank still continues among three different groups from the community.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU