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PNB Gilts issue to be priced at Rs 20 premium

Our Bureau

NEW DELHI, June 23

PNB Gilts Ltd, a wholly-owned subsidiary of Punjab National Bank, is proposing to come out with an initial public offer (IPO) of 3.5 crore equity shares by mid-July. This public issue will be the first from the PNB group and will also be the first IPO by any primary dealer.

PNB Gilts is proposing to offer shares to the public at a premium of Rs. 20 per share, aggregating to Rs. 105 crores. The company is planning to use funds so raised to augment long-term resources.

Speaking to Business Line, Mr. Arun Kaul, Managing Director, PNB Gilts, said the company being a primary dealer in Government securities, a major portion of the funds will be deployed in Treasury bills, Government dated securities, State Government and o ther approved securities.

In addition, the company can deploy funds not exceeding its net-owned funds in non-Government securities such as bonds of public sector undertakings and other money market instruments.

In the meanwhile, PNB Gilts has reported a growth of 75.4 per cent in its total income at Rs. 263.76 crores during the year ended March 2000, as against Rs. 150.41 crores achieved during the previous year. The profit before tax also increased by 72.4 per cent to Rs. 105.84 crores during the year 1999-2000, as compared to Rs. 61.40 crores during the previous year.

PNB Gilts' profit after tax during 1999-2000 was Rs. 65.76 crores, up 54.4 per cent from Rs. 42.59 crores achieved during 1998-99. According to Mr. Kaul, the good performance of the company was due to the active secondary market operations by PNB Gilts w hich helped it maintain its market share at 7 per cent in Government securities and the Treasury bill market despite an increase in the number of players in the market.

The total outright turnover in Government securities and treasury bills was Rs. 38,112 crores during the year as against Rs. 17,440 crores last year. In the primary market also, against the annual bidding commitment of Rs. 4,500 crores in Government secu rities, the company made bids worth Rs. 11,045 crores in the various auctions achieving a success ratio in the bids made at 43.42 per cent against the required 33.33 per cent.

In treasury bills also, against the annual bidding commitment of Rs. 2,120 crores, the company made bids worth Rs. 4,095 crores and achieved a success ratio of 41.20 per cent against the Reserve Bank of India stipulation of 40 per cent.

PNB Gilts is the first and only primary dealer in the country to achieve the ISO 9002 certification. The company also has a high P1+ rating from CRISIL for its short-term borrowing programme to the extent of Rs. 250 crores.