SAHARA BIKASH BANK LIMITED

Note: IPO applied for more than 50 units should be divisible by 10 and when applied for more than or equal to Rs 50,000 the payment should be made through account payee check.

Issue Manager:  

• Global IME Capital Limited

Introduction of Sahara Bikash Bank Limited

Company Profile

Sahara Bikash Bank Limited was established in 2066/09/28 under the Company Act, 2063 and has been carrying out its activities as per Nepal Rastra Bank Act 2058, and Bank and Financial Institution Act, 2063. It commenced its operation as “B" Class (One District i.e. Sarlahi) financial institution of Nepal from 2067/07/10 after receiving a license from Nepal Rastra Bank as on 2067/06/18.

The bank was mainly established to facilitate in the economic development of country by channeling the savings of locals to needed area. With this ambition, businessman, intellectuals, industrialists, bankers and academicians came together to establish Sahara Bikash Bank Limited.  From establishment, the company’s mission has been to become preferred provider of quality financial services.

The Bank has been registered with an authorized capital of NPR 30 million and currently holds an issued capital of NPR 20 million and a paid-up capital of NPR 14 million.

At present, promoters own 100% shareholding of the bank which is expected to come down to 70%, provided the proposed IPO is fully subscribed.

The bank’s registered office is situated at Malangwa-9, Sarlahi district, which is also the Head Office of the bank. Currently, the bank is providing services to its customers through branches  in Barahathawa, Bayalbas and Lalbandi of Sarlahi.

Major shareholders of Sahara Bikash Bank Limited

Board of Directors of Sahara Bikash Bank Limited

1.       Mr. Sugandha Kumar Gupta, Chairman

Qualification: I.Com

Work Experience: Associated with printing press and other businesses for a long time.

2.       Mr. Bal Krishna Sah, Director

Qualification: S.L.C

Work Experience: Associated with pharmacy business for a long time.

 3.       Mr. Amrendra Kumar Yadav, Director

Qualification: BBA

Work Experience: Associated with construction business for a long time.

 4.       Mrs. Suniti Kumari Yadav, Director

Qualification: Graudate

Work Experience: Associated with construction business for a long time.

Board of Directors (BOD) shareholding in the bank as per the Offer letter

Management Team of Sahara Bikash Bank Limited

Mr.  Ajit Kumar Jha (Chief Executive Officer and Company Secretary)

Qualification:   MBS

Mr. Pankaj Hari Sharma (In-charge - Credit (H.O.))

Qualification: BBS

Mrs. Rima Pandit (In-charge - Remittance (H.O.))

Qualification: BBS

Capital Structure

FINANCIAL HIGHLIGHT OF THE BANK

                                                                                                                                                                Figure in Rs “000”

Following its establishment, the paid-up capital of the bank has not come to alter. Currently it stands at 70 percent of the issued capital. With the initial public offering (IPO), the company plans to par the capital structure with that of the issued capital.

In addition, the central bank of Nepal has asked the bank to raise its paid up capital to Rs 5 arba from the existing level. So, the chances of right share or bonus share are high in future.

Now, observing the reserve and surplus of the company, it has sustained healthy growth till date. Coming to the third quarter data of this fiscal year, the bank has made significant growth as it reserve size has incremented by 233.54 percent which is a very astounding growth figure.

As per the published CD ratios, we can clearly see that the utilization of fund by the bank has gradually increased coming to the latest period. If we compare current third quarter CD ratio with that of two years before, it has increased by around 16 percent, however, CD ratio is still behind the optimum level set by NRB at 80 percent.

From the table, we see that the bank has been making increment in both deposit and loan but the growth figures of both portfolios have shrunk to double digit. However, it is to be noted that the size of both portfolios are reasonably good for a new bank which is functioning under one district only.

Looking at the loan portfolio of the company, it still sustains higher exposure in Overdraft Loan/TR Loan/ WC Loan i.e. 92.24 percent which is nearly 3 percent higher than the previous third quarter data. The second highest exposure is in Other Loan with 7.68 percent. While, the bank has slightly decreased its exposure to Home/Housing Loan to 0.08 percent from 0.73 percent of corresponding third quarter. It is to be noted that the bank doesn’t have any loan exposure in real estate, margin type and term loan.

In the initial period as the base size of profit was small, the bank was able to publish such a hefty growth in both operating before provision and net profit. In addition, the high spread, because of excess liquidity in the market, also attributed to the growth.

However, coming to the third quarter data of this fiscal year, the outcome is different. In this quarter, the interest income growth shrunk to 55.99 percent from that of 76.98 percent which mainly diluted the growth size in earning indicators.  Apart from it, the high expense growth to revenue further impacted the outcome.

In spite of such outcome, the progress chart of bank till date is still very positive going by the its size.

Now if we look at the net write back/loan, in the current third quarter it is tallied at 0.55 percent  from 0.43 percent of previous corresponding quarter which suggests the bank bad loans has slightly  increased with raise in loan portfolio. From net provision figure also, we can conclude that same thing as the net write back has increased to Rs 908 thousand from Rs 634 thousand.

But, it is to be noted that ratio of bad loan increment has slightly decreased compared to previous third quarter as the bank NPL only stood at 1.06 percent from 1.11 percent. This suggests that the bank is able to minimize its back loan in spite of increasing loan flow.

If we look at the Net Worth of the company, its figure is one of the best among its competitors. Now, looking at the EPS, ROA and ROE till the third quarter of the FY 2070/71, we can see that, the increment in all this indicator has been on steady path.

But, it should be kept in mind that the BOD of this bank mainly consists of the directors with business background that lack banking experience. In addition, the bank is experiencing stiff competition for the commercial banks.

However, as the bank is focused on only one district, it will have better understanding of people’s needs residing in this area than other national level banks which may lead to its own niche market.

Along with it, looking at the market condition, where even the company having net worth below par is oversubscribed numerous times, the sentiment of the investors may uplift the value of this IPO rather than company’s performance alone.

COMPANY’S WEBSITE: http://www.saharabikashbank.com

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