EGM notice issued by Ratnakar Bank

EXPLANATORY STATEMENT AS REQUIRED UNDER SECTION 173 (2) OF THE COMPANIES
ACT, 1956 IN RESPECT TO THE SPECIAL BUSINESS:
The Bank's transformation journey towards becoming a 'New Age' Bank started in the year 2010. To
achieve the transformation and growth, the Bank had raised capital to the tune of ` 702.75 crore by
th allotment of 10.49 crore equity shares of `10 each at a premium of ` 57 per share under the 10
Rights Issue in December 2010. The amount raised in the said Rights Issue has been effectively used
to meet the transformation and business requirements of the Bank so far.
The Bank's transformation process has progressed well since 2010. The Bank has increased its
Branch and ATM network from 88 branches and 19 ATMs in March 31, 2010 to 117 branches and 150
ATMs as of now. The Bank has set up a modern Mumbai Controlling Office in a prominent business
area of Mumbai, a National Operating Centre at Goregaon, Mumbai, renovated branches in Kolhapur
Region. The Bank has diversified into newer geographies / added branches in Delhi, Gurgaon,
NOIDA, Northern Rajasthan, Chennai, Hyderabad, Surat, Madhya Pradesh etc. and certain parts of
Maharashtra and Karnataka such as Aurangabad, Ahmednagar, Shirdi, Doddaballapur which have
hitherto remained uncovered. These developments/expansion has helped the Bank to grow its size
of business significantly.
The Bank has introduced several new products and services during the aforesaid period. The Bank
has introduced Internet Banking facilities, new switch for ATMs and put ATMs on National Financial
Switch (NFS) leading to a wider acceptability of the Bank's ATM card as well as improving the cross
utilization of the Bank's ATM network. The Bank has also introduced new international debit cum ATM
card, prepaid cards, implemented Treasury System, became an Authorised Dealer in Foreign
Exchange and started Foreign Exchange and Foreign Trade Business. The Bank has very recently
completed implementation of Finacle, a new age Core Banking System (CBS) developed by Infosys
Limited which will enable the Bank to have a 360 degree view of the customer relationships improving
customer service. This will help the Bank to further introduce new products and services and improve
productivity. Apart from the new CBS, the Bank has revamped its entire IT infrastructure to ensure
high level of security, robustness and resiliency. The Bank can boast of having deployed one of the
most advanced technologies in this field which have enabled dynamic system and infrastructure
management and reduced the downtime at the branches. The Bank has made significant addition to
its human resource capital as well as made significant efforts in enhancement of their learning and
development.
Alongside these developments on the Operations and Technology front, the Bank's business and
profitability has also improved substantially. The Bank's advances and deposits have grown from
`1,170 crore and `1,585 crore, respectively as of March 31, 2010 to ` 4,568 crore and ` 5,551 crore,
respectively as of September 30, 2012, showing a growth of 290% in advances and 250% in deposits
between March 31, 2010 and September 30, 2012. The Bank's Profit after Tax has increased from
`19 crore in financial year 2009-10 (FY 10) to ` 66 crore in FY12 and ` 44 crore in the first six months
(H1) of FY 13 showing a growth of 247% between FY10 and FY12. The Bank's sources of income are
becoming much more diversified and qualitatively better with addition of several new products and
services. The Bank's non-interest income has increased from `13 crore in FY10 to ` 67 crore in FY12
and ` 49 crore in H1 FY13. With growing branch presence, technology revamp and additional
manpower, the operating expenses have increased from ` 39 crore in FY10 to ` 139 crore in FY12
and ` 97 crore in H1 FY13 in line with the Bank's transformation strategy of investing in technology,
systems, branches, human resources etc.
The Bank's Capital Adequacy Ratio (CAR) had increased substantially after the last round of capital
infusion in late FY11. The CAR was at 56.41% as of March 31, 2011 which reduced to 23.20% as at
(All figures of H1 FY13 are unaudited).


March 31, 2012 owing to substantial growth in the size of balance sheet of the Bank. The CAR has
further dropped to 17.4% as of September 30, 2012. As the Bank grows its balance sheet in the
coming days, the CAR will further drop to lower levels.
The Bank needs to continue with its transformation journey, expand its branch presence, continue
with IT system changes/upgrade/revamp and further expand the business of the Bank. With Basel III
implementation, capital requirements of the banking industry are expected to increase over the next
few quarters. Therefore, capitalization levels across industry are likely to go up in the coming days.
Our Bank also needs to ensure that with growing balance sheet, its capital position is enhanced
commensurately. Accordingly, the Board of Directors of the Bank, has recommended raising further
capital by way of preferential allotment of shares to certain institutional/professional investors of high
pedigree. Some of these prospective investors could bring immense value to the Bank. The capital
proposed to be raised from such investors would be further utilized for diversification into new
markets, Brand promotion of the Bank, setting up of more Branches and ATMs and to deliver robust
and cost – effective, customer centric banking. The Board of Directors has identified the investors
listed above for allotment of equity shares on preferential basis.
The Board proposes to issue equity shares within a price band of `102- `110 per share (i.e. equity
share of face value of `10 per share at a premium of ` 92- `100 per share). The Board may issue and
allot shares in one or more tranches. The Board may, at its discretion, decide a differential price within
the above price band while allocating shares to the prospective investors if in their judgment it is in the
long term interest of the Bank to do so depending upon the prospective investor's institutional
character, long term nature of shareholding, image and pedigree in the global markets, financial and
other strength as well as support in the institution building process and value accretion to the Bank.
In view of the above, the requisite approval of the shareholders is being sought in terms of the
provisions of the Companies Act, 1956 (the Act) read with the Unlisted Public Companies
(Preferential Allotment) Rules, 2003, as amended from time to time and other applicable regulations.
The relevant details as prescribed under these regulations are given below:
(a) THE OBJECTS OF THE PREFERENTIAL ISSUE:
To raise the funds through preferential offer for long term financial needs of the Bank from the
Investors referred in the resolution.
(b) THE PRICE BAND AT WHICH ALLOTMENT IS PROPOSED :
The shares shall be issued and allotted at a price determined by the Board. The shares shall
be issued and allotted within a price band of `102- `110 per share (i.e. equity share of face
value of `10 per share at a premium of ` 92- `100 per share).
(c) THE RELEVANT DATE ON THE BASIS OF WHICH PRICE HAS BEEN ARRIVED AT :
The price band has been arrived on the basis of price benchmarks prevailing in the market as
applied to financial position of the Bank as on September 30, 2012.
(d) THE CLASS OR CLASSES OF PERSONS TO WHOM THE ALLOTMENT IS PROPOSED
TO BE MADE:
The shares may be issued and allotted to the Investors as detailed in the resolution.
(e) INTENTION OF THE PROMOTORS / DIRECTORS/ KEY MANAGEMENT PERSONNEL OF
THE BANK TO SUBSCRIBE TO THE ISSUE :
No directors/Key Management Personnel intend to subscribe in the proposed preferential
issue of shares.


(f) SHAREHOLDING PATTERN :
The shareholding pattern before and after the allotment of shares as mentioned in the
resolution is as below:
Category Pre- Issue Post- Issue
No. of Shares % age No. of Shares % age
Promoters None Nil None Nil
Directors and their relatives 1,19,94,070 5.44 1,19,94,070 4.79
NRIs 81,28,910 3.68 81,28,910 3.24
Banks 52,20,000 2.37 52,20,000 2.08
Mutual Funds None Nil None -
Government None Nil None -
General Public 7,18,01,529 32.54 7,18,01,529 28.65
Body corporates & Financial Institutions 12,34,95,749 55.97 15,34,95,749 61.24
Total 22,06,40,258 100.00 25,06,40,258 100.00
(g) PROPOSED TIME WITHIN WHICH THE ALLOTMENT OF EQUITY SHARES SHALL BE
COMPLETED :
The allotment of equity shares is proposed to be completed within 12 months from the date on
which the shareholders sanction is obtained for the preferential allotment of equity shares.
(h) WHETHER A CHANGE IN CONTROL IS INTENDED OR EXPECTED :
The Board do not envisage any change in control by the proposed allotment of shares. None of
the proposed allottees would hold 5% or more shares in the paid up equity share capital of the
Bank after the proposed allotment of equity shares on a preferential basis.
(I) AUDIT CERTIFICATE :
Mrs. Priya Pangaonkar, Company Secretary in practice, has certified that the proposed issue
of the shares is being made in accordance with the requirement of the Unlisted Public
Companies (Preferential Allotment) Rules, 2003, as amended from time to time. A copy of this
certificate shall be placed at the Extraordinary General Meeting.
Your approval is sought, as required under Section 81 (1A) and other applicable provision of
the Act and rules made thereunder, for allotment of equity shares on a preferential basis.
The Board recommends passing of the resolution.
None of the directors of the Bank is concerned or interested in the proposed resolution.
By the order of the Board of Directors
Virta Jain
Company Secretary
Mumbai, December 22, 2012

Sandip Ginodia

ABHISHEK SECURITIES

We deal in over 60 unlisted companies with 15 years of expeirence . For latest prices visit :www.abhisheksecurities.com/unlisted.htm / call : 09830271248 .

Email : ginodiasandip1@gmail.com

For more info and regular updates about unlisted shares and the stock market :

Follow our blog : www.abhisheksecurities.blogspot.com .

Visit : www.abhisheksecurities.com .

Like us on facebook : www.facebook.com/abhisheksecurities