L&T Finance Holdings to focus on retail; exit wholesale, realty finance

Appoints L&T CEO S N Subrahmanyan as chairman; Shailesh Haribhakti to remain independent director

As part of a business rehaul, L&T Finance Holdings (LTFH), a subsidiary of engineering major Larsen and Toubro Ltd (L&T), will focus only on retail finance and exit wholesale and realty funding business within the next two years.

S N Subrahmanyan, chief executive and managing director, L&T has been appointed as chairperson of the finance company. He replaces Shailesh Haribhakti, who would continue to be independent director on the board of the company. This is in line with L&T’s overall commitment to strengthen its presence in the services area.

A M Naik, chairman L&T said shareholders of L&T have not been happy about the performance of the finance company. The decision to appoint S N Subrahmanyan and reshaping strategy will virtually change the character and structure of L&T Finance Holdings Ltd. The current chief executive Dinanath Dubhashi will continue to lead the finance company as CEO.

The decision to exit wholesale lending and real estate finance is driven by difficulties experienced in repayments by borrowers, Naik said.

LTFH has established itself as a strong and well-capitalised financial institution. It has a strong presence in farm equipment finance, two-wheeler finance, as well as micro loans. It continues to be one of the leading players in financing infrastructure sectors like renewables and roads.

Shankar Raman, chief financial officer, L&T said the finance company will not require fresh capital as capital adequacy ratio is about 23 per cent. While the overall loan book is about Rs one trillion, the retail portion will be about Rs 50,000 crore. There is potential to double the retail portfolio in four years.

Elaborating on the roadmap, Subrahmanyan said LTFH portfolio will shrink first as it exists wholesale and real estate exposures and then scale up size. The finance company is embarking on a new journey towards Vision 2026.

Given the thrust being provided by L&T Group for the services businesses in its overall portfolio, growth of L&T Financial Services is an important component of the Group’s Lakshya 2026 Strategic Plans, he added.