 "Srei to continue to focus on infrastructure lending even after getting banking licence")
Srei Infrastructure Finance, a major player in infrastructure financing and one of the 26 contenders for new banking licences, plans to offer complete financing solutions for the core sector once it gets a banking licence.
Although the current uncertainty surrounding the infrastructure sector has seen major players go slow on lending to the sector, the Kolkata-based financier will continue with its focus on infrastructure.
The company saw its disbursement drop to Rs 3,520 crore at the end of first quarter of the current financial year (FY14) compared with Rs 3,717 crore in the year-ago period. The lower disbursement was second in a row with the April-June quarter of FY12 recording Rs 3,919 crore.
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The fall in fresh disbursements was due to fewer number of new infrastructure projects and the company’s own cautious approach, Hemant Kanoria, chairman and managing director of Srei Infrastructure Finance, told Business Standard .
Srei is preparing to expand its financing portfolio after getting a banking licence with an eye on the long-term prospects available in the infrastructure sector.
At present, the firm cannot do working capital financing or fee-based business. “When we have the platform of a bank we can do add-on services and offer complete value chain of financing service.”
The firm’s total assets under management currently stand at Rs 34,483 crore.
According to Kanoria, the company did not have too many distressed assets. “The one or two distressed assets we have are not something that we cannot manage. But in both equipment and project financing, we are adopting a cautious approach in new lending.”
He said risks in the sector were not so visible till two years ago, but now financiers have to be cautious of a number of factors including the “vigilance and scam risks”. This involved doing a due diligence even on the process followed to bag a project or a natural resource linked to a project.
Kanoria said the current pessimistic mood in infrastructure sector was not likely to change immediately. “I do not see things picking up till March 2014. None of the Bills approved by Parliament will accelerate progress in the infrastructure sector. The new land Bill complicates land acquisition further. It is not practical if it does not encompass operational matters.”
Besides the highway sector, issues in the power sector are worrying, too, he added. According to him, right from the stage of setting up power project to the actual sale of power and distribution, the sector faces several problems.
However, infrastructure continues to offer a huge opportunity. “The government does not need to take big strides but a small tweaking is needed which is more of an administrative issue than anything else,” said Kanoria.
However, infrastructure continues to offer a huge opportunity. “The government does not need to take big strides but a small tweaking is needed which is more of an administrative issue than anything else,” said Kanoria.