Srei may see asset portfolio growth slowing to 5% against 20% last year

“WE ARE PREPARED EITHER FOR AN IPO OR OTHER FORMS OF CAPITAL RAISING BUT DON’T NEED CAPITAL AT THIS JUNCTURE. ONLY AFTER THINGS STABILISE WILL WE GO TO THE MARKET FOR FUNDRAISING”

Chairman, Srei group Kolkata-based Srei group, which has moved away from infrastructure finance, is likely to see growth in asset portfolio slowing to 5-7 per cent this year, in contrast to the annual 20 -30 per cent growth it recorded prior to the IL&FS crisis.

Currently, 75 per cent of its asset holding is for equipment finance, the rest coming from infrastructure financing . The latter share is expected to further come down to 10 -15 per cent over the coming years, Hemant Kanoria, group chairman, told Business Standard.

In fact, the consolidated AUM fell slightly to ~47,070 crore in 201819, from ~47,480 crore a year earlier, primarily because of SIFL’S lower numbers. “We could have done better but the IL &FS incident happened. It has not impacted from a liquidity or business angle but growth has been impacted because of loss of confidence,” said Kanoria.

He said there was a need for serious relook at the official non-bank finance company (NBFC) guidelines. “A distinction needs to be made between mistakes and fraudulent decisions, since any action has a ripple effect in the sector,” said Kanoria.

Srei had started reducing its exposure to infrastructure financing about four years earlier. In its equipment financing business, that for construction and mining has slowed; agriculture and technology equipment financing is still going strong.

Kanoria said banks were wary of extending loans to NBFCS, which were therefore relying on external commercial borrowing for fund raising . Last year, the group had shelved its plan for an Initial Public Offer (IP O) of shares f or Srei Equipment, following the NBFC crisis. “We are prepared either for an IPO or other forms of capital raising but don’t need capital at this juncture. Only after things stabilise will we go to the market for fund raising,” he said.

Kanoria expected infrastructure investment to pick up after the country’s general election but finds sentiment weak even in the roads sector, which was earlier doing well.

In which connection, he said any star ting of ins olvency proceedings leads to value erosion in stressed assets. “IBC (Insolvency and Bankruptcy Code) is like a funeral march. It is better if mediation (between creditors and a stre ss ed company) can b e done earlier.”

The infra sector, he said, needs clarity in regulations. Besides, there should be a dispute resolution mechanism.

On whether his company would turn into a bank at some stage, he said it would depend on Reserve Bank of India policy.

HEMANT KANORIA