IDFC sees opportunity in road, power financing

Infrastructure financier IDFC today made it the National Stock Exchange's (NSE) Nifty 50 index. On the occasion, the company's Executive Director Vikram Limaye spoke to CNBC-TV18 on the its growth plans and how he sees India's infrastructure sector panning out ahead.

Here is a verbatim transcript of an exclusive interview with Vikram Limaye on CNBC-TV18. Also watch the accompanying video.

Q: Last time when we did speak with you, you did target a modest growth rate of about 15% for FY10. Are you on path to deliver that sort of growth now?

A: Yes. As we have outlined before I am not able to talk in any detail on numbers etc since we were very close to half yearly results. But there is no change from what we indicated earlier.

Q: With the kind of macro environment now sort of changing you think your loan growth target now can be upped considering you do have the legroom now to increase leverage from current levels?

A: We will address some of these questions on our half yearly results call that we will do in a couple of days. But broadly from a macro perspective there is reason for optimism in terms of the prospects for infrastructure growth. It is still early days as we have said in infrastructure-related disbursement takes time to materialize. They are not in the nature of consumer lending where you can disburse quickly. These are all projects disbursements that take two-three years to disburse after financial closure has been achieved. We certainly expect that in the next five years there will be a lot more projects that come on stream. Therefore, the overall growth in infrastructure lending will certainly pick up but there is always a lag effect to when activity levels pick up and when actual disbursements happen.

Q: In this pick-up in infrastructure activity, if you could just tell us how are the opportunities looking as far as particularly for the road, telecom and the power space? Is there an improvement on that front?

A: We see the largest opportunity in power, roads and telecom. You all heard about what we cater for roads sector in terms of the opportunity and the focus that the government has on speeding up road development. There have not been any new bids that have come out as yet but they are likely to come shortly. Based on how the bidding actually happens one sees the stretches are announced, there will be more clarity on how quickly these projects will come on stream. In telecom, there is a large opportunity not only as it relates to the passive telecom but also because it relates to expenditure that will happen in relating to 3G and the rollout of that.

Q: How much of funding requirement you have currently from bank borrowings? Are you planning on any alternate funding requirements as of now?

A: As we said, all along we continue to be largely institutionally funded and largely domestically funded because there were restrictions on ECP financing for non-banking finance companies (NBFCs). So we are largely funded by banks and insurance companies from the domestic landscape.

We have not borrowed anything offshore as yet. As and when the ECP approvals come through and if the rates are attractive in the international landscape, we will certainly look at borrowing offshore where at this point in time so all largely domestic institutionally funded.