To make open offer for add'l 20% in DPSC: SREI Infra

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In an exclusive interview with CNBC-TV18, Sunil Kanoria of SREI Infra, spoke on the latest developments in the company. Also watch the accompanying video.

Below is a verbatim transcript of the exclusive interview with Sunil Kanoria on CNBC-TV18. Also watch the accompanying video.

Q: Can you take us through this deal; how much will SREI Infra hold in Dishergarh Power Supply Company (DPSC) out of the 15% in which the consortium, led by you, is buying?
A: It is a consortium led by SREI as a financial institution partnering with India Power Corporation which is a power company out of Kolkata. We will be working out the ratio of financial systems. We will put in terms of our contribution whether directly or through our infrastructure funds which we are managing. We believe the opportunity which is there in the DPSC would be good for the company as a result of kind of growth in the power sector, and more particularly, in the power distribution which DPSC is in.

Q: What is the road map now from the current 120 MW? What is the scale up plan for DPSC and how much money would SREI Infra be investing in this?
A: Initially, along with IPCL we will be taking this 58% which will be approximately Rs 171 crore, which we have to pay to acquire this stake. I believe there would be an open offer also which we will have to give as per the SEBI norms and procedures because this entire process has been run through the court process where the court has brought in the auctions mechanism. We will have to wait and watch what will be the next steps from the company and the court and when the entire transaction should hopefully get completed. We hope that in the next couple of days we should get much clearer on the future. Then once we get into the company then only we will be able to plan out the future course of strategies because at the moment the information was more limited to what has been the past.

Q: Does this change your FY10 or FY11 guidance?
A: No, not exactly because this will be an investment at this stage. These are infrastructure projects and these take medium to long term strategies, but basically, these are strategies to build up holistic infrastructure institution which SREI is all about.

Q: Who else is part of the consortium and how soon will you have to go for the 20% open offer?
A: It is only India Power Corporation (IPCL) and SREI which are in the consortium. The open offer would be as per the SEBI guidelines at the same price.

Q: Any problems you are facing on SREI Infra on asset quality because your non-performing assets (NPAs) have gone up and that has raised a few eyebrows? Are you concerned at any asset quality worsening possibilities over the next 2-3 quarters?
A: I would not say so. Our business has been cyclical and in terms of what happens during this September quarter, with monsoons the construction sector where we are primarily involved in financing the cash flows get a little tighter. But we have seen in the history of last 20 years that things have improved post the monsoon period and by last quarter we expect good improvement. And also many projects, where we have gone slower, things have started picking up and construction activities are improving and there is a strong positive vibe going forward.