May 21, 2013, 05.12 PM IST
With a dip in net income to Rs 180 crore as against Rs 214 crore in the previous quarter, SREI Infrastructure Finance says that the year gone by was the worst for the infrastructure sector. The company had to make addtional provisions for CDR cases in Q4.
We did not focus much on the growth of the business but on the profitability, and taking care that our assets are managed well and under control
SREI Infrastructure Finance ’s net interest income for Q4 dipped to Rs 180 crore, as against Rs 214 crore for the corresponding quarter of the previous fiscal. Talking to CNBC-TV18, Sunil Kanoria, vice chairman, SREI Infrastructure Finance , says that he expects better results in the second half of the year. Last year was among the worst years India has ever seen in infrastructure space, and the company’s key focus was on profitability .
Also read: SREI Infrastructure clarifies on news item
Here is the edited transcript of his interview with CNBC-TV18
Q: I just want to verify what would be your net interest income (NII) for Q4 because our calculation shows that it would be Rs 180 crore, versus Rs 214 crore year on year?
A: It would be more or less that.
Q: Could you tell us how was the quarter gone by for you and going forward, what kind of NII can we expect in the coming quarters?
A: In spite of the overall economy being under major challenge last year, it was among the worst year India has ever seen in infra space. So, definitely we did not focus much on the growth of the business but on the profitability, and taking care that our assets are managed well and under control.
That is what the key focus was there. We have been able to achieve that to a great extent in terms of taking care of the profitability so we have seen a comfortable growth in profitability.
In terms of overall disbursement in business growth, we have not seen much last year, we expect the current year also for the next few months to be slow. The second half we expect better with some of the policy initiatives been taken by the government and getting addressed.
Q: This time around, the company has provided for a little more, both on a year to year as well on quarter on quarter basis, as the bad debts written off appear higher. Could you tell us how the asset quality is panning out are you seeing increased stress because of which you provided higher?
A: There are two reasons why we have made more provisions. One, in SREI Equipment business, we have some of the accounts where the customers have gone for corporate debt restructuring (CDR) and as a non banking financial institution (NBFI), we are not allowed to have standard assets even for a CDR case.
We had to make a provision whereas the banks are allowed to treat it as a standard asset so therefore we had to make a provision. In spite of the fact that we had regular payments from the customers and we are an asset finance company but because of the regulation, we had to make additional provisions and provide the entire exposure to those cases which are CDR.
That increased our gross non-performing assets (NPA) and also our net NPA to certain extent because of our few accounts. At SREI project finance level, apart from the old cases we had, one major case which we had was Deccan Chronicle where because of our exposure, we had to make both income reversal and NPA provisions, which has had a major impact.
We hope in the current year and going forward we should not be seeing much more of it.
Q: Could you give us some more clarity on this stake sale in Quippo?
A: It is not stake sale as such. We have not sold stake in Quippo. Those business needed further capital so the funds have invested into it as a result it remains an associate of SREI, but not a subsidiary and therefore the accounting measures has only changed, that you only account for the minority sharing basis rather than on a majority basis. On a consolidation result we can see a little different.
Q: There is no plan as well to sell stake in Quippo?
A: At the moment, there is no plan except, our view on the telecom power business is there, that as we go along we will look at some opportunity of encashment and liquidity raising from the telecom power business.
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