SREI losses on account of forex; posts Rs 19 crore PAT

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SREI losses on account of forex; posts Rs 19 crore PAT

SREI Infrastructure posted PAT at about Rs 19.4 crore compared to Rs 40 crore in the corresponding quarter last year. CNBC-TV18 spoke to Hemant Kanoria, chairman and managing director of SREI Infrastructure Finance about the numbers and the way ahead.

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SREI Infrastructure  posted PAT at about Rs 19.4 crore compared to Rs 40 crore in the corresponding quarter last year. Speaking to CNBC-TV18, Hemant Kanoria, chairman and managing director of SREI Infrastructure Finance says, "The MTM losses of about Rs 110 crore in the last 9 months has had an impact on the profit, but we had taken a provision at about Rs 53.80 as on 31st December." This is however a one-off event since with the appreciating rupee, these provisions will be reversed and that will add to the profitability of the company.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: If you could give us the basic numbers and what you all did by way of a net interest margin?

A: This quarter, the total consolidated assets now under management has grown upto about Rs 29,000 crore from Rs 16,000 crore in the corresponding period for the last year. The profits have also grown. If we take into account in the last nine months and the MTM losses on the foreign currency that we have had, that would be approximately about Rs 110 crore. If we do not take that into account, then the profit before tax would be about Rs 292 crore on a consolidated basis. However, if we do take that into account, then profit before tax is about Rs 182 crore and the PAT is about Rs 98 crore for the nine months.

For this, quarter the PAT would be about Rs 19.4 crore compare to Rs 40 crore, which was there in the corresponding quarter in the previous year. For the nine months, it would be about Rs 42.87 crore against Rs 182 crore that we had.

So, basically the MTM losses of about Rs 110 crore in the last nine months has had an impact on the profit, but we had taken a provision at about Rs 53.80 as on 31st December. Now that we already see a trend that the rupee has been appreciating, so by March we may have to do a reversal of the provisioning that we have done on the MTM and that would again improve the profitability.

As a matter of fact though, the MTM losses has been taken because we have been prudent on the provisioning side of it, but as we don't see that these would result in actual losses because our loans are for 10 years and we follow a very conservative policy of making full provisioning on that. Therefore we don't see that over a period of time the company will be losing because of this MTM losses; it's just that we have to take this provision.

The disbursement also for this particular quarter has been quite good at about Rs 3,900 crore compared to what we had at Rs 3200 crore previously, and the total disbursement for nine months has been Rs 13000 crore against about Rs 9000 crore that we had in the corresponding period for the previous year.

So, overall, we feel quite confident about the growth in the business and the way the things are going about. The only unfortunate part is the rupee depreciating and we had to take these MTM losses.

Q: We didn't get your net interest margins. What did you say you did this quarter around?

A: The net interest margin which we had was about 3.7%.

Q: Getting into FY13, what kind of a disbursement growth do you think SREI Infrastructure could eke out?

A: I think that this year we should be closing with about 30-35% growth on the disbursement compared to what we had last year. In 2013 also, it's certainly too early to say, but I think that we should be in a position to maintain a healthy growth of 25-30% which in the previous years also we have been able to do. It all depends how the economy grows and certain issues which are there in various sectors, in infrastructure, we are quite hopeful that it will get ironed out in the next three-four months and if it does then for the next year 2012-13 the disbursements would be even higher.

Q: Can you tell us what the possible impact of yesterday's 2G ruling would be for maybe a tower company like Viom Network?

A: Viom is again an infrastructure play. So the telecom towers which has been put up by Viom is nothing but just an infrastructure, so therefore maybe operator A may not be using it, operator B maybe coming in or operator C maybe coming in. So to that extent, we would be agnostic to it. But definitely, we have to see because yesterday some licenses will get cancelled and if those licenses get cancelled then maybe the new guys who are coming in to those areas where we have our towers; we have a unique advantage because we have our towers in those places where other towers are not there. So whoever maybe the operator, they just can't go by not servicing those subscribers there. So someone will come in and takeover the subscribers; it maybe A or B. So whoever is there would be on our tower. So therefore, I don't see that as a medium to long-term problem, but maybe immediately in the next three-five months some people may have some problems but that would be a very short-term kind of a problem.