Profitable growth, not market share the aim:L&T Fin's Deosthalee

“Our focus is profitable growth; we are not looking to simply grow the balance sheet,” he said, adding that the company would sell down the loans wherever it got a good opportunity.

He said the company was looking for buyers for its non-core loan portfolios, but it also had the option to wind them down by not growing it further.

Over the last year, the company has managed to increase its RoE by 2 percent percentage points to 14-15 percent through a focused approach, and is confident that the target of 18 percent by 2020 can be achieved.

Desothalee is bullish on affordable housing and renewable energy, both areas in which it has a sizeable exposure. It has also stepped up loans to transmission projects and road projects, saying there was a revival in both sectors.

He said the government’s thrust on affordable housing had the potential to be a game-changer. That is because it would provide employment and support a diverse range of industries from building materials to banks.

But for that to happen, the states and the Centre had to work in unison since land laws were both a state and central subject.Deosthalee said L&T Finance, too, had been hurt by demonetization, but not to the extent that it had feared. Micro finance, tractor and two-wheeler collections were impacted, he said.

At the same time, there were some positive effects as well. Notably, some of the disbursements that used to happen in cash are now happening through cheques, and borrowers, too, were forced to accept cheque disbursals.

Deosthalee disputes the widely held view among analysts that demonetization would hurt non-banking finance companies in the long-run. In theory, as more people become part of the formal economy by opening bank accounts, they will prefer to borrow from banks which offer loans at a lower rate of interest.

“Demonetisation will not take away the competitive advantages that NBFCs enjoy over banks — quick response, the ability to provide customized solutions, nearness to the customer, and better understanding of focussed business segments” Deosthalee said.On corporate governance, Deosthalee said, “People who talk about corporate governance first need to understand what corporate governance really means. Everybody uses the term as it suits them.”

On corporate social responsibility (CSR) initiatives, Deosthalee felt that it would make a bigger impact if companies came together to take up focused issues.Deosthalee feels the system of quarterly earnings announcements should be done away, as it was forcing company managements to take a short term view without it really benefiting any of the stakeholders. He feels the company can update shareholders every quarter on how it is placed to achieve its longer-term goals, and announce earnings every six months.