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Last Updated : Jan 09, 2018 03:32 PM IST | Source: CNBC-TV18

Seeing recovery in infra sector, especially in roads: SREI Infra

In an interview to CNBC-TV18, Hemant Kanoria, CMD of SREI Infrastructure Finance spoke about the latest happenings in the company and gave an update as to how business is panning out in the third quarter.

CNBC TV18 @moneycontrolcom

In an interview to CNBC-TV18, Hemant Kanoria, CMD of SREI Infrastructure Finance spoke about the latest happenings in the company and gave an update as to how business is panning out in the third quarter.

Kanoria said we are trying to find resolution for stressed assets in the portfolio.

He further said that we still have a long way to go with regards to resolution of Sterling Port (in Dahej).

Talking about business, he said we would like to partner with other institutions to aid resolution of stressed assets.

He mentioned that we are seeing recovery in the infra sector, especially in roads.

According to him, every stressed asset need not be resolved via bankruptcy proceedings.

On IPO front, he said we are looking at initial public offering (IPO) of SREI Equipment within this financial year.

Below is the verbatim transcript of the interview:

Q: Update us on the news which is now doing the rounds, you along with JSW Infrastructure buying the Sterling Port in Dahej. What is the cost, what is the stage at which it is and what is your cost to purchase this?

A: Last quarter was good and we will be having our results next week, so I do not want to pre-empt anything on the financials of the company but as we have been seeing last two-three years, there has been recovery on the infrastructure and especially what we have been trying to do as an organisation is to recover the money that we have lent to people wherever there have been problems and we have been trying to find out resolutions. Therefore, this is also one of the resolution cases where we think we have been able to find out a resolution but we have to still. We still have a long way to go. However, I do not want to get into the details of the transaction as such because we still do not know what will be happening with the government because we are working on it. We are trying to find out resolution. We as a financial institution always believe that it is better to get institutions or organisations that have the capability of running assets; in some cases we do have capabilities. Therefore, in those cases we look at investing and brining our operating teams to manage it but in other areas where we do not have those expertises within the group, so therefore we do like to partner with organisations like we have a water company where we have invested with Veolia. So similarly we have various ventures where we have invested in financial institutions because we have to keep in mind that for the stakeholders it is very important that how do we manage the risk and how do we enhance the value for them. Therefore investments into equity or mezzanine or lending - so that is how we look at it and this is also one of these particular transactions.

Q: I agree that you will be structuring or restructuring the debt but even if you can tell us what kind of a haircut or what is your exposure?

A: At this particular juncture it is difficult to say, it is too early days. So until and unless we know how things are going to pan out, it is just very recently that last week only the announcement has come out; basically it is not finalized as yet so it will be preemptive on my part to mention anything about this particular transaction but in general I can tell you that on the infrastructure space, we see, there is recovery which is happening especially in the road sector there has been tremendous recovery and a lot of new projects are coming up. In some of sectors, still there are laggards; there are problems which need to be addressed and in steel also there is a recovery now because there is a lot of enthusiasm and excitement for many of the bidders to bid for the plant which are under problem in the National Company Law Tribunal (NCLT).

Q: A two-part question. Will this deal go through within this calendar year and also what kind of growth do you see for dredging and shipping sector as a whole because of this deal that is going through?

A: As I mentioned that we have not done deep analysis as yet on this because it was just one of these cases where we are trying to find out resolutions and resolution does not mean that we have to take every case for bankruptcy because besides bankruptcy also there are a lot of steps which can be taken. Bankruptcy is a last resort as an institution that we feel that if there is no other recovery method possible then only you take it for bankruptcy but before that we have to try all kinds of formulas to see that what succeeds. And in this case that is the reason why we brought in JSW, there were other bidders also and along with other lenders we thought that this would be the most appropriate way to go ahead to find out a resolution to this particular case because infrastructure, what I personally believe and as an organisation, we are quite convinced about it that if any asset has been created or there is asset which can be put to work, it is much better to do so because it is a national asset and it is in the national interest that any infrastructure project is not allowed to just die down.

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First Published on Jan 9, 2018 12:06 pm

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