Mkt stressed for infra; focus on profitability: SREI

SREI Infrastructure registered a 140 percent growth in its consolidated profit after tax (PAT) to Rs 47 crore during the quarter ended December 31, 2012 as compared to  Rs 19 crore during the same quarter last fiscal. Hemant Kanoria, CMD of the company told CNBC-TV18 that the assets under management (AUM) of the company are worth Rs 33580 crore. "There has been a substantial increase in the AUM, but the disbursement has not been very high. So, we have tried to concentrate on the profitability," adds Kanoria.

Further Kanoria mentions that the market conditions for the infrastructure remains stressed. Going forward, we will not be concentrating on the disbursements to a very large extent adds Kanoria. Below is the verbatim transcript of Hemant Kanoria's interview on CNBC-TV18 Q: With regards to Kingfisher Airlines fiasco, you must have heard that the banks are recalling their loans. What is the residual share that banks like State Bank of India (SBI) have in the collateral that is held by your company and how much do you think can be recovered from that?
A: That is very difficult to assess because the investment, which has been made at our end has been through the fund and there are other investors also in the fund. Once the competition commission clears the purchase of shares by Diageo of United Spirits (USL) then the fund managers and the trustees will decide how they have to go about in selling of the shares, what will be the residual because there are a lot of securities, which are there? What are the securities that will be realised towards payment of the investor? The balance will be going back to the bank - whatever is there in the agreement but it is very difficult to take a call now because we all are waiting for the clearances to come in. Also Read: Expect Budget to stimulate demand: Srei Infra Q: SBI spoke about the Kingfisher loan recall and mentioned that they have a residual charge on certain shares, which are pledged with Srei at this point in time. Would you be giving some amount of profit to SBI or certain amount of gains from the amount of shares that you sell post, to recover the Kingfisher loan?
A: These loans were novated by ICICI to the fund and are therefore an agreement. It is not only SBI, but there is a consortium of the bankers. So, whatever would be the residual amount left after the exhaustion of the dues of the investors that would go back to the bankers and is already an agreement. Whatever is there in the agreement will be complied with and that is something which the trustees and the fund managers will take a call and do it at an appropriate time. At present it will be too premature to mention anything on that. Q: Your numbers this time around have been a good gain that you have seen on your profits because of an exceptional gain. What kind of AUMs and disbursements can SREI Infrastructure realistically do through this calendar year 2013?
A: In this particular year, our AUM from Rs 29,000 crore which was there last year in December 2012 has gone up to approximately about Rs 33,580 crore. There has been a substantial increase in the AUM, but the disbursement has not been very high. So, we have tried to concentrate on the profitability. Therefore,  PAT last year was about Rs 99 crore for nine months, which is Rs 194 crore and the profits have gone up substantially.
There is an exceptional item for about Rs 70 crore, besides that there has also been a good profit growth and the income also has grown from Rs 1,700 crore to Rs 2,399 crore in these nine months. The profit before tax (PBT) also, from Rs 182 crore to Rs 279 crore.
There has been a slight increase in the NPA also with the environment which is there and also with the conservative policy of provisioning that we follow. Therefore, there has been a higher provisioning that we have done in this particular year, but that does not mean that we will not be able to realise the money because in the past also whatever provisioning we did, is higher than the Reserve Bank of India (RBI) norms on a conservative basis.
Over a period of time, we are able to realise it, which gets reflected in the profits and the income. So, we are going to have the same kind of situation. As we all know that the market conditions are stressed at this juncture for infrastructure for the last one-one and half years.
Therefore, our main concentration has been to see that the asset portfolio is protected. The clients who are seeing any kind of stress, we are in a position to support them and concentrate more on the profitability and that is what we have seen that this is bond results because in the last nine months there has been a good increase in the profits. So, going forward we will not be concentrating for this particular financial year, we will not be concentrating on the disbursements to a very large extent.
We will be concentrating more towards maintaining the profitability and increasing the return-on-equity (RoE) to the shareholders so that the return gets enhanced. As and when the market for infrastructure starts picking up then again we will start doing the disbursements because when you have a long-term objective then all these short-term blips do not make much of an effect.