All subsidiaries have high growth potential: IDFC‘s Limaye

Vikram Limaye, MD & CEO of IDFC in an interview to CNBC-TV18 outlined the performance of the company and its subsidiaries. He said the performance of the bank as well as that of other subsidiaries like debt finance and asset management businesses were extremely satisfactory.IDF (Infrastructure Debt  Fund) is a subsidiary of IDFC. He is very bullish on IDF being able to finance all infra projects in the country and expects IDFC IDF assets going up to Rs 1500 crore by March from Rs 1000 crore as on January.According to him IDF has the potential of becoming a large NBFC and more so because it being a tax exempt entity can provide much better rate to borrowers.The asset management business in the mutual fund category too has huge growth potential, said Limaye.The company is looking to raise funds for the private equity (PE) and for real estate business, said Limaye.According to him inorganic growth is an important part of growth and would like to evaluate the opportunities for all businesses, said Limaye. Below is the verbatim transcript of Vikram Limaye's interview with Ritu Singh on CNBC-TV18. Q: Explain more about this quarter's numbers? A: It has been a good quarter given that the bank has just started. Our consolidated net profit at the IDFC level is Rs 176 crore. This is a consolidation of all our subsidiary profits and we own 53 percent of the bank. The bank disclosed its results last week and out of Rs 176 crore of net profit on a consolidated basis Rs 128 crore represents 53 percent of the bank's net profit. The balance Rs 50 crore comes from many of our other subsidiaries. We have an infra debt NBFC, we have an asset management company, an alternatives business and institutional equities business. So those are the other businesses and all of them are doing well, all of them are profitable and all of them have long ways to go. Q: Structurally you said there are certain areas, wide spaces you are looking at to grow your businesses also structural changes you may introduce in your businesses to improve efficiency. Could you share your plans on each of the few subsidiaries that you hold? A: As far as scaling up each of our business--the potential is very large. The infra debt NBFC to start is an entity that can finance all operating infrastructure assets in the country and that is a large landscape. As of end of December we had about Rs 735 crore in loan assets, in January it crossed Rs 1,000 crore but we believe that over time this business can be a very large business. It currently capitalises with about Rs 500 crore of equity, its AAA entity but as growth picks up, this can be a fairly large NBFC. It is fair to say that being a tax exempt entity it can provide much better rate to borrowers. It is therefore also higher return on equity (RoE) business on a risk adjusted basis, so very attractive business for us to build. Second business is our asset management business in the mutual fund category. We are top eight mutual fund house with 4 percent market share, exceedingly profitable although we maybe in the top eight from asset from assets under management (AUM) perspective, from a profitability perspective we are much higher because focus on discipline, profitable growth as we build the business- that is a business that has long way to go, the penetration level in the country are quite low. Our international business is still very small. However, our idea is to scale up international business as well. On the alternative side we currently manage Rs 16,000 crore in seven different funds. We are in the process of raising funds in private equity and real estate. The international environment is still a bit difficult in terms of international investors committing to private equity or real estate in the country but we are still hopeful that we will be able to raise some fund.