The Hindu Business Line : Difficult times ahead, says Deepak Parekh

Chennai, July 18 Indian economy is “entering into difficult and dangerous times” with high inflation and high cost of funds, Mr Deepak Parekh, Chairman, IDFC Ltd, said today.

Addressing the annual general meeting the company here, Mr Parekh said that inflation and (consequently) interest rates were bound to go up.

Explaining to shareholders why IDFC could not afford to pay a dividend of more than Rs 1.20 a share, he noted that a infrastructure finance company like IDFC needed to conserve capital now more than ever.

Later, talking to Business Line, IDFC’s CEO & Managing Director, Dr Rajiv Lall, said that he foresaw a slowdown in infrastructure development.

He said that many infrastructure projects were suffering because of delays in getting various approvals, such as for land acquisition. The promoters’ facing slowdown in their other businesses also impacted infrastructure projects, he said.

Mr Lall, however, observed that IDFC would not be affected much by the slowdown because of the diversified nature of its operations—the company, through its subsidiaries, is also into investment banking, asset management (mutual funds) and private equity—the first two through recent acquisitions.

(A shareholder had previously pointed out in the AGM that the no dividends from the subsidiaries came into the parent company. To this, Mr Parekh replied that dividends from subsidiary to parent meant substantial tax outgo.)

Mr Parekh said at the meeting that he saw good growth prospects in telecommunications, as a few players had recently been awarded licences.