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Ambar Singh Roy

"If I may say, we have just taken out a bucketful of water from the ocean. Now that we have consolidated our position, we hope to accelerate the velocity and grow faster as a company," says Mr Hemant Kanoria, MD, Srei International Finance Ltd.

Mr Hemant Kanoria

KOLKATA, July 9

THIRTEEN years ago, the company commenced operations with the vision of being `Srestha' or the best in the non-banking financial services sector with special emphasis on the infrastructure segment. Today, Srei International Finance Ltd has emerged as a major player in the infrastructure projects and equipment finance business. With an asset base in excess of Rs 1,200 crore as on March 31,2002, Srei has successfully roped in as equity partners international agencies such as International Finance Corporation, Washington, and agencies of the governments of Germany and Holland. The company has subsidiaries that are engaged in securities trading, merchant banking and insurance services as well. The potential for financing infrastructure equipment and projects as well as renewable energy systems in India was huge, Mr Hemant Kanoria, Managing Director of Srei International Finance Ltd, told Business Line in an exclusive interview. According to him, only a bucketful of water has been tapped from the ocean. The saturation level was far, far away. The companies' growth could be hindered only on account of their capabilities, or the lack of it.

Excerpts from the interview:

Could you provide us with a brief background of SREI International Finance Ltd and its corporate focus?

We are in the business of infrastructure asset creation and wealth management services. When we started the company in 1989, there was a critical need to create infrastructure for sustained economic growth. At that time, infrastructure segments such as power and roads were in the Government domain. We began by financing equipment that were used to build infrastructure. After the sector was opened up by the Narasimha Rao Government, we took a step further and started financing small and medium infrastructure projects in power and road sectors. In the last three years, we have also got into financing renewable energy projects, especially solar energy. Today, the size of the market that we address is anywhere between $ 5 billion and $ 10 billion.

What are the priorities for the company now?

Over the last 13 years, we have built up a core team and put in place processes, risk mitigating tools and recovery systems. There is no looking back and we shall concentrate our energies on infrastructure asset creation and wealth management services. Besides, we offer project advisory services and have also set up an equipment bank.

What is the outlook for the future?

There is huge potential in the area that we have defined for ourselves. If I may say, we have just taken out a bucketful of water from the ocean. Now that we have consolidated our position, we hope to accelerate and grow faster.

Is the kind of growth that you are looking at sustainable ?

Of course, it is. Sustainability comes from our capacity to deliver, and not saturation at the marketplace.

At what cost do you raise funds?

We raise the funds that are required as loans from foreign and local sources. On an average, our cost of funds varies between 10 per cent and 10.5 per cent. We are constantly looking at raising funds at lower rates. In fact, we have been reducing the cost of funds by 150-200 basis points every year.

What is the debt-equity ratio of your company and what kind of ratings have you secured for your fixed deposit schemes?

Our debt-equity ratio is a healthy 3.5:1. We have secured AA rating from Fitch, A+ from Care and A from Crisil.

How do you propose to tap funds in the days ahead?

There are no plans to raise funds by issuance of fresh equity. Funds shall be raised through debts and new innovative instruments. Last year, for example, we raised Rs 30 crore by way of foreign-guaranteed, local currency bonds. In 2000 - - and for the first time in India's finance industry - - we raised Rs 52.66 crore worth of mezzanine capital.

Do you have any expansion or acquisition plans now?

There are no firm plans in this regard as yet. However, we are not averse to expansions and acquisitions provided they come across as synergistic opportunities.

What kind of competition do you foresee?

In the equipment financing business, we have competition from a few players, but they are not very strong ones. In equipment financing, we are the market leader. In project financing, we are a major player and in the renewable energy segment, we are the only dedicated private sector company. We are confident of maintaining our leadership position.

SREI has also been engaged in the investment banking business for its corporate clients.

Yes. Last year we raised about Rs 3,000 crore for 15 of our clients. This fiscal, we hope to mobilise more than Rs 5,000 crore from the market.

Which are the markets where you are particularly strong?

We are pretty strong in the East, South and the North. In the first quarter of the current fiscal, we have maintained our rate of growth over last year. As I said, the market for infrastructure finance companies such as ours is huge and is limited only to the extent of our capabilities.

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