Srei Infrastructure Finance expects improvement in business from ‘next year onwards’ with NPAs moving down. It also hopes concerns of the infrastructure sector will be addressed. Proceeds from the stake sale in Viom are likely to bring down interest cost and expand disbursals. The company’s consolidated profit dipped 62 per cent in the first half of this fiscal to ₹35 crore.

The asset under management (consolidated) stood at ₹36,246 crore till September 30, 2015. In an interview with BusinessLine , Hemant Kanoria, Chairman and Managing Director, Srei Infra, spoke about the outlook for the company, its acquisition plans and much moreEdited excerpts:

What is the outlook for the sector for second half of this fiscal?

On the infrastructure side, until the sector does well, there is no way that companies involved with it can do well. In the last few months, we have started seeing movement in the sectors — power, roads, mining — with the various steps announced by the Centre taking shape. But financially… it will take time. I’m not saying the outlook is despondent. But it is still going to take some time before it dramatically picks up.

Secondly, opportunity wise, we are still very optimistic. Everyone is gung-ho about the kind of investments required in the sector. The last three-four years have been very stressful.

For Srei, how do you see the movement of non-performing assets in the second half?

NPAs will start moving down next year (fiscal) onwards with the economy picking up and concerns of the infrastructure sector being addressed.

Are you looking at buying out stressed assets?

We are not into acquiring stressed assets. However, we have invested in a road and a power company, that may look at acquisition. If there are good acquisition opportunities, these companies can take a call.

When do expect the proceeds from Viom stake sale to come in?

We signed the deal in October. ATC has applied for FIPB and CCI clearances. Only after that, it can consummate the transaction. You should see the impact in our books by next fiscal.

How will the proceeds from stake sale in Viom be used?

We are a financial institution. Immediately, the money will be used to reduce the debt. But this is a temporary reduction. It does not mean the funds will remain there in the balance-sheet. We will have the capital for further lending with which we will look to grow our books. The interest cost will also come down.

When will you roll out the white-label ATMs?

We plan to roll out white-label ATMs in the rural areas. So there are various operational issues involved. Our team is working with the Reserve Bank of India officials and service providers to come up with a solution which can take care of operational and security issues. We have asked for an extension of the time frame within which we need to start rolling out these white-label ATMs.

But is this white-label ATM a feasible model, especially with disruptive technologies such as mobile and digital wallets coming in?

That is why we are concentrating on the rural areas where the bulk of the transactions are still in cash. If we were doing it in isolation, it wouldn’t make sense. But because we have these village-level entrepreneurs (VLEs) through Sahaj there is a marginal cost for VLEs and us. That reduces the cost of installation of ATMs and the operations. Otherwise, on a standalone basis, if someone has to put in and the cost of transactions are so low, it is not viable.

How has Sahaj panned out for you?

We have over 28,000 common service centres and the model has matured. The business in many of the common service centres is doing well. The Centre also has a programme Digital India and common service centres are quite established. Going forward, it will be a huge opportunity.

But the whole e-governance project hasn’t taken off still?

Yes, Sahaj came up ahead of its time. We have built an infrastructure that has come up on the technology back-bone in rural India.

When will Sahaj start making profits?

This year (FY16) we will turn EBITDA (Earnings before interest, tax, depreciation and amortisation) break-even. Hopefully, next year onwards we should start making profits.

There are rumours that you are trying to broker peace between Vijay Mallya and the lenders. Your comments.

There is some ₹650 crore that is lying with the banks according to a court order. We are a party to the court case and we are only trying to tell the banks and the promoters that instead of fighting, they can come to an amicable solution.

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