IT’S been 25 years since the Srei group started out to finance infrastructure; 1989 was when the Kolkata-headquartered firm set up shop. It hasn’t done too badly for itself: post-tax profits have grown at a compounded 40% in these 25 years. And despite the environment not having been particularly exciting in the last few years, the group seems to have found opportunities to lend because disbursement in the last decade grew at a compounded 26%. Like most Marwari families, the Kanoria family too found its way to Kolkata from Rajasthan: it was Kedarnath Kanoria who came to the city six decades ago. His son Hari Prasad Kanoria and grandsons Hemant and Sunil built the business which today boasts an asset book of R35,241 crore.
The Kanorias too started out small —running flour mills, an animal feed plant and trading. In 1989, Hemant and his brother Sunil ventured into the lending business. In 1997, IFC, a member of the World Bank Group, DEG of Germany and the Netherlands-based FMO invested in Srei as strategic equity partners. Eight years later, Srei Infrastructure Finance (Srei) became one of the first Indian NBFIs to be listed on the London Stock Exchange. In 2008, it formed a joint venture with BNP Paribas to finance equipment—Srei Equipment Finance—whose profits stood at R225 crore on March 31, 2014.
While power and transportation have been two major sectors in which the firm funds projects, Srei is looking to tap new infrastructure sub-sectors—healthcare, hospitality and cold chains. “We will try and identify and hope to get an exposure of about 5-10% of our disbursements to the three sub-sectors this year,” says Hemant Kanoria, chairman and managing director, Srei Infrastructure Finance Ltd. In the healthcare space, it is looking at financing hospitals-related infrastructure while in the hotels space it will tap hotel projects in tier II cities. Srei is also keen on opportunities to acquire assets in the distressed power and road sectors, especially those which promoters and bankers are ready to exit.
“We see an opportunity now for acquisitions in the roads and power sectors, among others because there are several companies under stress. Many of the banks also want to exit loans and we could pick up some like we did with Kingfisher Airlines a few years back,” Kanoria explains. Kanoria says the group is in talks with almost all bankers to acquire bad loans.
Kanoria said Srei has expertise in promoting and managing large infrastructure projects and can bring in “innovative solutions” to manage stressed projects. Srei has still not sold the stake acquired in the ailing media house Deccan Chronicle Holdings (DCHL). DCHL had issued more than 6.6 crore equity shares to Srei in January this year as conversion of a part of the loan dues into equity. The 6.6 crore equity shares allotted to Srei constitute 24% of the expanded paid-up equity share capital of the Hyderabad-headquartered company.
The Kanorias forayed into the power sector in 2003 with the incorporation of India Power Corporation Ltd (IPCL), which has generation assets and also runs distribution networks, while Bharat Road Network Ltd (BRNL), supported by the group, has a pan-India presence in the BOT (build-operate-transfer) roads sector with a portfolio of nine projects.
Srei is planning to raise up to R2,500 crore by the way of public issue of non-convertible debentures (NCDs) this financial year in one or more tranches. Meanwhile, it is also exploring opportunities in UAE and Nigeria through its initiative Quippo, India’s largest equipment rental company.
Kanoria says Srei is also evaluating strategies for Viom Networks, its telecom tower venture with the Tata group. “We are still looking at both an IPO and a stake sale. We would definitely like to do it this fiscal,” he says.