Srei Infra mulls deleveraging balance sheet, stepping up recoveries to reduce stress on books

Srei primarily borrows cash from banks and different lenders for deployment of funds in the direction of financing for asset creation for its clients

Srei Infrastructure Finance (Srei) is specializing in deleveraging its steadiness sheet and lowering stress on its books by way of recoveries and sell-down of portfolios, based on its annual report. The Kolkata-headquartered non-banking finance firm (NBFC) is within the midst of elevating fairness capital from international buyers. In July, the corporate’s board gave an approval to lift as much as Rs 2,500 crore by way of numerous means, together with certified institutional placement.

Earlier to this, its subsidiary Srei Gear Finance Ltd (SEFL) attracted a complete funding proposal of Rs 4,200 crore from the US- and Singapore-based buyers. The pandemic induced lockdown put stress on the financials of the corporate, inflicting asset-liability mismatch, leading to a document internet lack of Rs 7,338 crore in 2020-21 as in opposition to internet revenue of Rs 89 crore in FY’20, the report stated.

The corporate’s earnings per fairness share was destructive at Rs 145.87 in 2020-21 as in opposition to optimistic earnings per fairness share for Rs 1.76 within the year-ago interval. Srei primarily borrows cash from banks and different lenders for deployment of funds in the direction of financing for asset creation for its clients, it added.

“Nonetheless, the pandemic has had an hostile impact on our clients, which has affected their money flows, leading to muted collections for us,” the report stated. Even because the debtors of the NBFCs got aid in reimbursement by way of moratorium and restructuring due to the financial misery because of the pandemic, no such facility was obtainable to NBFCs from their lenders, leading to money stream mismatch, it stated.

“Our major focus has been to deleverage our steadiness sheet to make sure seamless enterprise continuity. We’re in the course of a debt recast and are attempting to lift capital. Additional, we’re centered presently on recoveries and sell-down of our portfolio to lower the stress on our steadiness sheet and generate liquidity,” Srei stated in its annual report for FY20-21. “As well as, we wish to realign our liabilities with the anticipated money flows,” it stated. The corporate can also be scale back its infrastructure portfolio.

It stated that strategic discount of infrastructure/structured finance portfolio was a piece in progress when the pandemic struck and consequently accelerated the method. “Leveraging our area information and experience, we are going to proceed to focus and capitalise on the alternatives throughout all the infrastructure gear life-cycle. We’re strategically trying to improve our presence within the agriculture, healthcare and know-how sectors,” Srei stated.

These sectors not solely performed a important function in the course of the pandemic, however would proceed to take action sooner or later. The lender approached the Nationwide Firm Legislation Tribunal (NCLT) in late 2020, with a debt decision plan to repay loans to its collectors over a time period. Srei is especially engaged within the enterprise of infrastructure gear financing.

The corporate stated gear financing and leasing has been its forte, the explanation behind its management place within the sector over the past 30 years, and its instant precedence is to take the corporate out of the current disaster by fine-tuning of enterprise mannequin and realigning the excellent debt to the collectors.

For that, the corporate is working in the direction of guiding its totally owned working subsidiary, Srei Gear Finance Restricted, to a stronger monetary footing and to return out of the pandemic-induced stress unscathed, the annual report stated.

Additional, the corporate with its wealthy repository of area information throughout numerous infrastructure sectors will turn into extra lively within the infrastructure advisory house which is sure to realize traction with the rollout of the Nationwide Infrastructure Pipeline (NIP) with an envisaged funding of Rs 111 lakh crore over 5 years.