Bad loans in power need coordinated central, state action: Hemant Kanoria

Hemant Kanoria, Chairman and managing director of Srei Infrastructure Finance, tells Ishita Ayan Dutt & Namrata Acharya, there must be an alignment between states and the Centre to recover stressed as

Have you seen your corporate loan book expanding, as banks are shy in lending to big firms?
 
We are seeing growth every quarter. But, our scope is limited to equipment financing in certain sectors — construction, mining, healthcare, IT, and agriculture. There is so much opportunity in equipment financing and infrastructure that we are not diversifying. Infrastructure is an area where you have to understand the business. Fortunately, because of our investment, we understand the operational issues and not only the balance sheets of companies.
 
Your assessment of stressed power assets, especially valuation?
 

The sector is in a difficult situation. The government has to take a strategic approach. The sector is dependent on the Centre because of fuel. They are dependent on state government because ultimately the discoms are owned by them. So, unless there is alignment of clear strategy, I do not see the sector reviving. We have Rs 5,000 billion of non-performing loans in the sector.

 
Would you be interested in stressed power assets?
 
India Power is bidding for plants are coming under the Insolvency and Bankruptcy Code (IBC). It now has 1,500 Mw of power generation. It is a good opportunity.
 
Is the steel problem getting addressed through IBC?
 
Steel is getting addressed because prices have picked up. That is why you see buyers. Power needs to be addressed because if that Rs 5,000 billion becomes performing loans, then no capital infusion will be required.
 
With so many parties moving court, how will it play out?
 
If a company is going into IBC and the resolution plan is approved by 51 per cent voting by the committee of creditors (CoC), the order should be passed and quick resolution approved. By pushing companies into liquidation, great harm will be done to the economy. We are a capital-scarce country. To set up a project, it will take 5-10 years in the present environment. It is the fundamental responsibility of the National Company Law Tribunal and the CoC to accept a resolution plan.

 
What is the status of your Russian venture?
 
We closed it down last year. After the sanctions on Russia, our European partners could not continue there. Besides that we didn't have any other overseas operation.
 
Your view on the Punjab National Bank fraud?
 
There were lapses. However, any financial institution should first get their money. Once you create panic the money is gone. As a financial institution, the approach should be to recover as much money as possible. After that, if there has been fraud, you take action. Otherwise, there is a double whammy. First, the money doesn’t come and, second, one has to keep chasing the person.